COLLECTING TAXES – SCHOOL DISTRICT PUBLIC LIBRARIES AND SPECIAL LEGISLATIVE PUBLIC LIBRARY DISTRICTS

Even after a successful vote to establish and fund a public library as an independent entity, the library must depend on the municipality or the school district to collect its tax monies. The issues covering tax collections for public libraries are very complex and involve numerous laws, regulations, and opinions of the State Comptroller. The issues, laws, regulations and Comptroller’s opinions affecting School District Public Libraries and Special Legislative Public Library Districts also differ. The following is a general summary of tax collection issues for both types of libraries.

School District Public Libraries

Taxes to support a School District Public Library are usually collected by the school district. Though a library budget vote may take place in the spring, actual tax collections may not occur until several months later. New York State Laws and Regulations require school districts to provide sufficient funds for library operations until tax monies are received. Some do this by advancing monies from their general fund to the library. Others may issue Tax Anticipation Notes in the amount necessary for the library to operate until tax monies are collected. Though school districts are required to cover the interest on these Tax Anticipation Notes, many School District Public Libraries elect to pay all or a portion of interest associated with this borrowing. Procedures for funding library services before collection of taxes be discussed in advance with representatives from the school district.

It is also important to note that school districts are required to turn over to the School District Public Library the exact amount of tax dollars specified in the library budget proposition that was approved by voters. Tax collection shortfalls due to defaults by property owners should be covered by the taxing entity that has the ability to place a lien against properties; in most cases, this is a county or other municipal entity. However, in some cases, it could be the school district. A New York State Education Law Department letter issued in 1949 and Official Opinions of the New York State Comptroller support these positions.

School districts must pay the funds to the library upon request once the taxes have been collected. Normally this would entail a letter from the library to the school district treasurer asking that the funds be released. The school district must comply with the request when it has collected the taxes, and cannot send partial payments.

Special Legislative District Public Libraries

A municipality and/or a school district within the service area covered by the library will collect the taxes resulting from a public vote in support of a Special Legislative District Public Library. In some cases, taxes may be collected by multiple jurisdictions. The responsibility for collecting taxes for a Special Legislative District Public Library usually falls on a municipality. Here are a couple of examples:

Example A

Library A is chartered to serve an area that includes all or portions of several townships, two counties, and two school districts. The library’s taxes would most likely be collected by each of the two counties. The counties will each determine the assessed value of the property within the area served by the library district and apply an appropriate tax rate necessary to raise the amount of funds specified in the library budget vote. The counties will collect those taxes and pay them to the library. The timing of the library tax collections will likely coincide with the counties’ regular tax collections. In this case, the counties must set the funds aside in a separate account and pay them to the library upon request.

Example B

Library B is chartered to serve an area that is coterminous with two separate school districts. In this case, the school districts might collect the library’s taxes based on the amounts specified in the library budget vote and then set the funds aside for the library. Again, the taxes would be paid to the library upon request.

Neither a municipality nor a school district is required to advance tax monies to ensure sufficient funds to operate a Special Legislative District Public Library prior to the collection of taxes. Therefore, it is imperative that the libraries work hand-in-hand with local municipalities when making a transition to ensure that funds will be available to cover any gap.

A municipality or school district collecting taxes for a Special Legislative District Public Library is required to turn over to the library the exact amount of tax dollars specified in the library budget proposition that was approved by voters. Tax collection shortfalls due to defaults by property owners will be covered by the taxing entity that has the ability to place a lien against properties. In most cases, this is the county or other municipal entity.

In spite of the above protections, it would be wise for a Special Legislative District Public Library to anticipate and prepare for minor variations in tax collections, which may be caused by a number of factors.

It is also important to determine when tax collections will occur and to plan for any cash flow needs to cover the gap. Once a proposition is passed to create a Special Legislative District Public Library the Assessor for the municipality or municipalities that will be collecting taxes must add the new district to the tax rolls. This involves a formal process that may take several months, resulting in the new library district not receiving its tax money for a year or more. For example, the deadline for establishing tax rolls for 2006 tax collections may occur in the spring of 2005. Thus a library district created by public vote in the fall of 2005 may miss the deadline for being added to the tax rolls for 2006 and may have to wait until 2007 to receive its tax money. Libraries making the transition to a Special Legislative Public Library District need to talk to their local Tax Assessor to determine the critical dates for establishing tax rolls and for collecting taxes and then develop a plan for covering any resulting cash flow problems.

-- revised January 27, 2005