A rededication of several property taxes proposed by New Orleans Mayor LaToya Cantrell would cut funding for the public library system by around 40 percent, according to a Tuesday presentation before the City Council by Cantrell’s Chief Administrative Officer Gilbert Montaño.
The new proposal, which the Cantrell administration would like to put before voters in the Dec. 5 election, would not reduce or increase the tax rate for property owners. Instead, it would rededicate an existing package of property taxes that are set to expire at the end of 2021.
Aside from the library budget reduction, the biggest change from the rededication would be $4.5 million in new funding for the city’s economic development fund, which is receiving no money at all in property taxes this year. There would also be smaller funding increases for infrastructure and maintenance spending, as well as for housing and blight initiatives.
Montaño explained that the city is in dire financial straits, facing 20 percent budget reductions across city departments. He said that since voters approved a second property tax dedication for the library in 2015 (which doesn’t expire until 2040), the library is taking in more than it needs at a time when city departments are struggling to maintain basic services.
“Make no mistake about it, the bottom has dropped,” he said on Tuesday. “And now we need to manage our financial position.”
The City Council will consider a resolution on Thursday that will put the proposal to voters as a ballot initiative in December.
Gabriel Morley, the city’s top librarian, broke the news to library staff on a conference call on Tuesday morning.
“Unfortunately, today I have some bad news about the library,” he said. Morley said the library had planned on putting an existing property tax, or millage, on the ballot for renewal next year. “Instead, the city of New Orleans has decided to ask voters to rededicate our millage to other priorities in the city.”
Morley framed the outcome of Cantrell’s proposed ballot initiative as a “no-win situation for us.” He told staff that on the one hand, if voters approve the tax reallocation, the library will lose an estimated $7.5 million per year. But if voters don’t approve the proposal, he said, the millage will simply expire without any replacement, not even a reduced one. That would mean an even bigger cut of $10.5 million — roughly half of the money the library collected in property tax revenue last year.
“As you can see, the outcome of both of these scenarios is swift and significant for the library going forward,” he said. “We can’t really advocate for the millage because that’s a $7.5 million cut. And we can’t really advocate against it, because that would be a $10.5 million cut. So we’re in a tricky spot here on behalf of the city.”
There is still another year left on the current package of millages in this proposal. If voters rejected the proposal, the current tax dedication would remain in place for another year, meaning the library would maintain its funding for 2021. In that scenario, the city would have another year to pass a property tax proposal before the current taxes expire.
The City Council on Tuesday allowed for 45 minutes of public comment, which was filled front to back with residents and library staff arguing — via comments submitted through the City Council’s website — against the proposal and stressing the importance of the library to the city. Some spoke in broad terms about the importance of public libraries.
“Libraries are fundamental pieces of communities,” said a comment submitted by Morgan Hemingway. “There are children who eat there during the summer, children who come here after school instead of getting mixed up in trouble, and children for who this is their safe space between school ending and their parents getting off of work. For adults, this is a place they can seek employment or use the internet and resources to seek assistance and contact loved ones.”
Others wrote about the library in a more personal way.
“I would still be homeless and wouldn’t have the computer in front of me to write this on if not for the library and the services it provided me,” Nina Sibley’s comment said. “It’s shameful to think about cutting the library millage when so many people are out of work and facing eviction.
City Councilwoman Helena Moreno argued that the rededication made sense for two reasons: the city is facing budget shortfalls on a wide range of vital city services, and the library has had annual budget surpluses ever since voters approved the second property tax dedication for the library system in 2015.
“The positive part about dedicated millages is that the money goes to an important dedicated cause,” Moreno said. “The negative part is that once they are dedicated, even when there are great surpluses, the money ends up getting stuck in special funds, and it’s really hard for us to get those funds out. We have seen this in particular with the dedicated millages for the library.”
In his presentation, Montaño claimed that the library had spent, on average, 11 percent less than it collected in property taxes since the new tax went into effect in 2016. However, that average results from higher surpluses in 2016 and 2017. The figure was only 2.1 percent in 2018 and 3.2 percent in 2019.
He also said that the library had $11.6 million in reserve funding. But again, most of that accrued in the first two years that the new tax was being collected.
Over the last two years, the library has spent just over 97 percent of its collected property taxes, according to Montaño’s presentation.
Several times during Tuesday’s meeting, Montaño and council members framed the proposal as an overall decrease in taxes for residents.
“As we present it, it would actually mean a tax decrease,” Montaño said during his presentation.
Councilman Joe Giarrusso asked him to explain that to residents further.
“I think the first question people are going to have on their mind is, ‘if I’m not making money and if I might be evicted or if my assessment has gone up, why should I be in favor of this?’ And I think the notion that the tax rate goes down is a really important part of that calculus.”
Montaño went on to explain that the ballot initiative itself would not result in a decrease in the property tax rate. The proposal is for a rededication of existing taxes. The decrease results from different tax proposal the Cantrell administration is working on.
He said they will be asking the Board of Liquidation, which sets a special millage to pay off the city’s bond, to lower its millage, now set at about seven times the rate of the library millage. But the ballot measure on the table will not directly change that rate.
It’s unclear what will happen to the library system if the rededication is placed on the ballot by the City Council and approved by residents.
“So what do these cuts mean? Well at this point we don’t know the specifics.” Morley said on Tuesday’s conference call. “Clearly, the library will not be able to operate at its current level with a 40 to 50 percent budget cut.”
Montaño said there was no current plan to close any library. In his presentation, he pointed out that the library spends 75 percent of its funding on personnel costs. There are 223 people currently working for the library.