Tax rate decreases
by BCPL Director Debbie Cosper
I am happy to report some good news: Boyd County residents will see a reduction this year in the amount of real and personal property tax they pay to support Boyd County Public Library.
Now, I know words like “tax rate” and “budget” usually make people’s eyes glaze over, but I think it’s important to explain to the taxpayers how their funds are being used to support their library.
Let’s start with the tax rate. Until last year, Boyd County Public Library had three options for setting the tax rate for library revenues (set by state statute): 1. Take a rate that would not bring in less than the previous year (called the Compensating Rate); 2. Take a 4 percent increase that would require a public hearing before adoption (the library has not taken this increase in over five years); or 3. Raise the rate beyond the 4 percent, which would require a ballot measure (this has not been done for decades, if at all, by the library).
In all cases, these rates are levied on the value of property in the county set by the PVA (Property Valuation Administrator), which the library has no control over. The Boyd County Sheriff’s office is responsible for collecting property tax for the library, and we pay them about 4 percent of the total collected.
The Library has taken the Compensating Rate for about five years now. Last year libraries were permitted to take rates less than the Compensating Rate. We opted to take the same rate as the previous year on real property and the Compensating Rate on personal property. This resulted in a 3 percent decrease in revenue for these two funding sources.
For the current fiscal year (that began July 1, 2012), Boyd County Public Library Board of Trustees and myself have set a budget that REDUCES the real property rate from 14.7 cents (per $100 of value) to 13.6 cents and the personal property rate from 20.0 cents to 13.91.
This, combined with all revenue resources, should bring in sufficient funds to cover the library’s 3.62 million operating budget (personnel, materials, utilities, supplies, service contracts, and other miscellaneous costs). However, the $709,500 budgeted for capital improvement projects will come from reserve funds (more on this later).
The library operates on reserve funds from the beginning of the fiscal year (July 1) through mid- to late-November when property taxes are collected and the funds are received. (Having five months of reserve is extremely important because it is very inefficient to borrow operating funds until revenue is collected.)
In addition to the start-of-year funds, the library has made a commitment to having a total of 12 months of operating expenses in reserve. This is just good fiscal management because there are several scenarios that could keep the library from receiving our revenue check in November – an an issue with the sherriff’s office, failure by the fiscal court to accept the library’s budget, the PVA failing to get property valuations in, just to name a few. This way the library could remain open, providing services and materials, while a solution was worked out.
Reserve funds are designated “restricted” or “unrestricted”; as the terms imply, they can be used for only as specifically designated (such as investments and reserved monthly expenses) or for fluctuating expenses (such as a 5% emergency fund, remaining fiscal year operating expenses, and outstanding capital outlay projects). Any remaining funds, after all of these items are taken into account, go into a building expansion and remodel fund — because one day our community is going to need a new main library.
Reserve funds fluctuate throughout the fiscal year depending on which side of November we are on, any remaining operating and capital expenses that are expected to be expended, and how much has been collected from the other revenue sources. Here’s what that looked like on July 1:
Cash and Investments: $5,358,357
Liabilities (outstanding bills, required payments, etc.) $173,500
Restricted (investments and annual reserve) $1,054,274
Emergency fund (5% of budgeted expenses) $0
Designated Expenses $3,551,000
Capital Outlay $579,583
Building Expansion & Remodel $0
Total liabilities and expenses $5,358,357
The December reserve funds will look much different. Provided we receive our revenue check in November and have taken in other revenue “Cash and Investments” will increase, “Restricted” will go to the equivalent of a year’s expense less capital outlay, “Emergency Fund” will go to 5% of the budget ($165,346), “Designated Expenses” will go down to what is budgeted for the remainder of the fiscal year, as will “Capital Outlay”, and any remaining funds will go into “Building Expansion & Remodel”.
Regardless of revenue and expenses fluctuation, “Total Liabilities and Expenses” cannot exceed “Cash and Investments” otherwise the library is borrowing money. I don’t want to do that, the board doesn’t want that to happen, and the taxpayers sure don’t want that to happen.
It’s challenging balancing all that staff would like to do for the community with what the community can afford. I am very happy that the library is able to allocate 25% of the budget to materials – more stuff to check out and use in more formats. The library only spends 45.5% of the budget on personnel expenses (salaries, benefits, continuing education) but still has a dedicated and informed staff. And we have remodeled the Main library, added a new location at Kyova Mall, and are in the early planning stages for remodeling Catlettsburg without having to borrow any additional funds.
On a personal note, I find the budget process fascinating and could go on and on. If you would like more information check out thebookplace.org for budgets, audits, financial reports, and balance sheets. Or give me a call at 606.329.0518, ext. 1110, and we can discuss it.