INTERGOVERNMENTAL FISCAL FACTORS · 29

It is, therefore, reasonable to expect that Federal categorical funding support for public libraries, in some form, will be continued. This analysis of the financing patterns for public libraries, and the comparisons with general criteria and other intergovernmental financing patterns should assist the resolution and final development of an improved fiscal base for public library services.

The Public Finance Dimension

Recent Trends in Public Library Expenditures

The $814 million (less than $4 per capita) expended by states and localities for public libraries in fiscal 1971-72 was less than that spent for virtually every other domestic service. It was about one-third of the amount spent for local parks and recreation and less than one-sixth the expenditure for police protection. It represented less than 2 percent of state-local expenditure for elementary and secondary schools.

Total general expenditure of state and local governments rose almost 80 percent in the 5-year period 1967-72, while library expenditure grew by less than 60 percent. (See Table 1.) By contrast, expenditure for police protection virtually doubled as did spending for health and hospitals. Because personal income grew almost as fast as did expenditure for libraries during the same period, the latter increased only minimally relative to personal income, while related expenditure for police protection and health and hospitals rose by one-third.

Interstate Variations

Per capita library expenditure averaged $3.90 in 1971-72 and ranged from a low of $1.58 in Alabama and Arkansas to a high of $7.76 in Massachusetts a factor of almost five to one. (See Table 2.) As is the case for expenditure in general, the Southeast registered the lowest per capita amounts, while the Midwest, New England and the Far West spent the largest amounts. Because personal income grew at considerably different rates in individual states, it is not surprising that library expenditure per $1,000 of personal income actually fell in a number of states between 1967 and 1972. Almost half the states showed declines in library expenditure relative to personal income. In a dozen states, the drop was more than 15 percent.

Governmental Source of Financing

As in the case of local public schools, all three levels of government-Federal, state and local-participate in the financing of public

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TABLE 2.-STATE AND LOCAL EXPENDITURES FOR LIBRARIES, 1967 AND 1972, BY STATES AND REGIONS

30 ALTERNATIVES FOR FINANCING THE PUBLIC LIBRARY

United States

libraries. Indeed, for the United States as a whole, the Federal share of library financing differs little from its share of local school financing7.4 percent and 8.0 percent, respectively, in 1971-72. (See Table 3.)2 But here the similarity ends. Library expenditure-both direct and in the form of aid to localities-from the states' own revenue sources comprised only 11.7 percent, leaving about 81 percent of the total bill to be financed by local governments. The corresponding figures for elementary and secondary schools were 40.2 percent and 51.8 percent. In this connection, it should be noted that library aid (LSCA) is a general grant while school aid (ESEA) is targeted for a particular clientele.

The predominance of local financing for libraries and the growing state participation in school financing are pointed up in the last two columns of Table 3. When Federal aid is excluded, states only provided 12.6 percent of library funding and therefore seven-eighths of the nonFederally financed public library bill was borne by local governments. Only 46 percent of non-Federal public school expenditure came from local revenue sources. Only six states financed as much as 40 percent of the library costs (Hawaii financed the full bill for libraries and almost all of the school spending).3 By way of contrast, 21 states absorbed more than half the school costs-a number of them well over half.

At the local level, it is the property tax which dominates public library financing. Public library services are provided mainly by city governments in that about two-thirds of the local cost for libraries ($751 million in 1971-72) was expended by municipalities. Counties account for about 20 percent, and townships and special districts (mainly in Indiana and Ohio), for the remainder. It is apparent, then, that the lion's share of library financing comes from local property taxesalthough, by no means all. State and Federal aid provided some $90 million-about 122 percent-in 1971-72, and, because municipalities provide the bulk of local financing, a significant proportion was provided by non-property tax sources as well as by charges and miscellaneous non-tax revenue. Although property taxes produce about 85 percent of all local tax dollars, only two-thirds of municipal tax revenue comes from that source and about half of the municipal own-source general revenue is from property taxation.4

Local Fiscal Problems

Public libraries compete for tax dollars with a variety of services that, as has been noted, are primarily the responsibility of municipal and county governments. Put another way, the library function exists in the arena of non-educational public activities, such as police and fire protection, environmental management and control, health and hospi

INTERGOVERNMENTAL FISCAL FACTORS · 33

tal services, housing and urban renewal and social services, which have given rise to the phenomenon known as "municipal overburden." Unlike local schools, public libraries do not generally have the independent status and political insulation of the special district. 5

Fiscal Plight of Cities

The major cities-those that constitute the core of metropolitan areas-have encountered serious difficulties in financing an increasingly costly body of public service needs. This has been brought about in large part by the demographic and socio-economic shifts that have been occurring since the early fifties. As is pointed out in a recent analysis, by the Advisory Commission on Intergovernmental Relations, of central city-suburban fiscal disparities:

Central cities, then, are growing more slowly than their suburbs. They are also becoming increasingly nonwhite and exhibit larger proportions of the poor and elderly than do their respective suburbs. This general "sorting out" of these population groups is also accompanied by higher central city crime rates, and a housing market designed to accommodate lower-income populations."

The fiscal implications are clear: the metropolitan centers, relative to their suburbs, are extremely high-tax and high-expenditure jurisdictions. The ACIR findings regarding the 72 largest SMSA's for which it analyzed fiscal 1970 data, can be summarized as follows:

1. Per capita expenditure in the central cities exceeded that of their respective suburbs by $150.7

2. Central city per capita non-educational expenditure was twice that in the suburbs.8

3. Because household incomes and residential property values were generally lower in the central cities than in their suburbs, central cities had to levy higher tax rates than did their suburbs to raise equivalent amounts of revenue.9

These findings, of course, have implications for the public financing of libraries as well as for other aspects of municipal finance. When grouping cities according to population, there is a downward progression in per capita expenditure and revenue as population size declines. (See Table 4.) Thus, for the cities with 1970 populations of 50,000 and over, 1970-71 per capita library expenditure ranged from $5.88 to $3.64. It then dropped precipitously to $1.90 per capita for the 17,664 cities with populations below 50,000. A similar situation held for recreational and police expenditures (albeit at much higher levels than for libraries), as well as for property taxes and other revenue items.

It is apparent, then, that large-city policymakers have had to make hard priority choices in allocating scarce resources among various