To the Council: Don’t Use Fund Balance for the Library!

Contributed by APT Editors
Monday, 04 April 2005
This letter was mailed to each member of the City Council on Apr 1, 2005, and presented at the Council meeting on Apr 4th to express the Association of Portsmouth Taxpayers (APT) concerns regarding the increasing new library budget.The APT has always supported, and continues to support a new library, but has grown increasingly reticent about the steps being taken to make the library a reality.

TheAPT voted at their February 16th meeting to oppose further bonding for the new library. At the March 30th APT meeting, taxpayers voted to oppose the excessive doubling of the taxpayer’s liability for the library, and to file this as testimony at the April 4 City Council meeting and as a letter to the editor in local newspapers. The public needs to be made aware of the outrageous mismanagement of the library financials. The library burden on taxpayers must be remedied to every extent possible, and steps must be taken to hold city officials accountable and protect taxpayers on future city projects.

With a $7,942,404 guaranteed maximum price for the entire construction project, submitted by North Branch Construction, and $300K in furnishings and equipment hidden in the capital improvement plan, the cost of the library to taxpayers has mushroomed to $8,242,404.

At the time residents voted for the library, it was to cost taxpayers $4MM, with $3MM to be raised through private contributions. When $7MM was bonded we were told it was in anticipation of raising an additional $3MM from private donations. The goal for private contributions has since been reduced first to $1.1MM and most recently to $500K. Assuming $500K can be obtained from private sources, the APT would like to know if this money would go towards reducing the overall cost, or would be used for additional ‘extras’.

The library is now costing citizens $4,242,404 more what was promised at the time the library was voted for by the citizens. Instead of costing taxpayers $4MM, we are currently looking at a taxpayer funded cost of $8,242,404. That is assuming the spending interests do not continue to sneak further costs into the equation.

APT notes that there are already sunk costs in the new library. The 1995 Gund Engineering Study cost the city approximately $600K. This is money already spent on the new library, and is additional to the current budgeted costs.

We propose that in the future, when taxpayers are asked to vote on a project, an estimated range is included in the ballot measure, including the average annual cost per household over the life of the bond. In addition, after projects are agreed upon, only the intended taxpayer liability be bonded, and only after receiving a fixed-cost bid. No demolition, land purchases, or other large expenditures or irreversible actions should be entered into until taxpayer liabilities are finalized.

But what to do about the $942,404 in excess library costs above the $7MM bond? The city clearly intends to push forward with this. City Manager Bohenko says he can use funds from the city “fund balance” so this increase will have no effect on taxpayers. Anyone who can add knows better. The fund balance represents taxes that have been paid and not spent, which in the opinion of APT, should have been returned to the taxpapers. This is taxpayers’ money and spending it on the library most certainly will increase future taxes from Portsmouth residents by the same amount as that taken from the fund balance. APT wonders whether this is a legitimate use of the fund balance, and urges the city council to not give approval for the use of these funds, a requirement before Mr. Bohenko can use them for the library.

Rather than simply expand the budget in response to increased cost projections for the library, APT advocates that the Library Committee evaluate ways to reduce costs to meet the original library cost projections. When a family builds a house or buys a car, the budget does not expand without end to fit their desires. The city should exercise the same level of fiscal responsibility regarding the library.

An estimated $1MM is budgeted to meet “LEEDS” certification process, a restrictive environmental certification. Given the budget problems faced by the library, APT recommends that serious consideration be given to dropping this from the project.

Mr. Bohenko has also proposed using proceeds from the sale of the current library building to alleiviate expenses. Unfortunately, the building’s value is reduced by historic preservation covenants our city officials have previously allowed to be placed on the existing library in return for federal funding. These covenants restrict changes to both the inside and outside of the existing library, making it unlikely that a private entity will be able to use the building economically. Likely, it will remain unsold, adding to the large inventory of buildings owned by the city.

The large number of buildings owned by the city are expensive to maintain, adding significant cost to the city’s Capital Improvement Plan, which is projected at $235 million over the next 6 years. Rather than sell excess city owned buildings, a number of buildings have been given away to special interest groups for one purpose or another. The new owners typically pay little or nothing in taxes to the city, while the new users of these buildings consume their share of city services, e.g. police, fire, etc. Our officials are now discussing a similar plan for the Lafayette School, a building located in a valuable downtown location. Many other city owned buildings remain virtually unused, requiring maintenance, but providing little or no discernable value to the taxpayers.

Taxpayers, not city officials or special interests, own city property. City properties that are not in use for citizens of our town or which have become expensive to maintain should be sold for private uses, with proceeds used to fund other, more useful projects to the people of Portsmouth.

Signed,

Neil Novello, Acting President

On Behalf of the Association of Portsmouth Taxpayers

Voted Upon and Approved by the Membership at the March 30, 2005 meeting.

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