[BoulderCouncilHotline] Library Budget Reallocation

[Yates, Bob]

Council Colleagues:

This week, I will be on a self-funded trip to Boulder sister city Dushanbe, Tajikistan. So, I will miss our study session on Thursday, September 22.

One of the items scheduled to be discussed at Thursday's study session is what to do with the approximately $11 million in funds that the city spends to operate the library, should Boulder County Ballot Measure 6C pass. That ballot measure would create a new library district governmental entity and a new $19 million library property tax to fund it, thereby potentially freeing up for other city uses the $11 million that the city spends to operate the city library. Since I won't be in attendance at the study session on Thursday to discuss this matter, allow me to share my thoughts with you here:

  1.  Premature: I believe that it is premature to discuss on September 22 how the city might reallocate library funding, when none of us will know until November 8 whether Ballot Measure 6C will pass. I suppose it might be appropriate to have a conversation about reallocation later this year or sometime next year, if and after the ballot measure passes. I surmise that having this reallocation conversation now, before the election, is in response to a desire by the proponents of the ballot measure to have something to say to voters about the potentially freed-up library funds as they campaign in favor of Ballot Measure 6C over the coming weeks. But, I am not sure that this is an appropriate use of council or city staff resources at this time, given how uncertain it is whether and when these funds will become available.
  2.
  3.  Timing: As city staff says in their memo <https://boulder.novusagenda.com/agendaintranet/CoverSheet.aspx?ItemID=4849&MeetingID=754> to us, assuming that Ballot Measure 6C passes, "the soonest that budget dollars may be available for reallocation is the 2024 budget." Later in the memo, staff refers to this as the "most optimistic timeline for reallocation," and staff says that this could occur only if an intergovernmental agreement between the city, the county, and new library district can be negotiated quickly and the new district is ready to take over library operations by the end of 2023. Staff acknowledges that reallocation actually may not occur until 2025. And staff observes that, during any interim period, the city would likely need to make a "start-up" loan to the new district until the new district becomes self-sufficient. Terms of the repayment of such loan back to the city are yet to be determined, but would undoubtedly impact when the city truly would have funds available to reallocate to other purposes.
  4.
  5.  Uncertainty: Regardless of whether the money currently used to fund the city library's operations become available in 2024, 2025, or beyond, none of us knows today what the future revenues or expenses of the city will be. Nor do we know what economic conditions might exist two or three years from now which could affect the largest source of city revenues: Sales taxes. Funding of the library constitutes only 2% of the city's overall budget, with the largest source of that library funding being sales tax. As we saw during the pandemic and corresponding economic downturn, sales taxes can swing significantly in any given year. I would suggest that it would be false precision for us to say today, in September 2022, that we are confident that the city will have an "extra" $11 million to spend come 2024 or 2025.
  6.
  7.   Binding Future Councils: Based on city staff's memo, it sounds like it is theoretically possible that the city's funding of the library may become available for other uses as early as the 2024 city budget. Members of this council, who are now planning the 2023 city budget will (with the possible exception of Junie) also be the members of the council that will plan the 2024 budget, next autumn. So, I can see why this council might want to have a discussion sometime next year about reallocating the library funds for the 2024 city budget, if it becomes apparent that such funds actually will be available that year. But, of course, this council cannot bind the next council, which will be seated at the end of next year and which will decide the 2025 city budget. So, anything that this council says will be applicable only to the 2024 city budget, which may or may not include diverted funds from the library.

Best regards,

Bob
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