Library director says there is no written plan to adjust to 40% cut backed by Cantrell

By Michael Isaac Stein

Source: The Lens

December 2, 2020

Dr. Gabriel Morley, the director of the New Orleans Public Library, said at a Wednesday morning press conference that he had seen no written plan for how the library would adjust to a 40 percent budget cut being proposed by Mayor LaToya Cantrell.

The cut would result from a package of three ballot propositions Cantrell is asking voters to approve on Saturday that would, if passed, reallocate 40 percent of public library property tax collections to economic development initiatives, housing programs, infrastructure maintenance and early childhood education.

Also on Wednesday, Emily Wolff, director of the city’s Office of Youth and Families, repeated several of the misleading statements that have come from the Cantrell administration in recent weeks regarding the proposal, including that the proposal will “come to taxpayers as a tax reduction.”

That isn’t true. The city’s property tax rate next year will be the same whether the proposal is approved or rejected in full.

Cantrell and other city officials have for months promised the public that the library would be able to absorb the roughly $7 million annual cut without any changes to services and without any detriment to the library system. The city has offered various broad ideas for how to cut costs, such as finding new efficiencies and attrition, but has stopped well short of offering a comprehensive plan to the public.

The 2021 budget that the City Council passed last month, for example, plans library spending based on its current tax collections, rather than the lower budget Cantrell has proposed.

At a press conference last month, Wolff and Cantrell argued that there would be no reduction in library services because their new, lower revenue was all the library truly needed to operate. Wolff said that the Library had underspent its budget in 2019 by “close to $6 million.”

Except that wasn’t true. On Wednesday, Wolff acknowledged that the library only underspent its budget by $500,000 in 2019, meaning the library spent 97 percent of its budget last year.

Critics have argued that without a clear plan on how to cut library spending, the public doesn’t fully know what it’s voting for. That was cited by the Bureau of Governmental Research, a local nonpartisan think tank, as one reason it came out against the proposal in a November report.

“Voters are asked to approve a nearly 40% revenue cut for public libraries without a strategic plan or a clear roadmap for right-sizing their budget before their reserves run out,” the report said.

The Times-Picayune/New Orleans Advocate gave a similar justification when it came out against the proposal in an editorial last month.

“Voters don’t have enough information to be assured that the system has a plan to get through 20 years without harm.”

But on Wednesday, Morley indicated that not only does the city lack a public-facing plan, it appears to lack an internal, comprehensive roadmap for how the Library system will cope with the sharp revenue losses.

‘Make the best of what we have’
In the past month, Morley has displayed an optimistic tone when publicly speaking about the ballot proposal, indicating that its passage would be positive for the library.

That wasn’t always the case, however. When Morley first announced the proposal to library staff in August, he said it was “bad news” and a “no-win situation for us” that would have “swift and significant” consequences for the library.

“Clearly, the library will not be able to operate at its current level with a 40 to 50 percent budget cut,” he told staff in August.

On Wednesday, Morley had a different tone.

“It’s just a matter of shifting resources,” he said. “This is part of a modernization effort, where we’re trying to bring in more technology and use data to really hone in on the things that citizens need.”

The Lens asked Morley what had changed between then and now to boost his confidence in the plan.

“We’ve been able to study our spaces, the services we provide,” Morley said. “We’ve also been able to use a lot more data. We didn’t have a lot of data coming in. We’ve been able to pull some of that data. We can see what libraries are being used, what time of day is being used, we can see where our resources will better be aligned. I think we have a much better picture now of how we can streamline as we modernize by using technology.”

Asked whether he had seen any written, detailed plan for how the Library would adjust from a $21 million budget to a $14 million budget over the next few years, Morley said no.

The Lens asked how the public could trust that the 40 percent budget cut wouldn’t diminish Library operations if there was no written plan on how to do so.

“Proposition 2 provides operational funding for the library,” Morley responded. “And our job is to figure out how to make the best of what we have with the money we have. And if those dollars amount to $14 million, $16 million or $140 million, we’re going to make the library be the best it can be with the amount of funding we have.”

Wolff, the director of the city’s Office of Youth and Families, indicated that the city did in fact have some plan.

“We do scenario planning,” she said. “We have a number of scenarios that the library has mapped out that involve a combination of the [cost cutting measures] I just mentioned.”

Those scenario planning documents have not been released to the public. Cantrell’s office did not immediately respond to a request to review them.

Wolff said that the scenarios all assumed that the library would tap on its healthy reserve funds over the next few years to sustain its budget. The library has built up a $15 million reserve fund, Wolff said on Wednesday, which the city has repeatedly pointed to as a justification for the proposed revenue cut. However, with such a significant cut to its taxes, the reserve fund would run out in a matter of two to three years. After that, the library would likely be forced to reduce its expenses.

Wolff appeared to suggest that one potential cost cutting measure would involve the library’s catalog.

