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Bruchey wants to use reserves to offset tax increase

May 04, 2001

Bruchey wants to use reserves to offset tax increase



By DAN KULIN

dank@herald-mail.com

Like a family dips into its savings account in tough financial times, so the City of Hagerstown should use some of its reserve funds to lessen a potential tax increase, says Mayor Robert E. Bruchey II.

Bruchey wants to use about $180,000 of the almost $3.8 million in the general fund reserve account to reduce the scheduled real estate property tax increase by 1 cent per $100 of assessed value. Bruchey's proposal would reduce the increase from 4.6 cents to 3.6 cents.

All council members cautioned against using the reserve account when the city isn't in a crisis or emergency. But a majority of council members said they would not oppose using some reserve funds in the upcoming fiscal year.

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No council member supported taking as much from reserves as the mayor is proposing.

Bruchey wants to use the reserve money for first time or one-time spending items, such as new police cruisers and a $50,000 budget item expected to go to Community Rescue Service.

Also, the mayor wants to use an additional $51,000 in reserve funds to help fund a housing program the Washington County Community Action Council is launching in response to the YMCA closing its resident program.

Bruchey said he would like the reserve account to be at least 10 percent of the $24.5 million general fund. According to the proposed budget, the almost $3.8 million in reserves is about 15.3 percent of the 24.5 million general fund. Bruchey said taking about $230,000 from the reserve fund would not dramatically lower the amount in reserve.

Councilman J. Wallace McClure said he would go along with using reserve funds to pay for a $50,000 contribution to CRS. There is $50,000 in the proposed budget for emergency services, which is expected to go to CRS.

McClure said reserves should not be seen as a solution to the proposed tax increase.

"The reserves are a cushion for catastrophic events ... They're probably better off left untouched," he said.

Councilman William M. Breichner said he would support tapping into the reserves so long as the amount in reserves remained at least 15 percent of the general fund. This means Breichner would support taking about $77,000 from reserves.

Councilman Alfred W. Boyer said he would consider using money in the reserve account for one-time spending items, such as the money expected to go to CRS. But he did not know how much would be acceptable to take from the reserve fund.

"Dipping into your savings is not good fiscal policy ... But we're talking about a 4.6 cent tax increase," Boyer said.

Councilman Lewis C. Metzner said, "I'm leery of it because we haven't done it in my seven years on the council. ... Someone would need to convince me of it."

Councilwoman Susan Saum-Wicklein opposes using the reserve funds.

"Is that sound fiscal policy? No," she said.

The City Council is considering raising the real estate property tax, which is 69.2 cents per $100 of assessed value, by 4.6 cents to 73.8 cents per $100 of assessed value.

Reducing the tax increase from 4.6 to 3.6 cents would lower the tax bill $10 on a $100,000 home - from a $46 increase to $36.

Bruchey said he will bring up the issue of using some of the city's reserves during Tuesday's council meeting.

A final council vote on the tax rate is scheduled for May 22.

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