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Library cash crisis looming: Officials mull deep cuts, branch closings to balance books

December 12, 2005

After long delays, the city's Central Library expansion should finally be finished by 2008. But to heat the building and keep its lights on, the Indianapolis-Marion County Public Library may have to shutter half a dozen of its 22 branches.

IMCPL officials say the system faces dire financial woes. They project a $1 million shortfall in next year's $36 million budget, and even bigger problems after that. By 2008, IMCPL expects to be short $6.3 million a year, or about a sixth of its budget.

Library officials say they've already cut operations to the bone, slashing $2 million in annual spending since 2003. Without more money, they say, IMCPL will have no choice but to reduce service in ways that patrons, who log 5 million visits a year, are sure to notice.

"We as a community are making decisions about where we can find tax money to do certain things," said library board President Louis Mahern. "The decision has been made that we can afford a football stadium. Now the question is, what decision will we make for a library system that will draw three times as many people as the Colts in a single season?"

City-County Council members say they're sympathetic to the library's plight, but aren't willing to raise property taxes to bail it out.

"As far as a tax increase, if anybody needs it right now, it's our police and fire," said Democrat Ron Gibson, chairman of the council's Municipal Corporations Committee. "Bottom line, there's a lot of tough love for what the library does. They're very much needed in our community. But as far as increasing taxes, we're a long way from there and we need to think of creative ways to avoid that."

Library funding

IMCPL's fiscal problems began in 2003, when the Indiana General Assembly capped property tax hikes for all libraries at 5 percent a year. That caused problems for libraries across the state, said Indiana Library Federation President Wendy Phillips.

It was an especially big blow to IMCPL and other systems that had not been using their full property tax levy. IMCPL CEO Linda Mielke said her system had deliberately left $3.4 million of its authorized levy unused, with the intention of tapping it in later years to cover the higher costs of staffing and operating the Central Library when it reopened.

But when the General Assembly imposed the cap, IMCPL's new base became $27.7 million, not the $31.1 million it had been anticipating. The library immediately began making cuts, Mahern said, reducing personnel, eliminating employee raises, outsourcing maintenance, and even mixing its own cleaning solvents.

"We've already laid off about 100 employees," reducing the total to 525, Mahern said. "It's pretty hard to reduce employment further without cutting some kind of services. It's pretty hard to operate a branch with one person."

In the two years after legislators imposed the cap, IMCPL's board was able to increase taxes, as long as those hikes didn't exceed 5 percent. But matters turned worse this spring, when the General Assembly passed legislation targeting Marion County. It made the City-County Council the final fiscal authority over IMCPL. And the council immediately rejected IMCPL's pleas for any property tax hike-even one beneath 5 percent-flat-lining its budget.

State Sen. Michael Young, R-Indianapolis, helped sponsor the legislation. He said the City-County Council should have the final say because it's in a position to prioritize local needs and its members are elected. Without the measure, municipal corporations like IMCPL, which has an appointed board, could raise taxes without regard for other needs.

"It's a good thing that bill passed, because had it not, we would have had another tax increase," said Young, R-Indianapolis. "At least we now have elected officials who make the decisions. Hopefully, it will make the library board a little better at looking at their budgets and planning."

Mahern said he understands IMCPL isn't the only agency under financial pressure. But he wants to warn officials now about the ramifications of their choices. To find $6.3 million in savings, IMCPL would have to consider drastic changes, including cutting hours and shutting branches. The cost of operating a branch ranges from $208,000 to $1.5 million annually.

"If we have to make substantial service cuts in 2007 or '08, I don't want anybody in the city of Indianapolis to say, 'Oh my God, we had no idea,'" he said. "We will make the cuts. We will operate within the budget we're permitted to fund. But understand there are consequences to this."

Central overages

But considering the Central Library expansion's many problems, local officials may be losing patience with IMCPL.

The project was supposed to cost $103 million and be complete next year, four years after ground breaking. However, in early 2004 library officials discovered widespread cracks in beams and pillars. The problems delayed construction for more than a year and triggered a torrent of litigation and finger-pointing among contractors and engineers.

IMCPL says overruns may top $45 million. Mahern is hopeful settlements from lawsuits eventually will cover those overruns. But there's no guarantee IMCPL will prevail in court. And even if it does, the library must keep paying construction contractors in the interim.

While the litigation plays out, IMCPL plans to pay for the additional costs by issuing bonds backed by property taxes. IMCPL still has the authority to raise property taxes for capital projects, but not to fund operations.

"I'm tired of hearing about more increases to this [Central Library] project," Councilor Gibson said. "It's been a running tally. We need to find out where we can scale back, still make it a worthwhile project, and keep the finances in line with the current means of payment."

"I don't blame Louis [Mahern] or Linda [Mielke]," Gibson added, since both assumed their posts last year. "I think they inherited this situation and have done a good job cleaning it up. But I think there's more cleaning up that needs to be done before we can even think about increasing taxes."

Mahern shot back that the Central Library expansion is way too far along to pull the plug now.

"We could just say we're going to throw a tarp up over this thing and forget about it," he said. "I think people would find that's a much more expensive proposition than building it and issuing the new bonds and seeking to recover in the court."

"If the council has other ideas as to how we should conduct ourselves and the business of the library, believe me, we're all ears," he added.

But Gibson said the council's mission is to set directives, not micromanage agency budgets. And other municipal corporations, such as the IndyGo bus service, have found ways to make do with tight fiscal constraints.

Councilor Scott Keller, a Republican who sits on Gibson's Municipal Corporations Committee, agreed.

"Having a second- or thirdclass library, when we've had one of the finest in the country, is not what I want," Keller said. "But you don't get something for nothing. If we're going to have first-class libraries, it's going to take some funding. And just kicking property taxes up again I don't see happening in any significant regard."

Since the council won't consider a tax hike, IMCPL is at an impasse, with substantial cuts in service the only apparent option. That's regrettable, said Indiana Library Foundation's Phillips.

"It would be a tremendous loss if they have to close branches," she said. "The community is going to suffer for this."
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