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Twin Town High (vol. 8) |
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The new library: Is it a white elephant?
Wednesday 24 January @ 18:39:19 |
 BY WIZARD MARKS
It's no secret that the Minneapolis Public Library is in very tough straits: 25 percent of staff laid off, three libraries closed and still not enough money to keep the remaining 12 libraries open for reasonable hours. This is the same MPL that was recently hailed as one of the most used library systems in the country.
 MPL has both popular library and research library functions, holding 1.15 million volumes with an average of 1.6 copies/volume. MPL also has extensive online databases and depth in its primary research materials. By contrast, Hennepin County Library has some 300,000 volumes with an average of 6 copies/volume. HCL is termed a popular library, having a limited research collection.
Up until the late 1950s, MPL was a much larger system, having four or five more branches than it currently operates, in addition to the hospital and factory substations, and the branches in public schools. These were put in place by Gratia Countryman, the renowned director of MPL from 1904 to 1936, who hewed to the Carnegie mission of spreading literacy to all. In the '50s and '60s, MPL shrank to the 15 branches it has now.
Beginning in the mid-1960s, there was a massive movement of people out of Minneapolis to the suburbs. However, since Hennepin County's library system was still in its early days, the county budgeted money to support MPL because county residents used MPL, particularly the Central Library, extensively. The original annual support was $1-plus million, but it decreased in subsequent years. In the late '60s, Hennepin County tried to force a merger that resulted in many years of controversy. Hennepin County decided to continue some support to MPL for two or three more years. Between 1970 and 1975, county support was replaced by MELSA, a federation of 102 libraries in the seven-county metro area. MELSA's federal and state funding supports library usage for 52 percent of all Minnesotans.
Between 1965 and 1979, the Library began to build regional libraries and attempted to close some of the smaller community libraries, but the plan raised such a stink among users that the Library Board backed off. Washburn Regional branch was built during this time, as was North Regional, but the proposed South Regional was never built. In the early 1980s, South Regional was again proposed, with a plan to close Hosmer and Roosevelt, but library users again rejected it and the board again backed off.
By 1980, the library was getting some 25 percent of its revenue through Local Government Aid (LGA).
Following the disappearing money
In 1994, after the 1991-92 downswing, things were looking up for Minneapolis. Business was good, so property taxes were filling the coffers at City Hall. Commissioner Carol Becker, now on the Board of Estimates and Taxation (BET) and then-policy analyst for Mayor Sharon Sayles Belton, explains the factors leading up to the situation in existence when R.T. Rybak was elected: "Even though the economy was booming, the tax base was shrinking. This has to do with hydraulic tax functions. Taxes are like a balloon, you squeeze it here, and it pops out over there."
Both commercial and industrial and rental property owners were complaining about their taxes. Commercial properties kicked in 56 percent of the tax base, rental apartments kicked in 12 percent and homeowners supplied the remaining 32 percent of the tax base. If the Legislature decided to give both of them a break, then homeowners would foot the bill.
In 1997, the real estate bubble was cooking right along. Residential property was now worth more and gaining every day. But business was not going up; it was flattening and then began to sink. The taxes were shifted onto homeowners. By 2001, the economy was experiencing a slowdown.
Business and industry were downsizing; jobs were lost. As a consequence, commercial buildings downtown, whose taxes were based on the usage of each building, were no longer able to charge the same rents and commercial space was going begging. The value of the properties was appreciably lower. For example, the IDS once put in $10.5 million per year into the tax base. It shrank to current levels of $4.4 million. Count the amount of commercial and industrial property and you will see the tax base disappear.
"The three things that create a decline in the tax base for the city are the hydraulic effect of taxes, the tax rates and the real estate bubble," says Becker. "Homeowners are getting hammered, but the amount of money coming into the city is shrinking." The Legislature had shifted the tax burden to the present formula of commercial and industrial property, delivering only 35 percent of the real estate tax base, with rental property contributing 10 percent and homeowners responsible for a whopping 55 percent. Homeowners were getting hit three ways: The real estate bubble had caused the value of their homes to more than double, the limited market value break was being reduced by increments to zero, and homeowners were now responsible for 23 percent more of the tax base than they had been.
Then the Legislature and the governor decided to cut the Local Government Aid (LGA) drastically. LGA is supposed to buy down the cost to homeowners for a fully functioning city. "This was the Republican[s] get Minneapolis deal," says Becker. The LGA cuts have cost Minneapolis tens of millions every year since Pawlenty has been in office. "The city adopts its budget before the state says how much the city will get in LGA," says Becker. "At that point, everything went really bad financially."
Minneapolis had already gotten itself in hot water financially. It had bonded itself close to the limit of its ability to stay in the black. The three bonding annalists (Standard and Poor, Moody, and Fitch Ratings) did not change the rating, but one house did attach a "negative outlook" addendum, looking for specific improvements. A bond rating is similar to a credit rating for individuals; ratings are subjective since each bonding house emphasizes different criteria. When the city wants to issue bonds, the interest rate is lower when the city has an AAA rating. Minneapolis has had an AAA rating since the 1960s. Historically the state and the city have outperformed the national economy.
