When county auditor Paul Neeper issued his audit of Harford's finances June 30, he predicted the county would have an $18 million budget surplus at the end of June 1991.

But new County Executive Eileen M. Rehrmann found when she took office Monday that all but $1.5 million of the $18 million in the county's surplus account had been spent by her predecessor, Habern W. Freeman, and the former County Council that ended its term in office this month.

What was the money spent on?

County records show that at the beginning of the 1990-1991 fiscal year, July 1, when the council approved the budget, council members voted to spend about $9.3 million of the surplus for 34 capital improvement projects to be paid for out of the county's available cash, known as the pay-as-you-go fund.

The council also spent about $3 million of the surplus on operating budget programs and reserved about $550,000 for late bills from the previous year, county records show.

Between July 1 through its last meeting Oct. 16, the council spent nearly $4 million more on five other pay-as-you-go projects, including $2.2 million for construction of the Fallston Middle School.

Among the 34 capital projects in the approved budget:

* $1.8 million for the county's share of building a Singer Road Elementary School.

* $500,000 to buy the site for the Route 543 Elementary School.

* $500,000 for solid waste central disposal.

* $350,000 to renovate the Bel Air library.

* $300,000 for purchasing agricultural preservation easements.

New projects approved between July 1 and Oct. 16 by the outgoing council included the following:

* $2.2 million for construction of the new Fallston Middle School.

* $500,00 for a building to be shared by the county's animal control department and the county Humane Society.

* $119,000 to furnish the Whiteford Library and buy books.

* $800,000 for a remedial environmental action investigation of the Old Bush Valley Landfill.

* $150,000 for the Thomas Run Park Adult Recreation Facility at Harford Community College.

At best, Rehrmann said, the county will break even at the end of the year. At worst, the county could face a deficit, because the county will likely take in about $2 million less than expected in income taxes and recordation taxes, which are charged when legal papers are filed with the clerk of the court.

But council President Jeffrey D. Wilson, one of two members returned to a council seat in the November election, defended the past council's actions and praised Freeman's fiscal responsibility. The seven-member council must approval all spending legislation, which by charter is initiated by the county executive's office.

"I don't think there really should have been any surprise about it," said Wilson. "Certainly there were some small ticket items and they add up, and few big ticket items -- including Fallston Middle School, which was on everyone's agenda. I think we did spend that money well."

In an effort to save money and end the year with a small surplus, Rehrmann imposed an immediate 30-day hiring and purchasing freeze. Rehrmann also called for cost-cutting measures and immediately scratched plans for a new county administration building.

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