HARRISBURG -- The size of the state Legislature's budget reserve account, which critics sometimes attack as a "slush fund," has declined slightly over the previous year, for the first time in years, a legislative audit panel said today.

The fund dropped from $242 million as of June 30, 2007 to $237 million in the 2007-08 budget year, which ended June 30.

There are still $37 million in financial obligations yet to be paid for the 2007-08 fiscal year, which left $200 million to carry over into the current 2008-09 fiscal year, said Rep. Joshua Shapiro, chairman of the Legislative Audit Advisory Commission.

He suggested transferring all but about $60 million of the legislative surplus to help erase the state's growing 2008-09 budget deficit, now estimated at $1.6 billion.

Senate Republican leaders have suggested transferring $75 million from the surplus to ease the deficit situation. But a move to transfer the money would have to be approved by the full Legislature, and in the past some legislators have been resistant.

Mr. Shapiro said that $60 million is what would be needed to keep the Legislature in business for about two months -- in case of a budget standoff that lasted into the fiscal 2009-10, which starts July 1. Some legislators see difficult budget negotiations ahead, given the growing deficit and the difficult steps that will be needed to erase it, such as spending cuts, layoffs or possibly tax increases.

Citizens groups who attacked the 2005 legislative pay raise (later rescinded) have also called on legislators to return to the state treasury most or all of the surplus, which they often brand as an unaccountable slush fund for legislators' pet projects or re-election purposes.

The idea of putting the legislative surplus back into the general fund hasn't been a serious issue until now, but the looming budget deficit, after several years of surpluses, is forcing legislators to look at all financial options.

The legislative budget surplus has been building annually for about 15 years. Those reserves are in addition to the regular General Assembly annual spending allotment of about $330 million. Anything not spent in a given year is shifted over to the reserves.

The legislative audit was done by Ernst & Young accountants, which was paid $180,000 for the work.

More details in tomorrow's Pittsburgh Post-Gazette.