Note: An earlier version of this story said Portola Valley built its new library with accumulated excess library tax revenue. Portola Valley Mayor Maryann Derwin says the new Portola Valley Library was actually built with donated funds. At the time of its construction, the town had only recently started generating more tax dollars than it spent on the library, she said.
As real estate prices have boomed in recent years, additional property tax revenue has helped turn around Atherton's finances, but has also prompted town officials to criticize some inequities in funding of local agencies that have their roots in the passage of Proposition 13 in 1978.
At an Oct. 5 study session, Atherton City Council members discussed a proposal by the San Mateo County Libraries system to start using some property tax money generated in Atherton, Woodside and Portola Valley that is set aside for libraries to help fund libraries in less-affluent communities.
The year after California voters put strict limits on property tax rates with the passage of Proposition 13, the state Legislature allocated property tax proceeds to local agencies based on the percentage of local tax revenues the agencies had received prior to the proposition's passage.
Now, 47 years later, the allocations put in place in 1979 mean that in Atherton, during the last fiscal year, taxes set aside for libraries brought in $1.2 million more than it costs to run the library. Woodside generated $439,212 in excess library funding last year and Portola Valley, $105,269.
Currently, the excess library funds are set aside for the municipality that generated them to use for library-related expenses. Woodside remodeled its library with its accumulated funds. Atherton plans to build a new library with its library funds, currently about $11 million. (Portola Valley's new library was built with private donations because the town had not been generating excess library funds for long enough before building the library to pay for it.)
But the Joint Powers Authority (JPA) that manages the county library system which also includes Belmont, Brisbane, East Palo Alto, Foster City, Half Moon Bay, Millbrae, Pacifica, Portola Valley, San Carlos and Woodside as well as San Mateo County is now asking for changes. The proposal is that the three municipalities that generate excess library property taxes give 50 percent of their excess tax money to the JPA, so it can be spent on other libraries.
Rick DeGolia, who represents Atherton on the governing board of the library JPA, said the proposal is to split the funds remaining after the library's operating expenses and a share of the overall system's expenses are paid.
The split would come before the towns paid the expenses of maintaining and operating their library's buildings and grounds, Mr. DeGolia said, and that didn't sit well with some council members.
"Our job is to make sure the residents of Atherton" are getting the benefits from their tax dollars, said council member Mike Lempres. "It's great to subsidize libraries in other places," he said, but that is not Atherton's job.
Council members also said they want to build up a reserve fund to repair or replace the new library in the future.
"If we have to do some sort of splitting," council member Bill Widmer said, the split should occur after facility operations and maintenance are funded and some money is put into a replacement fund. Otherwise, he told Mr. DeGolia, "I think you should vote against it."
Mr. DeGolia said he had already made the argument to the JPA board exactly as Mr. Widmer suggested. "That's a position I have taken and it has not passed," he said.
Mr. DeGolia pointed out that the prediction is that Atherton will generate about $1.5 million a year in excess funds once its new library is built, and that maintaining and operating a new and larger library probably will not cost more than about $150,000 a year.
"Nobody has presented an idea of how we could use $1.5 million a year on library services," he said.
Council members also expressed frustration that while the town has resorted to a parcel tax to fund a long list of capital improvements, Atherton-generated property tax revenues allocated for other purposes seem to be going unused.
"I'm having a hard time separating this issue" from the issue of how much property tax generated from Atherton goes to the fire district and how much of that is spent in Atherton, Mr. Widmer said. "Where is our money going, and what is it being spent on, and are we getting any benefit from it?" he asked.
Mayor Elizabeth Lewis suggested the council might form a subcommittee look further into the library issue before it comes to a vote of the JPA.
Any amendments to the library JPA agreement would have to be approved by two-thirds of its 13 members," Mr. DeGolia said.
"There's some leverage that we have to get what we want, because they want us to stay in the JPA," Mr. DeGolia said.
Mr. DeGolia said that the county library system, originally an independent entity, was changed into a joint powers association in 1999. He said turning the fire district into a joint powers association, which would presumably be made up of Menlo Park, East Palo Alto, Atherton and San Mateo County, would be "one solution for the fire district."
"That's a potential avenue to look at for the fire district," he said.