Boulder Library District
For what?
By Bob Yates
For what? By Bob Yates September 2022 Would you pay more in taxes? If I asked you that question, you’d probably ask back, for what? What will we be getting for the extra money out of my pocket? Maybe yes, maybe no. You’ll have to convince me. Boulder voters have been quite generous in approving new taxes through the years. We have voted to tax ourselves to buy Open Space, to maintain our parks and our streets, to build cultural and human services facilities, to take our share of responsibility for climate action, and to construct affordable housing so that people of all income levels can enjoy what we have here. Under Colorado law, no tax can be imposed, increased, or extended without a majority vote by those paying the tax. That’s as it should be. Boulder voters have rarely met a tax that they didn’t support, as long it pays for something they value. So, it will be interesting to see what Boulder voters will do with a proposed new library tax on this fall’s ballot. There’s no doubt that Boulder has a great library, with an award-winning main library downtown, a historic research facility on Pine Street, branches in southeast and southwest Boulder, and a new branch opening next year in North Boulder. Our library is more than a place to check out books. The downtown library hosts an art gallery that showcases local artists, a 200-seat theater for performances and presentations, and a maker space, where people of all ages can build and create. Library programs run the gamut, from adult literacy and English classes, to bee-keeping presentations (there are bee hives on the roof of the main library), to story hours for little kids and gaming for teens. Odds are, you can find something that interests you by browsing the library’s website. So, how much does this all cost us? About $9.2 million this year in operating costs for the library. City funding for the library has gradually increased over the years. After the financial setback caused by Covid that reduced all city budgets—including the library’s—city council is about to approve the 2023 municipal budget, which will not only restore the last of the Covid cuts, but will significantly increase the library’s funding compared to before the pandemic. Under the proposed 2023 budget, the library’s funding will grow by 21% next year, to $11.1 million, an almost $2 million bump over this year’s funding. By comparison, the police and fire budgets are going up 4% and 6%, respectively. Likewise, the library staffing will grow from 75 full-time equivalent employees this year (and 67 last year), to a budgeted 86 next year. Because the city suffered significant budget cuts for all city departments over the last couple of years due to the pandemic and corresponding economic downturn, it is perhaps more informative to compare the proposed 2023 budget to budget years prior to 2020. The pre-Covid operating budgets for the library were $8.7 million in 2019 and $7.7 million in 2016. So, the 2023 funding for the library represents 28% and 44% percent increases over those four- and seven-year periods, respectively (see the graph below). Most of the funding for the library comes from the city’s General Fund which, in turn, has sales tax as its biggest source. That’s one thing that’s cool about living in a town where nearly half of our sales tax is paid by people visiting from places like Arvada, Anaheim, and Amsterdam. Those visitors come and enjoy our town and leave their sales taxes behind, affording residents a better standard of living than most towns of 100,000 people. Our libraries are the beneficiaries of this. You might wonder: If we have great and growing library facilities and programs, funded in large part by visitors who stop through for a few hours or days, what’s not to like? Well, of course, there always could be more. In addition to the new North Boulder branch opening next year, some people would like to see another library branch built in Gunbarrel, which is partially in the city. Others would like to see expanded library hours or even more extensive programs. Still other folks don’t like the fact that the library has to compete for funding each year with other city services, like police and fire protection, street maintenance, and parks and open space operations. They want the library to be operated independent of the city, to leave the city’s management, and to have its own, separate funding source. So, those people—a group calling themselves the Library Champions—have placed on this fall’s ballot the question of whether voters want a new, independent “library district.” Such a new library district would primarily encompass the city limits, but would go a bit farther and pick up the parts of Gunbarrel that are in the county, as well as a few mountain communities, like Jamestown and Ward. In a way, such a library district, if approved by the voters, would be similar to other governmental taxing districts we’re familiar with, like the Boulder Valley School District (BVSD) or the Regional Transit District (RTD), with its own board, its own employees, and its own funding source. Of course, a new library district that seceded from the city would need to look to the city to obtain its buildings and books, which are currently owned by the city and which have been paid for by city taxpayers over the decades. How a new library district would get these assets, and how it would be governed, are details to be worked out after this fall’s vote. We won’t know before we have to vote whether the city will sell, lease, or give way the library buildings to the new library district. Any, it’s anyone’s guess how the new government entity will be governed. It’s a bit ready, shoot, aim. There are certainly arguments pro and con over whether we should form a new government entity to run what is now the city’s library. Some government districts—like BVSD—seem to run pretty efficiently; others—like RTD—not so well. But, my big concern is the how a new library district would be funded. By departing from the city, the new library district would no longer have access to the city’s $9 million in funding that comes primarily from sales tax. Under state law, a library district (there are about 50 of them in Colorado, a majority in rural areas) must get its funding from property taxes. And, there’s the rub: While the city runs a pretty darn good library for about $9 million a year (soon to be $11 million), a lot of which is paid by visitors’ sales taxes, a new library district will need a new funding source that comes exclusively from property taxes paid by local homeowners, renters, and businesses. But, rather than simply replacing the $9 million that the city now spends to run the library, the folks promoting a library district want to collect $19 million in annual property taxes to operate their new government entity, more than twice as much as the city now spends on the library. Some of this proposed property tax increase is caused by the simple inefficiency of breaking one thing into two, with all of the duplication of expenses to staff libraries and operate the