DATE: Saturday, September 6, 1997           TAG: 9709060371

SECTION: LOCAL                   PAGE: B3   EDITION: FINAL 

SOURCE: BY JOHN MURPHY, STAFF WRITER 

DATELINE: VIRGINIA BEACH                    LENGTH:   45 lines

BEACH ENDS FISCAL YEAR WITH $2.6 MILLION SURPLUS

It's not enough money to build an elementary school and falls far short of the library system's needs.

Still, the $2.6 million the city has after closing its books for last fiscal year isn't pocket change either.

The city actually finished the year with an extra $60.5 million, the finance department reported. It has targeted $57.9 million of that for a reserve fund that keeps the city looking strong on Wall Street and pays off for taxpayers in lower borrowing costs.

That left $2.6 million the City Council can spend.

The amount is down from a $20.5 million surplus at the end of the 1995-1996 fiscal year, but city officials said this year's smaller surplus actually reflects a city in better financial shape.

During 1995-1996, Beach officials explained, they were cautious with their spending because they knew the school district had sunk itself $12 million in the red the previous fiscal year.

So, as a safeguard, the city council that year didn't commit expected funds to capital improvement projects as they had before.

But this year, city officials had more confidence in the city's finances and allocated anticipated surplus funds for capital projects as part of the 1997-1998 budget year.

``The city had a good year. It reflects a stable economy,'' said Director of Finance Patricia Phillips.

``I hope the citizens realize that the city is in sound financial shape,'' Vice Mayor William D. Sessoms said. ``I'm delighted to have $2.6 million.''

The City Council will decide how the $2.6 million surplus will be spent.

At least half will probably be earmarked for city employees as a bonus for keeping costs down.

The other half should disappear quickly, as well.

The council committed to several big-ticket items during their meeting Tuesday: a new library in Princess Anne, reconstruction of W.T. Cooke Elementary and plans for a school modernization referendum in November 1998.

Sessoms expects the remaining funds will be spent on a modernization study of 11 of 18 elementary schools that would be repaired under the proposed referendum. Modernization studies have been done on the remaining seven schools. KEYWORDS: VIRGINIA BEACH BUDGET SURPLUS

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