When the city wants to fund a project like $140 million for a new library, having an AAA rating makes it much easier to do. At the same time, the LGA drop affected the library's ability to function, since 25 percent of its budget is LGA funding.
In all the hoopla preceding the 2000 election where voters passed the referendum for the library, only one tiny voice, Commissioner Wally Swan of the Board of Estimates and Taxation, was cautioning against the expenditure. No one heard him. The referendum for a new library passed.
At the time of the election, of course, we did not know that Pawlenty would cut LGA as a way to thumb his nose at Minneapolis. (LGA was cut statewide, but those cuts have been restored, for the most part, to small cities throughout the state.)
The combination of factors put Mayor Rybak in a considerable bind. He was looking for money in every nook and cranny. There was no way to "fix" it; there were very few revenue options.
In sum, when Fraser was mayor, he used LGA to nurture his family-centered agenda. He would give money to the Park Board, the Library, or other entities to create programs. When Sayles Belton was mayor, she took the position that LGA was to be shared out among the various departments, the parks and the libraries. Good times brought money to share, bad times brought belt tightening. R.T. Rybak looks at LGA as a source of money for his questionable initiatives.
The mayoral and city council solution
In his first year of office, Rybak capped the percentage of a tax increase to 8 percent a year. In effect, he went around the City Charter (the city's constitution) by imposing the cap. It hamstrung both the Library and the Park Board from being able to raise the mill rate that the City Charter empowers them to do for managing the functions of both boards. Rybak also put the cost of the new library under the 8 percent tax rise cap, further squeezing the library.
At the December meeting of the Board of Estimates and Taxation, a motion was made to pull the library referendum out from under the cap. The vote was 4-3 against the motion, with Rybak, City Council President Barb Johnson, City Council Member Paul Ostrow (Chair of the Ways and Means Committee on the Council) and BET Commissioner Jill Schwimmer voting against. The mayor and City Council have overridden the system of checks and balances described in the City Charter. When that happens, everything goes to hell.
This speaks to the values of the mayor and City Council. Both have lined up with the last Republican state auditor, Pat Awada, who, in 2003, reclassified libraries as non-essential services. At the same time as Rybak was denying funding for libraries, he also budgeted $7.5 million for advertising for the Convention Center and $100,000 for an education aide for his office even though he can only impact education indirectly through the bully pulpit. One hundred thousand dollars would have kept Webber Park Library open.
What happens next
There are two possible ways, at present, to bail out Minneapolis Public Library from the predicament created by the various forces. The first is for the Legislature to create space in the state budget to give money directly to the MPL. If the state were just to reinstate LGA, there is no guarantee that the Library would ever receive it. The mayor has already said that any operating money the Library receives would be deducted from the inadequate LGA funds the Library is presently getting.
Hennepin County Commissioner Peter McLaughlin has created a committee to study the MPL's situation. He has already said that a merger is on the table. A merger would spread the cost of operating MPL over all of Hennepin County. It would be difficult to arrange for three reasons: Hennepin County Library is a department of the county, but MPL is a separate entity with a board of directors; HCL is a popular library, while MPL is both a research and popular library with the research function servicing the whole state, but particularly the Twin Cities; and the cultures of HCL and MPL are vastly different.
A merger would presumably mean that an enlarged HCL would still be a department of Hennepin County with 41 branches rather than the 26 it has now, under the leadership of HCL Director Amy Ryan—MPL would lose its independent board. The mission of HCL is very much like the mission of MPL so that, in theory, the research function of MPL would be protected and funded. (Amy Ryan, an MPL management employee for many years, is fully aware of the importance of the research mission of MPL and agrees that it is a jewel in the crown, so to speak.) However, the cultural differences would be a huge stumbling block; it would not be an easy or comfortable merger.
There is nothing to be gained by Hennepin County in a merger; MPL can only present itself as financially unequal in the event of a merger. That makes the Hennepin County Commissioners queasy about the proposition. The cost for open libraries, all of them, would be more or less the same either way. The transition would be a nightmare, as such transitions are.
There are two things to mention that are important to the issue. The first is that the scare tactic used by Rybak (that taxpayers have to choose between cops and books) is malarkey. There is more elasticity in the city budget than that. New initiatives like funding trees and old initiatives like funding Convention Center advertising constitute fat in the budget that could have been used to keep libraries open.
Second, while the library referendum may have been the straw that broke the camel's back, the overuse of tax increment financing (TIF) was the budget-busting culprit. TIF, designed to redevelop land in blighted areas where the land would otherwise not produce taxes, was extended to redeveloping the northeast corner of 50th and France—an area that did not need public assistance to be redeveloped. ||
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