[snip]
I'm somewhat perplexed (or confused) by the usage of the terms capital funds, operating budget, capital improvement and so forth as used in this continuing thread/subject. Jim Berg's post is only the most recent one which seems to confuse what capital improvement is, and what repairs and maintenance are.But since this tread is about building funds, I'll say that the trouble is that the capital funds are promised far in advance and the CLIC recommendation for 2004-08 was zeroed out in the Mayor's budget. Concerns about how much it costs to run the library system shouldn't be addressed by cutting off capital funds. The new downtown library will be cheaper to operate than the old one, by 15%, and other capital improvements at neighborhood libraries will result in similar savings. Cutting off building funds only defers needed repairs and upgrades and makes the buildings more costly to operate.
"Outlook 2010" is the Library's plan for capital improvements to our community libraries developed before the referendum. The total budget for Outlook 2010 is $38 million, which assumes that $30 million would be raised from the library referendum and that an additional $8 million would be allocated through the City's Capital Improvement Program via CLIC with contributions of $1.6 million for each year between 2006 and 2010. The City Council and previous Mayor have repeatedly taken formal action recognizing these commitments. The current Council should reaffirm these commitments.
The Friends of the Minneapolis Public Library are raising $15 million in private funds for library improvements, including the new downtown libary. We are nearing our $8 million goal for November 2003, and a cut in the city's contribution to capital projects would do serious damage to the private campaign, even as the Mayor is making his rounds.
There's an important difference that seems to be getting mudied here. A capital improvement program, or a capital budget of any kind (separate from an operating budget) should be strictly referring to money that is going to be invested in property that will be depreciated under IRS regulations, or similar such investments in new facilities for use over a long-term future. On-going maintenance and repair of buildings does not usually fall under this category. Repairs are usually expenses, and as such are part of an operating budget, not a capital budget, and are not depreciated but are deducted in the year spent.
As a result I find this discussion rather fuzzy and unclear. How can zero'ing out a capital budget have any affect on needed repairs and maintenance? Those items should not even be in the capital budget. Building new buildings, or adding wings would certainly be capital. Buying new (not replacement) computers might be capital items. Repairing an HVAC system ought to be an operational expense. The library does have reserves for such unpredictable expenses, doesn't it? If not, it's time to get some new accoutants and some new executive management.
So, what is that is really happening?
Chris Johnson Fulton
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