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Economic Sustainability and Tax Diversion

Mid-Continent Public Library

Innovation Summary

Since the “great recession” libraries have found it increasingly difficult to sustain their revenues. To this end, Kansas City Public Library and Mid-Continent Public Library have been working together to determine the impact of tax diversion programs, like tax increment financing or tax abatement programs, on our revenues.

Innovation Leader: Steve Potter, Library Director, spotter@mymcpl.org

Problem Statement

Municipalities frequently claim that the only way to redevelop and to rejuvenate older parts of their towns is through tax incentives, abatements and other such programs. In Missouri, libraries are independent tax authorities. This means that libraries in Missouri are generally spared from the “library funding vs. public safety” debate. But when a municipality decides to divert taxes for economic development, library taxes are frequently in jeopardy of diversion. Because we rely on 90+ percent of our revenues from property taxes, there was a strong belief that this behavior was very damaging to the Kansas City Public Library and Mid-Continent Public Library.

Innovation

Steve Potter of Mid-Continent Public Library and Crosby Kemper of Kansas City Public Library worked closely with the Doolin Ward Consulting group to undertake two point in time studies to determine the impact of tax diversion programs on our respective library districts. We discovered that tax diversion programs have increased over time (by nearly $600M statewide). In terms of our library districts, MCPL was forgoing $1.9M of potential revenue (up from $1.7M) while KCPL was forgoing $3.1M of potential revenue (up from $2.9M). Armed with this information, both library districts could more effectively make the case to municipalities around tax diversion and the need to scrutinize these programs and their relationship to library funding.

Progress

Since undertaking these studies, KCPL and MCPL have been community leaders in the effort to be more strategic and become more critical of tax diversion programs in an attempt to effectively sustain our funding sources. KCPL has been able to effect real change in the Kansas City Economic Development Council and the structure of the Administrative TIF Commission. MCPL has been able to share this information with several city TIF commissions and has been able to recommend policy changes in some districts. In addition, the libraries have worked with Doolin Ward to draft changes to the Missouri Statutes around this matter. MCPL and KCPL have also worked with the Missouri Public Library Directors Association and the Show Me Institute to increase awareness of this issue throughout the state.