California Reading and Literacy Improvement and
Public Library Construction and Renovation Bond Act of 2000
SB 3 (Chapter 726, Statutes of 1999) Rainey
Background
For the most part, cities, counties, and special districts pay the costs of operating and building local libraries. These libraries do receive some money from the state and federal government for library operations. For example, in 1999-00 local libraries throughout the state are receiving a total of $90 million from the state and federal governments for various operating costs. (This represents about 10 percent of the statewide operating costs for public libraries.)
Also, in 1988 state voters approved Proposition 85--a $75 million general obligation bond measure for grants to local agencies for library facilities (new, expanded, or renovated buildings). Local agencies were required to pay 35 percent of the cost of any project in order to receive a state grant. This program resulted in 24 local projects receiving state grants ranging from around $300,000 to $10 million. A total of about $3 million of the $75 million is currently available for additional projects.
Proposal
This proposition allows the state to sell $350 million of general obligation bonds for local library facilities. The state would use these bond funds to provide grants to local governments to: (1) construct new libraries, (2) expand or renovate existing libraries, and (3) provide related furnishings and equipment. This grant program would be similar to the 1988 program. For example, local agencies would again have to pay 35 percent of the project cost.
Bonds. General obligation bonds are backed by the state, meaning the state is required to pay the principal and interest costs on these bonds. State General Fund revenues would be used to pay these costs. These revenues come primarily from state personal and corporate income taxes and the sales tax.
Grant Program. Under the program, local agencies would apply to the state for grants of between $50,000 and $20 million. As noted above, the grants could be used either to add new library space or renovate existing space. These funds could not be used for (1) books and other library materials, (2) certain administrative costs of the project, (3) interest costs or other charges for financing the project, or (4) ongoing operating costs of the new or renovated facility.
The proposition provides for a six-member state board to adopt policies for the program and decide which local agencies would receive grants. In reviewing local applications, the board must consider factors such as (1) the relative needs of urban and rural areas, (2) library services available to the local residents, and (3) the financial ability of local agencies to operate library facilities.
The proposition also provides for certain priorities for the grant monies. For instance, in considering applications for a new library, the state must give first priority to so called "joint use" libraries. These are libraries that serve both the community and a particular school district (or districts). In addition, for renovation projects, the state must give first priority to projects in areas where public schools have inadequate facilities to support access to computers and other educational technology.
Fiscal Effect
Bond Costs. For these bonds, the state would make principal and interest payments from the state's General Fund over a period of about 25 years. If the bonds are sold at an interest rate of 5.5 percent (the current rate for this type of bond), the cost would be about $600 million to pay off both the principal ($350 million) and interest ($250 million). The average payment would be about $24 million per year.
Local Cost to Match State Funds. As mentioned above, in order to receive a state grant a local agency must provide 35 percent of the project cost. Thus, on a statewide basis local agencies would need to spend $190 million. The cost would vary by local agency depending on the cost of their specific project.
Costs to Operate New Library Facilities. Local agencies that build new or expand existing libraries would incur additional operating costs. This proposition would probably result in a significant expansion of facilities throughout the state. Once these projects are completed, local agencies would incur additional operating costs (statewide) ranging from several million dollars to possibly over $10 million annually.