Library FundingMarch 2013

The last library millage proposal took place 11/8/94.

Per Michigan state law, a district library’s operating tax may not exceed 4 mills.

Voters approved 2.7 mills in perpetuity, .3 mills for 20 years, and 1 mill for 20 years for repair and restoration of buildings and for restoring hours of operation.

Headlee Rollback Factor: a millage may be reduced by this factor.

It Takes A Millage

A millage rate is equal to $1.00 per $1000 of a property’s taxable value.

A millage may not be levied or renewed without voter approval.

Once approved by voters, a millage must be requested annually by a taxing authority.

Millage Facts

County assessment of properties is completed by 12/31 each year & notices mailed to property owners.

State determines a SEV-state equalized value of every property and applies factors to achieve a taxable value.

Through March 31st, property owners may challenge the SEV/Taxable values at a Board of Review hearing.

The millage rates for all collections (i.e. police, fire, schools, library) are applied to the taxable value to reach each property owner’s amount of tax due.

Determination of Property Values

Taxing Authority

Real Property

Tax

Personal Property

Tax

Total Levy Due

PLOS

City of Saginaw 1,692,084 375,144 2,067,228

Kochville Township

500,321 92,654 592,975

Zilwaukee 158,563 33,749 192,312

2012 Real & Personal Property Tax Levies(less tax captures)

The library’s largest source of revenue.

The library receives summer property tax revenue from the City of Saginaw, Kochville Township, and the City of Zilwaukee.

Property tax revenue currently includes real estate and personal property taxes.

The amount of tax revenue changes annually based upon the taxable value of all real and personal properties.

Property tax revenue may be reduced by non-payment and foreclosures.

Property Taxes

Total Taxable Value (TV) $100,000.00

$100,000 /1,000 = 100 x millage rate

Current Library Millage Rate: Maximum authorized (Originally was 4, reduced by Headlee to 3.99470)

3.99470 x 100 = Property Tax Revenue $399.47

Sample Property Tax Calculation

In 2012 payments from the City of Saginaw, Kochville, and City of Zilwaukee were reduced by the following:

Capturing Entity 2012DDA – Downtown Development Authorities $156,748NEZ – Neighborhood Tax Incentives $1374IFT – Industrial Facilities Tax Abatement $3904Brownfield TIF – Brownfield Tax Increment Financing Act $11,732Board of Review & Michigan Tax Tribunal Tax Adjustments $22,378

$196,136

The following michigan.gov link has detailed explanations of the various tax abatements and exemptions that an entity may use:

http://www.michigan.gov/taxes

Tax Revenue Reductions & Losses

Beginning in July the taxing authorities (Saginaw, Kochville, and Zilwaukee) will remit tax payments to the library as they are collected – usually on a weekly/bi-weekly basis.

By April of the following calendar year, the final summer payments have been made.

Delinquent local real estate taxes (not personal property taxes) are paid to the library by Saginaw County.

If these taxes remain unpaid, the property is foreclosed upon and the library is billed for the taxes that the County paid on the tax payer’s behalf.

In 2011-2012 the library reimbursed the County over $90,000 in charge backs for foreclosed properties.

Tax Payments & Distribution

Certain business properties located in renaissance zone areas are generally granted a tax exemption for a specified number of years.

State law once held libraries harmless for the loss of tax revenue and reimbursed for the loss.

Renaissance Zone property taxes were paid to libraries by the State until 2010 when the statute was amended to absolve the state of its responsibility to reimburse these entities while maintaining the tax credit.

State legislature opted to restore a percentage of reimbursements to schools and colleges. MLA (Michigan Library Association) is lobbying to have libraries included.

Renaissance Zones Payments – a.k.a. Payments in lieu of taxes (PILOT)

2008 2009 2010 2011 2012

TaxReceipts

3,360,920 3,296,057 3,154,139 2,899,603 2,779,230

Ren Zone/PILOT

204,990 239,707 232,566 188,998 0

SingleBusiness Tax / SBT

271,734 0 0 0 0

Recession Blues

Penal Fines – State Constitution of 1963 requires that all penalties collected for violations of state penal laws (criminal and civil) be used for the support of public libraries.

PLOS receives penal fine revenue from the City, Kochville, Zilwaukee, Saginaw Township, Tittabawassee Township, Buena Vista Township and others in our legal service area.

Annual distribution is made to library by the County

Treasurer based upon the library’s certified service population.

Between 2008-2012 penal fine payments to the library decreased 18% from $446,000 to $368,000

Penal Fines-Crime Does Pay

Public libraries may collect 50 cents per capita for their served population if minimum standards of operation are met (i.e. hours open to public, number of degreed librarians, collection standards, programming, etc…).

State budget cuts reduced the per capita amount to $.19in 2011 and $.22 in 2012.

Annual State Aid Report which measures minimum standards is prepared and submitted to Library of MI by February 1st.

State aid payments are made in the winter and the spring.

Between 2008 and 2012 state funding paid to the library dropped from $86637 to $56136 – a 35% decrease in funding.

http://www.michigan.gov/libraryofmichigan/

State Aid to Libraries

Total revenue from all sources in the past five fiscal periods:

Hard Facts In five years PLOS has lost over $1.7 million in operating revenue

(approximately 29% of pre-recession revenue). Tax abatements and exemptions will continue to increase as

Saginaw rallies to attract new businesses. The State plans to cut personal property tax revenue to libraries

over the next 24 months-a possible loss of up to $500,000 to PLOS.

Libraries are limited in the other kinds of revenue generators in which they may participate (investments, securities, etc…)

Realities & Challenges

2008 2009 2010 2011 2012

6,120,573 5,482,465 5,261,979 4,775,997 4,365,102

Prepared for the Public Libraries of Saginaw

March 2013by

Neica Dey