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General Assembly reserve fund still showing a surplus

The account, which critics call a "slush fund," has fallen lately, to one lawmaker's approval.

HARRISBURG - The General Assembly's reserve account, dubbed a "slush fund" by some legislative critics, has been reduced but remains robust.

According to an audit of legislative finances released Tuesday, the reserve fund ended fiscal 2010 on June 30 with a $188 million surplus, down $13 million, or 6 percent, from a year earlier, said State Rep. Josh Shapiro (D., Montgomery).

He chairs the bipartisan Legislative Audit Advisory Commission, which hires accountants to do the annual audit. Shapiro noted, approvingly, that the size of the reserve fund has been gradually dropping, from $230 million two years ago to $201 million last year, and now to $188 million.

The reserve fund has been defended by legislative leaders as necessary for keeping themselves and their staff on the payroll if a state budget isn't ready by the annual deadline of July 1. That happened in 2009, when the new state budget was more than 100 days late.

But some General Assembly critics think a kitty of $200 million or so is too large, especially when legislators will need to find ways to cut state spending. A deficit of at least $3 billion is being forecast for the fiscal year that starts July 1, and many agencies are facing budget cuts.

"We are in extraordinary fiscal times in Pennsylvania,'' Shapiro said. "We need to find every dollar in state government to save.''

A year ago, he noted, the audit commission had recommended drastically reducing or even eliminating the reserve fund, but that has not happened. Without some amount of reserve, legislative leaders fear that whoever is governor would have an edge in budget deliberations, because legislators won't have their own independent budget expertise.

Sen. Pat Browne (R., Lehigh), another audit panel member, said he thinks the legislature should maintain a three-month reserve in case of a budget stalemate. At about $40 million per month in legislative spending, he said, that would necessitate a reserve fund of $120 million. He said that amount is "based on history," when there have been cases of a budget being two or three months late.

Shapiro said he could agree to completely eliminating the surplus, but if that is done, some emergency spending authority should be given to the House speaker and the Senate president pro tem in case of a budget stalemate that goes beyond July 1.

The audit panel also said Tuesday that there was a slight reduction in funds spent by the state House, Senate, and legislative agencies in fiscal 2009-10. A total of $318 million went for staff salaries and benefits, paper, printing, and other office expenses; that was down from $327 million spent in fiscal 2008-09. The annual spending has been even higher than that in the past.

The complete audit report will be available in a couple of days on a House Web site: