Form revised: December 6, 2011

 

 

FISCAL NOTE FOR NON-CAPITAL PROJECTS

 

Department:

Contact Person/Phone:

CBO Analyst/Phone:

The Seattle Public Library

Marilynne Gardner / 233-5109

Tim Morrison / 615-1336

Karl Stickel / 684-8085

 

Legislation Title:

AN ORDINANCE relating to regular property taxes; requesting that a special election be held concurrent with the August 7, 2012, general election for submission to the qualified electors of the City a proposition to lift the limit on regular property taxes under Chapter 84.55 RCW and authorize the City to levy additional taxes for up to seven years for the purpose of supporting, maintaining and improving core public library services; authorizing creation of a new subfund; ratifying and confirming certain prior acts; and providing for effective dates.

 

Summary of the Legislation:

The proposed ordinance would submit a $122,630,099 seven-year Library Levy (“Levy”) package to the voters of Seattle for their approval in August of 2012.  The proposed Levy would be raised under the provisions of RCW 84.55.050, which allows a city to obtain voter approval to exceed the “lid” on regular property taxes for any purposes.  Levy proceeds would be intended to support the following four categories of library services for the period January 2013-December 2019:

 

1)   Open hours and access - $26,860,000 (annual average - $3,840,000)

The Seattle Public Library (Library) will add back operating hours at branch libraries and bolster reference services to support patrons at branches and the Central Library. Funding will also be provided for operational functions that support open hours, such as security services, technology support, and maintenance. All libraries will have Sunday hours and two more libraries (Columbia and Northgate) will be open 7 days a week. The system will no longer need to impose a week-long closure each year.

 

2)    Collections - $17,320,000 (annual average - $2,470,000)

The variety and depth of the Library’s collection will be increased to better meet patron demand for materials in all formats.  The collections component of the Levy will also fund a significant increase in purchasing of downloadable materials such as e-books, and more copies of popular material in print, digital and other formats. 

 

3)    Technology - $10,590,000 (annual average - $1,510,000)

The Library will replace and upgrade computers and technology infrastructure that was purchased during the Libraries for All (LFA) capital program, providing users access to up-to-date technology tools and resources. Levy funding will also fund improvements to online services to ensure patrons can successfully find and use online material and exchange knowledge using the Library’s online platform.

 

4)    Maintenance

Regular maintenance of facilities - $10,680,000 (annual average - $1,530,000)

The Levy will provide additional support for regular maintenance to sustain the public’s investment in the Central Library and 26 branches that were constructed or remodeled as a result of the 1998 LFA bond measure.  Seattle’s libraries are among the most heavily used public buildings in the City and require additional resources as they age in order to preserve environments that are clean, safe and welcoming.

 

Major maintenance of facilities - $15,280,000 (annual average - $2,180,000)

The Levy will provide for sustained stewardship of library facilities. The Library’s capital improvement program (CIP) is largely funded by allocations from the City’s Real Estate Excise Tax (REET). When the original LFA capital program was approved, REET projections indicated there would be sufficient revenue to support the Library’s CIP once the buildings were completed. With the real estate market downturn, the Library’s CIP is at a historically low level - $820,000 per year.  The Library’s projected annual cost for major maintenance and building renewal, based upon an asset management plan, is $3,000,000.  This includes necessary maintenance for basic building components such as roofs, floors, finishes, HVAC and mechanical systems.  It does not include any funding for new or expanded library space. 

 

Additionally, Levy proceeds totaling $39,490,000 (annual average - $5,640,000) would be used to preserve, at 2012 levels, core Library services that would otherwise be lost due to the City’s continuing fiscal challenges. The City Budget Office currently projects a $40,000,000 General Fund shortfall in 2013. Based on this projection, the Library’s proportional share of 2013 cuts would amount to a $5,000,000 reduction to the Library’s 2013 baseline budget (2012 General Fund appropriation adjusted for inflation).  The $39,491,000 over seven years is the amount required to sustain the $5,000,000 in core services starting in 2013 that would otherwise be cut throughout the life of the Levy, assuming that operating costs increase annually by 4% due to inflation.

 

It is also anticipated that 1- 2% of Levy proceeds will be spent on administrative costs over the course of the 7-year Levy. This funding will be used to support implementation and accountability measures for Levy programs and annual reporting to the public on Levy outcomes.  Spending in this area for 2013 is estimated at $150,000.

 

An under-recovery rate of about 1% is also assumed in the revenue projections. 

 

Additional information about the services provided by the Levy is included in Attachment 1 to this fiscal note.

 

Background:  

The Library is one of Seattle’s most intensively used community resources.  In 2011 there were 6,700,000 in-person visits to Library facilities, an additional 7,600,000 visits to the Library web site, 11,600,000 items circulated, 1,500,000 computer sessions, and over 16,000 programs offered.  These services are more important during tough economic times as people increasingly turn to libraries for assistance for job searches, education, and free access to technology, learning resources and programming. 

 

Three factors have put these services at risk:

 

-          Budget reductions.  Since 2009 the Library’s operating budget has been reduced by 9% after adjusting for inflation.  Since 2009 the capital budget has been reduced by 50%.  These reductions have resulted in the loss of 190 open hours per week (the equivalent of the total weekly hours for four branches), a 13% reduction to the collections budget, and significant reductions to management and support services.

 

-          Increasing Cost Pressures.  The budget reductions come at a time when maintenance costs are increasing as buildings and technology provided by the LFA capital program age. Demand for digital and web-based resources and services is growing and patron usage remains high.

 

-          Future Reductions. Significant reductions in 2013 are anticipated and would seriously erode the current level of service provided by the Library.  Over the last three years, the Library has restructured its service approach and staffing to gain efficiencies and preserve public service as much as possible. Further reductions would have a severe impact on services for the public.

 

The proposed Levy, the first of its kind for the Library and for the City, would help stabilize core operating and capital funding, restore high demand services lost in recent years, and ensure that Seattle residents have the ability to use first-rate library services to support education, personal growth and success in the global economy.

 

The following table shows the anticipated allocation of Levy dollars between maintaining existing programs and supporting restored/improved services above 2012 levels.

 

 

Projected Total Library Sources and Uses (inclusive of all fund sources)

 

2012

2013

2014

2015

2016

2017

2018

2019

Amounts in $1,000s

Adopted

Proj.

Proj.

Proj.

Proj.

Proj.

Proj.

Proj.

Sources

Voter Approved Tax Measure

      17,000

      17,170

        17,342

      17,515

      17,690

      17,867

      18,046

Under-collection (1% of Annual Levy Amount)

 

 (170)

 (172)

 (173)

 (175)

 (177)

 (179)

 (180)

Misc Revenue

   2,479

2,479

2,479

2,479

2,479

2,479

2,479

2,479

Baseline GF/REET Support - CIP

       820

820

820

820

820

820

820

820

Baseline GF Support - Operations

  49,325

46,298

48,150

50,075

52,079

54,162

56,328

58,581

Total Sources

52,624 

      66,427

      68,447

        70,543

      72,717

      74,974

      77,316

      79,746

Uses

Current Base - Operations

 (51,804)

 (53,744)

 (55,762)

 (57,860)

 (60,043)

 (62,312)

 (64,673)

 (67,128)

Current Base - CIP

 (820)

 (853)

 (887)

 (922)

 (959)

 (998)

 (1,038)

 (1,079)

Levy – Additional Annual Spending

 

 (9,996)

 (10,527)

 (11,081)

 (11,656)

 (12,254)

 (12,876)

 (13,523)

Levy -  (Carry Forward)/Use of Balance

 (1,834)

 (1,271)

 (680)

 (60)

           590

        1,271

        1,984

Total Uses

(52,624)

(66,427)

(68,447)

(70,543)

(72,717)

(74,974)

(77,316)

(79,746)

GENERAL FUND SAVINGS

5,000

5,200

5,408

5,624

5,849

6,083

6,327

CUMULATIVE GF SAVINGS

5,000

10,200

15,608

21,232

27,082

33,165

39,491

Levy - Support for Base

      5,000

         5,200

          5,408

        5,624

        5,849

        6,083

        6,327

 

The Library Board has exclusive control of the finances of the Library under RCW Chapter 27:12.210 and sole authority to expend the Library Fund under Article XII of the Seattle City Charter. In connection with this fiduciary responsibility and the City’s annual budget process, the Library Board shall annually review the allocation of Levy funding to determine the funding allocations that will support, maintain and improve the Library Services identified in Section 5 of the ordinance.  

 

 

___      This legislation does not have any financial implications.

 

_X_     This legislation has financial implications.

 

 

Estimated Appropriations: 

 

Year

Fund Name and Number

Department

Budget Control Level*

Estimated

Appropriation

2013

Library Levy Fund #tbd

SPL

 

14,995,683

2014

Library Levy Fund #tbd

SPL

 

15,727,471

2015

Library Levy Fund #tbd

SPL

 

16,488,530

2016

Library Levy Fund #tbd

SPL

 

17,280,031

2017

Library Levy Fund #tbd

SPL

 

18,103,192

2018

Library Levy Fund #tbd

SPL

 

18,959,280

2019

Library Levy Fund #tbd

SPL

 

19,849,611

 

TOTAL

 

 

121,403,798

*Library funds are appropriated at the department level.

 

Appropriations Notes: 

Revenue collected from the Levy will be deposited to a Library Levy Fund created for this purpose.  Expenses for CIP projects will be charged directly to the Levy Fund.  There will be a yearly operating transfer from the Levy Fund to the Library Operating Fund (#10410) for all other Levy-related expenses.  The appropriation authority for this spending will be included in the Library’s adopted budget. 

 

Anticipated Revenue/Reimbursement Resulting from this Legislation:

Year

Fund Name and Number

Department

Revenue Source

Anticipated Revenue

2013

Library Levy Fund #tbd

SPL

Levy Proceeds

16,830,000

2014

Library Levy Fund #tbd

SPL

Levy Proceeds

16,998,300

2015

Library Levy Fund #tbd

SPL

Levy Proceeds

17,168,283

2016

Library Levy Fund #tbd

SPL

Levy Proceeds

17,339,966

2017

Library Levy Fund #tbd

SPL

Levy Proceeds

17,513,365

2018

Library Levy Fund #tbd

SPL

Levy Proceeds

17,688,499

2019

Library Levy Fund #tbd

SPL

Levy Proceeds

17,865,384

 

TOTAL

 

 

$121,403,798

 

Revenue/Reimbursement Notes:

Levy proceeds are based on a $17,000,000 allocation in 2013 which grows by 1% in each subsequent year of the Levy.  The under-recovery rate is assumed to be 1%.  See Attachment 3 for more detail.

 

Anticipated revenue will exceed appropriations in the early years of the Levy, resulting in a relatively small amount of interest earnings.  The amount of earnings is estimated at less than $300,000 over the life of the Levy.  This amount is not included in the revenue or appropriation tables.  If interest earnings do accrue as expected, a decision on their use will be made in the latter years of the Levy.

 

 

Total Regular Positions Created, Modified, or Abrogated through this Legislation, Including FTE Impact: 

The Seattle Public Library operates its own personnel system, separate from the City of Seattle.  The Washington State Administrative Code and the City Charter grant the Library Board of Trustees exclusive control of Library expenditures for Library purposes.  The Library Board adopts an annual operation plan that includes authorized personnel.  Unlike other City departments, the Library does not submit its position list as part of the budget.  The following table shows position and FTE counts associated with Levy funding for additional services and is intended for information only. The positions shown are anticipated to be in place throughout the 7-year life of the Levy.

 

Division

PT/FT

Positions

FTE

Public Services

26/12

38

29.3

Technical and Collections Services

0/3

        3

          3.0

Information Technology

0/5

5

5.0

Facilities

0/7

7

7.0

Security

0/2

2

2.0

Administrative Services

0/1

1

1.0

TOTAL

26/30

56

47.3

 

Position Notes:

Do positions sunset in the future? 

No

 

Other Implications: 

a)      Does the legislation have indirect financial implications, or long-term implications?

The Levy provides for the level of service described in Attachment 1.  Maintaining this level of service through the Levy assumes that General Fund support will grow according to the rate of inflation each year.  A reduction in General Fund or REET support below that shown in the table of Projected Library Revenue and Expenditures would likely result in a decrease in the level of service that the Library can provide.

 

Revenue at the end of this Levy will be approximately $2,000,000 less than annual Levy expenditures because levy revenues can only grow by 1% per year while spending is projected to increase by 4% per year due to inflation. Continuing the level of service established by the Levy beyond 2019 will require maintaining funding, either from renewal of the Levy at approximately the current level (adjusted for inflation), from increasing General Subfund and REET support, or from some other funding mechanism.  The Library will work with the Mayor and City Council in the intervening years to identify the best way forward.

 

b)     What is the financial cost of not implementing the legislation?  

The cost will be diminished levels of library service and insufficient support for the investment made in facilities by the LFA program.  While trying to maintain open hours and collections services as much as possible in the face of recent budget reductions, the Library has significantly reduced and streamlined business and staffing structures across the organization. If further reductions are required (as projected in 2013), the only viable options are deeper cuts to direct services, including collections (the lifeblood of the library system), open hours, and possibly closing facilities. By way of example, absorbing a $5,000,000 reduction to the Library’s 2013 base General Fund budget would be equivalent to closing 5 of 26 branch libraries and reducing the current $5,000,000 collections budget by 50%, or eliminating services on Fridays at all libraries currently open on that day, including the Central Library, and reducing the current collections budget by 50%.  It would also likely result in the loss of approximately 32 FTE positions.

 

c)      Does this legislation affect any departments besides the originating department? 

Some branch libraries are co-located with parks and/or neighborhood service centers.  Some of these locations would see higher levels of activity due to increased library hours, but this is not expected to create any added costs.

 

d)     What are the possible alternatives to the legislation that could achieve the same or similar objectives?  

An increase in General Subfund and REET support would achieve the same objective, but given the current demands on those funding sources this is not a realistic alternative.

 

e)      Is a public hearing required for this legislation? 

Yes, a public hearing is scheduled for April 3, 2012 at 5:30 p.m. in City Council chambers.

 

f)       Is publication of notice with The Daily Journal of Commerce and/or The Seattle Times required for this legislation?

No

 

g)      Does this legislation affect a piece of property?

No

 

h)     Other Issues:

None.

 

List attachments to the fiscal note below:

Attachment 1: Description of 2012 and Levy-supported 2013 levels of service

Attachment 2: Levy Rate and Annual Cost to Homeowner

Attachment 3: Projected Expenditures and Revenues for 2012 Library Levy

Attachment 4: Letter from Marcellus Turner, City Librarian and Marie McCaffrey, President of the Library Board of Trustees to Mayor Michael McGinn and the Honorable Richard Conlin

 

Attachment 1

Description of 2012 and proposed Levy-supported 2013 levels of service

 

Service Area

2012 Key Service Levels

2013 Service Levels with Levy

Hours and related Services

Central Library open 7 days/62 hours per week

11 branch libraries open 7 days/60 hours per week

15 branch libraries open 5 days/35 hours per week

One-week system-wide closure

Reduced reference and programming services at 8 smallest branches

 

Central Library open 7 days/62 hours per week

13 branch libraries open 7 days/60 hours per week

13 branches open 6 days/39 hours per week (current hours plus Sundays)

System open 52 weeks a year

Restored reference and programming services at 8 smallest branches

Collections

$5,000,000 annual collections budget

One new copy purchased for every 6 holds placed.

Reserve limit: 25 items on hold per patron at any one time

$6,300,000 annual collections budget

One new copy purchased for every 5 holds placed

Reserve limit: 50 items on hold per patron at any one time

Increase e-content purchasing by 45%

Increase collection depth by an additional 5,000 titles each year

Technology

Inadequate funding to replace and upgrade 1,150 public computers, aging public copiers and printers

Infrastructure replacement budget underfunded by $200,000

Skeleton staffing adequate for only basic web site maintenance

Fully fund replacement and upgrade program for public computers, copiers and printers

Fully fund ongoing technology infrastructure upgrades

Sufficient staffing to significantly improve high demand web services

Facilities – Regular Maintenance

Staffing and budget resources are beginning to fall short of increased demand for maintenance and repair of aging, heavily used buildings

Sufficient staffing and budget resources to keep up with day-to-day building maintenance and ensure a clean, welcoming environment at all libraries

Facilities – Major Maintenance

Annual CIP budget of $820,000 (less than $2 per square foot)

Average annual CIP budget of $3,000,000 to provide full funding to maintain structures and buildings systems to maximize the useful life of all Library buildings

 

 

 

Attachment 2

Levy Rate and Annual Cost to Homeowner

 

Total Levy Amount: $122,630,099

 

Tax Year

Assessed Value

      Estimate

% Growth from Prior Year

 

 

 

Annual Levy Amount

Rate per $1,000 of Assessed Value

2013

115,629,000,000

 

$17,000,000

$0.147

2014

116,785,000,000

1.00%

$17,170,000

$0.147

2015

120,289,000,000

3.00%

$17,341,700

$0.144

2016

125,702,000,000

4.50%

$17,515,117

$0.139

2017

131,358,000,000

4.50%

$17,690,268

$0.135

2018

137,269,000,000

4.50%

$17,867,171

$0.130

2019

143,447,000,000

4.50%

$18,045,843

$0.126

 

 

Tax

Year

Annual Cost to Owner of Home Assessed at $300,000 in 2013

Annual Cost to Owner of Home Assessed at $350,000 in 20131

Annual Cost to Owner of Home Assessed at $400,000 in 2013

Annual Cost to Owner of Home Assessed at $450,000 in 2013

2013

$44.11

$51.46

$58.81

$66.16

2014

$43.67

$50.95

$58.22

$65.50

2015

$43.67

$50.96

$58.23

$65.51

2016

$43.69

$50.97

$58.25

$65.53

2017

$43.70

$50.99

$58.27

$65.55

2018

$43.72

$51.01

$58.29

$65.58

2019

$43.73

$51.03

$58.31

$65.60

1.  $350,000 is the approximate projected Median Residential Assessed Value for Seattle in 2013 (City estimate based on King County Assessor’s Office median residential assessed value series.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attachment 3

Projected Expenditures and Revenues for the 2012 Library Levy

 

LEVY EXPENDITURES:

 2013

 2014

 2015

 2016

 2017

 2018

 2019

 Total

Maintain 2012 Levels

5,000,000

5,200,000

5,408,000

5,624,320

5,849,293

6,083,265

6,326,595

39,491,472

Open Hours and Related Services

3,284,856

3,456,943

3,635,913

3,822,042

4,015,617

4,216,934

4,426,304

26,858,609

Collections

2,118,575

2,229,563

2,344,990

2,465,034

2,589,881

2,719,721

2,854,754

17,322,518

Technology

1,295,079

1,362,926

1,433,486

1,506,869

1,583,187

1,662,558

1,745,103

10,589,208

Facilities – Regular Maintenance

1,306,042

1,374,463

1,445,620

1,519,624

1,596,589

1,676,631

1,759,876

10,678,845

Facilities – Major Maintenance

1,840,898

1,947,334

2,058,028

2,173,149

2,292,875

2,417,390

2,546,885

15,276,558

Administration

150,233

156,243

162,493

168,992

175,752

182,782

190,093

1,186,588

TOTAL EXPENDITURES:

$14,995,683

$15,727,471

$16,488,530

$17,280,031

$18,103,192

$18,959,280

$19,849,611

$121,403,798

LEVY

ESTIMATED REVENUE:

 2013

 2014

 2015

 2016

 2017

 2018

 2019

 Total

Levy Legal Allocation

(per Ordinance)

17,000,000

17,170,000

17,341,700

17,515,117

17,690,268

17,867,171

18,045,843

122,630,099

Estimated property taxes

to be collected

16,830,000

16,998,300

17,168,283

17,339,966

17,513,365

17,688,499

17,865,384

121,403,798

Investment Earnings (Est)

 

0

 

0

0

0

0

0

0

0

TOTAL REVENUES:

$16,830,000

$16,998,300

$17,168,283

$17,339,966

$17,513,365

$17,688,499

$17,865,384

$121,403,798

 

 

 

 

 

 

 

 

 

 

 

 

March 6, 2012

 

 

Mayor Mike McGinn

City of Seattle

City Hall, 7th Floor

 

Honorable Richard Conlin

Chair, Special Committee on the Library Levy
Seattle City Council

City Hall, 2nd Floor

 

Dear Mayor McGinn and Councilmember Conlin:

 

We are pleased to transmit the attached proposed Council Bill requesting that a special election be held to authorize the City to levy additional taxes in order to support essential public library services.  The weakening of the national and local economy has affected City revenues and particularly impacted a department like the Library that relies almost entirely on General Fund and Real Estate Excise Tax revenues.  Although the Library has made every effort to operate more efficiently, cycles of budget cuts in recent years have resulted in significant reductions to library services and resources.

 

Libraries are critical community resources in tough economic times. People turn to libraries for educational materials and classes, job resources, Internet access, early learning and adult literacy support, homework help, citizenship workshops, tax preparation help, finance and business information, computer instruction and much more. Partnerships with other educational and human service agencies allow us to offer opportunities that meet the wide-ranging interests and needs of Seattle residents.

 

Seattle’s system of 26 branches and the Central Library are among the most heavily used public resources in the city.  Nearly 7 million people walk through our doors annually and another 7 million tap Library resources online. Libraries are highly valued neighborhood civic and social anchors.  Nearly 33,000 Seattle residents helped shape the Library’s strategic plan in 2010 and in early 2012 another 5,000 people provided input to the service priorities that are proposed for levy funding.

 

This legislation is the culmination of a two year review of Library funding and alternative funding sources that could be used to address the Library’s funding challenges.  We believe a Library levy will preserve essential services and effectively support the next generation of Library users.

 

We appreciate the involvement of you and your staff during this review process and your support for the proposed measure.

 

Sincerely,

 

 

 

Marcellus Turner                                 Marie McCaffrey

City Librarian                                      President, The Seattle Public Library Board of Trustees