How much should a city or county have in general fund reserves?
The Government Finance Officers Association (GFOA) provides guidance on unrestricted fund balances in their Best Practice, “Should We Rethink Reserves?” “GFOA recommends, at a minimum, an “… unrestricted fund balance of no less than two months of regular general fund operating revenues or regular general fund operating expenditures.” However, the appropriate level of unrestricted fund balance depends on a government's specific circumstances. Also, one should bear in mind that large reserves could prompt local taxpayers to ask why they continue to pay taxes if there are large, unassigned fund balances.
Are there any state laws restricting the dollar amount that a library district can have in its reserve fund?
There are no legal restrictions on the amount that can be accumulated in the reserve fund.
Do nonprofit organizations pay or charge sales tax on their purchases or sales in Washington?
The Washington State Department of Revenue responds in the following FAQ:
“Generally, nonprofit organizations must pay retail sales tax on all purchases of tangible personal property and must collect retail sales tax on their sales of such items. However, nonprofits conducting qualifying fundraising activities may purchase goods and services that will be resold at such events without paying sales tax by providing a reseller permit to the seller. Additionally, the income generated from qualifying fundraising event is not subject to either retail sales tax or the business and occupation tax.”
WAC 458-20-169, in discussing fund-raising activities that would not be tax-exempt, states:
“(iv) Nonqualifying activities. Fund-raising activity does not include the operation of a regular place of business in which services are provided or sales are made during regular hours such as a bookstore, thrift shop, restaurant, legal or health clinic, or similar business. It also does not include the operation of a regular place of business from which services are provided or performed during regular hours such as the provision of retail, personal, or professional services. A regular place of business and the regular hours of that business depend on the type of business being conducted.
(v) Fund-raising sales by libraries. RCW 82.04.3651 specifically provides that the sale of used books, used videos, used sound recording, or similar used information products in a library is not the operation of a regular place of business, if the proceeds are used to support the library. The library must be a free public library supported in whole or in part with money derived from taxes. RCW 27.12.010.”
Confused? The Washington State Department of Revenue offers a very helpful video, “Nonprofits in WA” on this complex topic. Additional guidance may be found in the Department of Revenue’s brochure, “Nonprofit Organizations.”
May a public library charge user fees for the services provided by the library?
According to AG Opinion AGO 2005 No. 5, “Existing statutory law prohibits public libraries from charging fees for traditional library services, such as borrowing books or reviewing materials at the library. Libraries may charge fees for services which are beyond the traditional purposes of a library and are provided as a convenience for the public.”
This Opinion reaffirms AGO 1992 No. 31, which notes that the library can charge a fee to nonresidents.
Does a public library operated by a city organized under the Optional Municipal Code (RCW 35A) have authority to charge fines for overdue books and other library materials?
According to AG Opinion AGO 2005 No. 5, “public libraries have authority to impose and collect fines for keeping library materials beyond their due date or otherwise abusing the right of free access to the library.”
Can a library charge user fees for services provided to non-residents?
MRSC posts the following response (Reviewed November 2013):
“Yes. AGO 1992 No. 31 reviews this issue, noting that basic library services must be provided free of charge to residents of the political jurisdiction which supports the library through taxation. The corollary is that public libraries can charge user fees to those who do not live within the jurisdiction which provides the tax revenues to pay for the library. In fact, if a public library provides services to non-residents without charging a fee, an argument can be made that the library is violating the "gift clause" of the Washington State Constitution. [ Article VIII, Section 7 – CREDIT NOT TO BE LOANED — “No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporation.” ] Libraries can charge for ancillary services such as copying machines, phones, fax machines, etc. - that issue is also covered in the AGO.”
May a city that participates in a regional library keep and independently manage the proceeds of bond sales for regional library costs?
AGO Opinion AGO 57 – 58 No. 89 (1957) states:
“The treasurer of a regional library is the sole custodian of the proceeds of the sale of bonds, which bonds were issued to raise money for the construction of a regional library building… [B]y statute, and as a matter of contract, the proceeds of [all] bonds must be deposited in a common construction fund to be administered by the… treasurer of the regional library.”
Is removing fines a gift of public funds?
Removing fines is not a gift of funds because it is generated by a patron delinquency. Doing away with replacement costs for lost/damaged items would be a gift of public funds because the district or city paid for the items.