Evening star., 1952-10-02
Study Of Unique
Arlington Fiscal
Policies Planned
Short-Term Loon
Practice Is Unusual
In Nearby Areas

By Tom Burke

started soon as the result of al
near-criSis early this week when
it appeared that 1000 school en-
ployeS would go without pay.
Alfred E. Frisbie, county board
chairman. said he will ask the
boards Citizens Advisory Com
mittee on Fiscal Affairs to under
take the study. The problem will
be turned over to the committed
this Saturday at a board meeting.
The payless payday appeared
imminent last Saturday. The
County School Board announcedI
that operational funds had reached
such a low level that salary pay
ments for more than TOO teachers
and about 300 other school en-
ployes couldn't be met.
Bank Turned Down Loan.
The school board said it had
counted on a loan of $500, 900 from
the Old Dominion Bank to meet
the payroll due yesterday. The
bank turned down the loan, how
ever, on the grounds that three of
the school board members are in
volved in custer proceedings.
The crisis was avoided when
County Treasurer Colin C. Mac
Pherson announced Monday that
enough tax money had been COL
lected to enable transfer from
the general county fund to the
school fund to meet the payroll.
Tax collections hold the key to
Arlitlgton's fiscal problem.
Because taxes are not due until
December S it has heen routine
procedure for both the county and
school boards to borrow money
early in each fiscal year to pay
operational and maintenance costs.
S750,OO0 Borrowed. !
The county board has borrowed
$750,000 since the current fiscal
year began July /. This loan is
to be repaid by December Is. One
Official said it may be necessary to
borrow additional funds before tax
payments arrive in quantity.
A survey of fiscal policies fol-
lowed by other communities in the
Washington area shows that Ar
hngton stands virtually alone I'M
its system of large-scale, short
term borrowing.
In Montgomery and Prince
Georges counties in Maryland, the
practice has been to rely on a
cash reserve or surplus to meet
operational costs until tax pay
mentS are collected.
In Alexandria, Va, a semi
annual tax collection schedule isl
maintained. =. and only occasional
short-term borrowing is neceS-
sary.
Used to Be Routine.
"It used to be routine for US to
borrow money in anticipation OF
revenues but we have not used
that system since 1947," Alex K.
Hancock, Montgomery County di-
rector of finance, said.
The present Montgomery Coun-
ty budget includes an item of about
S500,0 900 which is carried as sur
plus. He said this fund would
also serve as contingency fund
if county revenues should sudden
ly dip below budgeted estimates.
Carl D. Mace. Prince Georges
County comptroller, said the cur
rent county budget includes cash
reserve of about $500,000, which
is used in the same manner as
the Montgomery surplus fund.
Advantages in Due Date.
The two Maryland counties have
one advantage over Arlington,
however, in that taxes are due
on the first day of the fiscal year.
The peak of tax collections in
Montgomery is in September and
in Prince Georges is late August
and September. In Arlington, tax
collections reach peak in late
November.
The twice yearly tax billing and
collecting ssytem in Alexandria
has been in effect since about
1928 under city ordinance.
E. G. Heatwole, city director of
finance. said taxes for the first
six months of the calendar year
are due May Is and for the Sec
ond half of the year, November
IS. Thus tax payments are re-
ceived near the midway mark
(November) of each fiscal year,
and again toward the end (May)
Of each fiscal year.
Necessary Sometimes.
Borrowing sometimes becomes
necessary early each spring, but
only in small amounts. Some bor-
rowing may be necessary each
September when heavy payments
on bonded Indebtedness must be
met. This may be offset by funds
from State aid programs which
usually are received in September,
he said.
Mr.. Frisbie and Mr.. Mcpherson
were both in agreement that
system of quarterly or semiannual
payment of taxes might be the
answer to the county's~ problem.
Edgar Smith, county director of
finance, said he also thinks this
may be the solution.
The three officials agreed that
establishment of surplus or cash
reserve of unbudgeted funds is
not good fiscal policy for meet
ing the problem.
In contrast to the procedure
followed in Maryland counties,
Mr.. FriSbie said he has always
favored budgeting to meet neces-
sary expenditures and not to Gre
ate a surplus.
Mr.. Smith said it is question:
able public policy to create that
type Of fund.-. and Mr.. Mac
Pherson said it wouldn't be good
business to have a million dollars
lying around for a nine month
period.
They all agreed that interest
payments on the short term loans
are avfrayroolv vnodeSf