“The board and [Morley] over the last couple months have done a lot of work to dig into the financials,” she said on Wednesday. “Looking at what kind of cost cutting measures could be implemented that wouldn’t impact services for the public. So things like looking at data on what people are checking out, what books people are checking out. From 2018 and 2019, [Morley] and his team saw that over 50 percent, or about 50 percent, of the collection was not actually checked out.”

Proposal wouldn’t result in tax decrease, despite claims from Cantrell
One consistent part of the Cantrell administration’s messaging around the tax proposal is that it would, if passed, lead to a property tax reduction. That isn’t true. As Cantrell has said herself, the proposal is intended to keep the property tax rate exactly the same as it is right now.

On Wednesday, Wolff justified that messaging by explaining that they are factoring in a different property tax decrease, separate from Cantrell’s tax proposal. The tax decrease was approved by the city’s Board of Liquidation, which is responsible for managing the city’s bonded debts.

Every year, the board can independently decide to reset their dedicated property tax rate to match what they expect they need to meet debt obligations. This year, the Board of Liquidation voted to decrease the rate.

Wolff said that when you include that tax decrease with the mayor’s tax-neutral plan, you get an aggregate tax decrease.

“Because of the city’s strong fiscal management, the Board of Liquidation, when it met this last month, was actually able to reduce the tax burden,” Wolff said. “What that means is that as a whole, for the taxpayer, if these pass, along with that reduction from the Board of Liquidation, that will mean a reduction of taxes for the taxpayer.”

“What we’re asking folks to do is go to the ballot, and to understand that each of these is coming as a renewal, and a restructuring of the proposal and for the average taxpayer it will be a reduction,” Wolff said. “In the aggregate, on the whole, if each of these propositions pass, along with the other actions the administration has taken, this will mean a reduction. There’s no trickery here. This is just pure numbers. So for the taxpayer it’ll mean a reduction.”

The Board of Liquidation approved its adjustment on Nov. 18, and it was passed into the city’s 2021 budget on Nov. 19, before New Orleans voters had cast a single vote on the Dec. 5 ballot propositions.

Cantrell has also used other justifications to call the proposal a tax decrease. In one instance, she appeared to factor in a property tax cut that already happened in 2019.

“This millage package going to the voters on Dec. 5, it will come as a tax decrease as well,” Cantrell said on a video posted to her official social media account. “It’s going to come as a tax decrease, because we are factoring in the existing conditions that we’re in, meaning that our people are in. So we’re moving from the 8.6 [mills] to 5.8 [mills]. So again, making it a tax decrease.”

This doesn’t appear to be a reference to the Board of Liquidation tax reduction.

Property taxes are measured in mills. One mill represents one dollar of tax owed for every $1,000 of assessed property value. Cantrell’s proposal would take several existing property taxes, currently set at 5.8 mills, and rearrange them into four new property taxes that would come out to the same 5.8 mills.

Last year, the City Council lowered the city’s property tax rates, against Cantrell’s wishes, in response to skyrocketing property valuations. The property taxes currently under consideration were reduced from 8.68 mills to 5.82 mills.

Cantrell’s office has not responded to questions about whether she was mistakenly referring to proposed rates prior to last year’s millage cut when she said the taxes were currently set at 8.6 mills.

Also on Wednesday, Wolff repeated another misleading statement that has been central to the Cantrell administration’s messaging — that failure to pass the proposal would lead to a $23 million budget shortfall.

“So if these propositions don’t pass, the Mayor has mentioned many times that these millage dollars are baked into our 2021 budget,” Wolff said. “These millages, altogether, represent about $23 million total. So it will mean, if these millages don’t pass, that we will need to identify other revenue in order to make up for those shortfalls.”

But it appears that the new tax rates are not, in fact, baked into the 2021 budget. Both Cantrell’s draft budget and the final 2021 budget passed by City Council last month use current property tax rates, not the proposed one, to set revenues and expenditures.

And Wolff failed to mention that the $23 million shortfall she referred to isn’t a risk until 2022. The property taxes involved in the proposal all expire at the end of 2021, meaning that if the current ballot measures fail, all of the taxes would remain in place for another year. Critics, including BGR and The Advocate, have argued that the city would have another year to come up with another plan to put to voters next year.

“With the City facing a multi-year financial recovery, voters may question whether it is prudent to lock in tax dedications for 20 years,” the BGR report said. “If voters reject the propositions, the City could levy the existing taxes for another year. It could adjust the individual tax rates for 2021 to achieve some of its reallocation goals without increasing the overall tax rate. The City could then return to voters in 2021 with tax propositions informed by a clearer picture of the City’s finances. The City would also have more time to address shortcomings in some of its plans for using the tax revenues.”

Correction: An earlier version of this story misquoted Emily Wolff as saying the library had underspent its 2019 revenues by “close to $7 million.” In fact, she said “close to $6 million.”

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