HARRISBURG -- If state legislators need to find some funds to balance next year's budget, they could look to a $201 million kitty of their own.

An audit of legislative finances, released yesterday by the Legislative Audit Advisory Commission, said the General Assembly itself ended the previous fiscal year on June 30 with reserves of $201 million, with another $37 million set aside for previous financial commitments.

The audit also said that legislative leaders spent $327 million on staff, office expenses and other costs in fiscal 2008-09. State Rep. Joshua Shapiro, D-Montgomery, panel chairman, said legislators are trying to be "more transparent" in how they spend state funds on their own operation.

State Rep. Matt Smith, D-Mt. Lebanon, said he thinks the reserve fund is a bad idea, especially during tough economic times.

"The Legislature should not retain a bloated and overgrown surplus when so many Pennsylvanians are struggling to make ends meet," he said. "It is a classic illustration of the need for a clean break from the past leadership practices and out of touch policies in Harrisburg.

"I believe that this money can be put to much greater use in the hands on Pennsylvanians to create jobs, ensure affordable health care, and create sustainable homegrown energy. Pennsylvania faces real financial challenges. Families have tightened their belts and have gone without this holiday season. Now is the time for the General Assembly to do the same and eliminate these leadership surplus accounts."

Legislative leaders began accumulating a budget surplus for themselves in 1991, when they were engaged in a budget battle with then-Gov. Robert Casey. Before that, when each fiscal year ended June 30, legislators didn't have any money left in reserve to keep them in operation past July 1.

That year, the budget wasn't resolved until August. The Legislature's lack of funds beyond July 1 gave the governor an advantage in budget talks. So legislators began building up a surplus, so they could pay staff and office expenses if budget talks dragged on past the deadline.

That happened this year also, with the budget not being passed until Oct. 9, but legislators had sufficient funds to stay in operation. The audit shows the Legislature spent $84 million from its reserves to continue operations during the budget battle, when Gov. Ed Rendell eliminated its money that had been included in a stop-gap appropriation to keep other state services running.

The Legislature's nest egg has stayed fairly consistent, with $200 million in June 2008 and $205 million in June 2007.

The new audit, done by outside auditors Ernst & Young, also recommended that new "benchmarks" be developed to determine exactly what the proper level of reserve funds should be. The commission will meet in January to make such recommendations to the House and Senate, Mr. Shapiro said.

"It's critical that the public has confidence in knowing how their tax dollars are being spent and that there is no waste in state government," he said.

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