The Sunnyvale Sun

Letters & Opinions

Library bond is an expensive proposition

By Tim Risch

One can certainly debate whether Sunnyvale needs a new library. But one thing is certain; the residents of Sunnyvale will pay dearly if it is built.

A proposition on the November ballot asks city voters whether they should authorize the issuance of general obligation bonds to pay for a new $108 million new library and approve an increase in property tax to repay the bonds over 30 years. But careful scrutiny of the financing plan reveals a number of hidden traps that may not be obvious upon a cursory reading of the 75-word statement.

According to the city, issuing bonds to cover the construction costs will require payments of around $7.5 million per year for 30 years. The first question is whether a bond and tax measure is really needed at all. Four years ago the city completed our new senior center using monies that were saved over the years by past city councils who prudently managed the city's finances. No new tax was needed, But the council over the last four years has been anything but prudent and has authorized millions of dollars of generous salary and benefit increases to city employees. A quick review of information provided by the city shows that employee wages and benefits, which comprise the largest portion of city spending, rose on average more than 28 percent over the last four years. This is nearly double the rate of increase for private sector jobs in the area that have increased only about 15 percent over the same period. The 13 percent difference that could have been saved by holding employee increases to the same level as private sector employees comes to at least $10 million per year. This savings would be more than enough to cover the yearly payments of any library bond, obviating a need for any new tax.

In a recent report to the city council, the city predicts that the average homeowner will pay only about $100 per year in an average year to finance the new library. But this fails to accurately mention that the first year's tax cost will be near double the average year, closer to $200 per year and even more if your house is assessed more than the $500,000 average value. The initiative contains no fixed limit to the amount that can be collected. The more your house is worth, the more that you pay.

Furthermore, under a worst-case financing scenario, the measure authorizes the city to collect up to $400 from the average homeowner in the first year. No doubt an additional $400 per year tax could be a hardship for many in our community. But the ballot measure contains no exemption for seniors or low-income residents as other recent tax measures have and certainly would be a hardship on those that can't afford a significant new drain on their incomes.

Additionally, the city admits that even with the tax, there will be a shortfall of at least $1.5 million per year to run the library that is not currently available in the budget. Not to worry, the city council already has "approved in concept" a new 911 "fee." The timing of this fee is perfect to cover the operational shortfall. However, because this new revenue stream is classified as a "fee," not a tax, the council can approve levying the fee immediately even without voter approval! It is estimated that this new "fee" could bring in an additional $2 million per year, so approval of the library initiative and initiation of the 911 fee will effectively increase new revenues to around $10 million per year, more than 20 percent more than what the city is publicly disclosing for the tax alone in the ballot statement.

At a recent candidate forum, Councilmember Dean Chu told the audience that the new library would cost homeowners only about $19 per year. Unfortunately, Mr. Chu, the self-appointed "finance expert" on the council, only quoted the average tax rate over 30 years per $100,000 per assessed property valuation. The actual cost to Sunnyvale taxpayers in the first year for an average home will be more than 10 times that amount. Three other council members who were in attendance at the forum made no attempt to correct the inaccurate statement of Mr. Chu. This begs the question: If a majority of the council doesn't understand actually how much the tax will cost residents, what confidence do we have that they can actually spend the proceeds wisely?

Residents should carefully understand the impact of voting for a new library. While it might be a grand new showplace for the city, the impact to your wallet might well make you think twice.

Tim Risch is the former vice mayor of Sunnyvale.