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Funding & Budget Brief
Tax Laws for Libraries
- Property taxes are the primary funding source for public libraries in Washington. Kitsap Regional Library receives 95% of its revenues from local property taxes.
- By state law, library districts may collect up to 50 cents for every thousand dollars of assessed value within the district.
- Library Districts are also limited to annual budget increases of no more than 1% over the prior year’s levy amount, plus new construction (RCW 84.55, Initiative 747).
- KRL levy-rate history:
Prior to 2002, levy rate varied between $0.45 and $0.50 per thousand dollars of assessed value, and was capped at a 6% annual growth plus new construction.
2002 – $0.48 2003 – $0.46 2004 – $0.45
2005 – $0.42 2006 – $0.36 2007 – $0.30
Increasing Library Funding
- Kitsap Regional Library continues to be an excellent steward of the public funds invested in the Library.
- The Library provides services within its means. In KRL’s 55 year history, the Library has asked voters for additional levy funding only once, back in 1979 voters approved a levy lid lift to support Library services.
- Out of every property tax dollar levied in Kitsap County, 3.2 cents goes to Kitsap Regional Library to provide library services.
- Kitsap Rural Library District (doing business as Kitsap Regional Library), a junior taxing district, receives 95% of its funding through property taxes, consistent with RCW 84.52.063, which limits the amount of taxes levied on behalf of the Library District to fifty cents per thousand dollars of valuation. State law (RCW 84.55) limits the amount that the Library District can levy to no more than 1% over the prior year's levy, plus new construction. Additional information available from the Kitsap County Assessor and 2006 Statement of Assessments.
- KRL's current levy rate for taxes levied in 2007 is 30 cents per $1,000 of valuation. The proposed ballot measure would increase the levy to 48 cents per thousand dollars of assessed value in 2008.
- The City of Port Orchard contracts with KRL for its library services (the formula used, via Interlocal Agreement, is the city’s assessed valuation multiplied by KRL’s property tax rate). For 2007, this reflects a preliminary amount of $223,638.
- KRL’s yearly property tax revenue disbursements fluctuate considerably throughout the year, with April and October being the two months where over 60% of the year’s tax revenues are received by the Library District. This disbursement methodology requires that KRL either borrow money, or have a reserve sufficient to address intermittent cash shortfalls, especially during the first and fourth quarters of each fiscal year.
- To ensure sufficient funds are available during temporary revenue shortfalls throughout each fiscal year, the Library District has established a Revenue Stabilization Reserve Fund (to be maintained at 17% of Operating Expenditures).
- In the late 1990’s, KRL had built a General Fund Reserve, but with the specter of potential property tax initiatives that could limit KRL revenues, KRL maintained a very conservative budgeting philosophy.
- In 2002, a property tax limitation initiative was passed (RCW 84.55) limiting the amount that the Library District can levy to no more than 1% over the prior year's levy, plus new construction. More info
- Since 2001, KRL budget forecasts have shown that in order to maintain services, and keep pace with inflation, the Library District would have to request a levy lid-lift. In 2001, we anticipated the necessity of placing a levy lid-lift measure on the ballot in 2004 or 2005. The Library District has been able to “stretch” this timeline to 2007 (for additional revenues realized in fiscal year 2008), by tapping the unrestricted General Fund Reserve.
- Starting in 2006, in order to maintain existing services, while also keeping pace with inflationary and cost increases, KRL has had to draw-down the unrestricted General Fund Reserves by a total of approximately $2.3 million, in order to balance the 2006 and 2007 budgets.
- If the Library maintains existing services and keeps pace with inflation and growing demand, it is projected that the Library will have a $2.1 million deficit (20% funding shortfall) in 2008, unless a funding solution is identified and approved.
2006:
Library District’s Assessed Valuation: $22,729,481,614
Library District’s Property Tax Levy Rate: $0.36 per $1,000 of valuation
Library District’s Property Tax Revenue (collected): $8,194,956 (includes new construction)
City of Port Orchard contract: $213,654
2006 Total Property Tax Revenue: $8,432,635
2007:
Library District’s Assessed Valuation: $27,852,565,981
Library District’s Property Tax Levy Rate: $0.307651 per $1,000 of valuation
Library District’s Property Tax Revenue (max. allowable): $8,568,870
(includes new construction)
City of Port Orchard contract: $223,638
2007 Total Property Tax Revenue: $8,792,508
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