buildings (the economies of scale are often why you see two entities merge). And the promoters of the proposed library property tax increase promise to build a Gunbarrel branch and to increase library services and programing. Is it worth it? That will be your call. You might wonder, what will this cost me? The proposed new library property tax would be 3.5 mills. By comparison, the city’s property tax mill levy is about 12 mills, as part of a total 86-mill property tax that includes funding for the school district and the county. So, an increase of 3.5 mills for a new library district would be about a 4 percent property tax increase for Boulder homeowners and businesses. For those within the new library district’s boundaries but outside the city limits, the tax increase would be more. If you own a home in Boulder, the math is pretty simple: For every $100,000 you think your property is worth (or the County Assessor thinks it’s worth), you will pay an incremental $23 each year under the proposed new library property tax. 1 If your home is worth $1 million (a bit below the median these days), that will mean an extra $230 in annual property taxes. For a $2 million home, you’d pay an extra $460 per year. And so on. For commercial property owners, the tax increase is four times this rate, due to state law. The proposed annual library property tax increase will be $92 for every $100,000 in commercial property value. Most small business tenants, like retail shops, restaurants, and hair salons, pay a portion of their rent in “triple net” payments, meaning the landlord just passes on to the tenant tax increases, dollar for dollar. So, those small businesses will have large increases in expenses, which they’ll presumably try pass on to customers in higher product or services charges. Other small businesses will decide to leave Boulder, or will simply close shop. For residential tenants who rent their house or apartment, the calculation is a bit more opaque. While the landlord’s annual property taxes will go up at the residential rate of $23 per $100,000 in value, it will be up to the landlord whether to pass some or all of this extra tax along to residential tenants. Some will and some might not, at least not right away. The amount of the rent increase for residential tenants will be determined in large part by what the market will bear. But, you can be sure that most landlords won’t want to operate their residential properties at a loss. If the new library property tax passes, what will happen to the $9 million (soon to be $11 million) that the city spends operating the library? Won’t that money be freed up if a library 1 Note: These tax calculations are net of the elimination of a very small city property tax that now goes towards funding the library and which likely will go away if the bigger library property tax is passed. district is formed? Can’t that tax money be returned to taxpayers, or applied to another worthy city service? Don’t count on a city refund or tax rate decrease (I have tried that, but got no support from my council colleagues or city staff). In a few years, after a new library district is up and running and collecting its own new property tax, the city will certainly be relieved of the financial burden of running the library. But, don’t expect to see an $11 millions “windfall” any time soon. A couple of reasons: First, even if a new library district and new library property tax are approved by the voters this fall, it will take the new government entity at least two or three years to get operational and start collecting its own property tax money. During this transition period, the city will effectively need to “loan” the operating expenses to the new library district (it remains to be seen how or whether this loan will be paid back). Second, while the $11 million budgeted for the library next year is a lot of money, it’s only about 2% of the city’s overall $514 million budget for 2023. As we just saw during the Covid downturn, as well as during economic recessions in 2008 and 2003, the city’s funding sources can shift pretty dramatically, sometimes by more than 10% per year. We don’t know what the economic conditions will be in 2025 or 2026 (or beyond), when the city’s library funding theoretically will be “freed up.” It may very well be that these dollars will be gobbled up covering the next economic downturn (there will be one; there always is). In short, there is false precision in saying that $11 million will simply drop into the city’s lap, someday. Some people would like the city council to declare today what a future “windfall” might be used for. We can’t do this. First, we don’t know how much will become available, when it will become available, or what other needs or shortfalls might exist when the library is on its own in a few years. Second, this city council cannot bind future city councils. We cannot legally control the new people who will be elected to city council in 2023, 2025, or thereafter. So, anything that current city council members casually say in 2022 would be non-binding and symbolic (and, misleading, in my opinion). While the proposed $19 million new library property tax is double what the city now spends on the library, most of the $9 million in taxes currently used to support the library are not going away. Taxpayers will still pay nearly all of that $9 million, which the city will simply rededicate to other purposes if and after the new library property tax is approved. Thus, the total amount of these two sets of tax contributions will go from $9 million today to about $28 million if the new library property tax is passed. The decision whether we should have a new library district and a new library property tax is yours, as it should be. If you think what is being promised is worth the incremental amount you would pay in property taxes, you may decide to vote in favor of the tax increase this fall. If you don’t think it’s worth the increase in property taxes, or you believe that there are other ways to improve funding for our city library without giving away the city’s books and buildings and paying a lot more, you might consider voting no. There are both ‘yes’ and ‘no’ campaigns out there, and you can read their arguments here and here, respectively. The proposed new library property tax will be only one of several tax proposals on this fall’s ballot, including a climate tax proposal from the city and transportation and infrastructure tax proposals from the county and the school district. In the October issue of the Boulder Bulletin, I’ll weigh in with my thoughts on each fall ballot measures. But, I’ll say now that I am opposed to this new library property tax. It’s too much for too little. If you’re like me, you’ll carefully consider what each tax proposal on the fall ballot will cost your household and whether what the community will get in return is worth it. Some I will support, others I will reject. Even though I’m a city elected official, I hold accountable the government entities that collect my taxes. If I don’t like how they’re spending my hard-earned money, I say so. You should too.
