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Sleep? Play Golf? Pay Your Utility Bill Late? You May Be a Patron of the Arts

By Daniel Grant
994 words
11 June 2003
The Wall Street Journal
(Copyright (c) 2003, Dow Jones & Company, Inc.)

These are difficult days for traditional arts advocates. In the wake of major budget deficits some state arts agencies have been cut back substantially (more than 60% in both California and Massachusetts) or been targeted by legislators for elimination (Arizona, Colorado, Missouri and New Jersey). The very existence of cultural activity in many states and regions has been threatened by these state budgetary shortfalls says Steven Tepper, deputy director of Princeton University's Center for Arts and Cultural Studies. Such shortfalls aren't new, nor is their impact on arts funding. What is new, however, is the greater interest among politicians in developing ways of increasing public support of the arts that do not include direct appropriations.

"There is a variety of indirect taxes for the arts, which are more prevalent than we realize and have proven quiet successes," said Mr. Tepper. "These taxes bring consistent funding for the arts through the back door and are not as much subject to the fate of appropriations-based government support, which can be a real roller-coaster ride."

One alternative type of arts support is to draw on a portion of a city's hotel/motel occupancy tax. This is "a highly equitable form of arts support in that it returns to the arts money that came to the city through the motels and hotels in the form of tourism," says Kary Schulman, director of San Francisco's Grants for the Arts program, whose $14.5 million budget this year is wholly supported by the city's bed tax. (The program gets 8.5 cents of every dollar in tax.)

San Francisco was the first city to experiment with this means of arts support, in 1961 -- when the tax was just 3%, producing $500,000 in revenue -- and the idea caught on in the 1970s and '80s elsewhere in California, as well as in cities in Oregon, Ohio, New Mexico; Dade County, Fla.; and throughout the states of Texas and Washington. San Francisco's Hotel and Motel Tax Fund budget now is based on a 14% occupancy tax.

In Texas, there is a statewide 17% tax on hotel and motel occupancy, producing more than $300 million in 2001, which is divided between the state and participating counties and municipalities. Most of the money is used for the development and staffing of convention and visitors centers, as well as for tourism promotion, but about 12% -- or $32.5 million -- went to support of the arts statewide, such as community arts programs and the purchase of works of public art. Houston uses all of its share of the tax for its Cultural Arts Council, providing the agency with most of its current $7.8 million budget.

In St. Louis and Chicago, a share of property-tax levies is being used to maintain major cultural institutions in those respective cities, while a portion of the municipal sales taxes in Denver, Salt Lake City and Tempe, Ariz., go to the arts. Aspen, Colo., generates $1.5 million in assistance to cultural organizations through a real-estate transfer tax, and $500,000 comes to arts institutions in Broward County, Fla., through a video-rental and music-purchase tax.

There is an art tax on gambling in Deadwood, S.D.; on vanity license plates in California and Florida; on a round of golf in Tucson, Ariz.; on late fees in paying utility bills in Wilson, N.C.; and on tickets to sports events, theater and movies in Chicago.

Legislators who can be shy about raising taxes or creating new ones have proven receptive to "dedicated" taxes that benefit the arts. Randy Cohen, vice president of the nonprofit Americans for the Arts, in Washington, D.C., says: "There is a lot of documentation that shows the economic impact of the arts industry on communities and how the arts may be used to address cultural, educational and social issues within a community, such as crime prevention."

More ideas for government to aid the arts apart from direct appropriations may be on the way. According to Mr. Tepper, they include the use of tax credits for both corporations and individual homeowners to spur historic preservation (Missouri has this now, and other states are considering the same) and the development of coordinated cultural, community and economic activity by cities in what are called "creative clusters": These have been established in England and have been touted by Harvard University economist Michael Porter ("The Competitive Advantage of Nations," Free Press, 1990).

This year, the New England Council, a regional business organization, developed a creative-economy subgroup composed of business, cultural and government leaders to foster the growth of both the design and filmmaking industries in the six-state region. A number of states (Arizona, Florida, Iowa, Nebraska and Oregon) have developed endowments or trust funds, composed of a combination of private and government contributions, that are designed to add to, rather than supplant, regular state arts agency support of the arts. For Oregon's Cultural Trust, the state legislature in 2001 amended the tax code to offer tax credits to individuals and businesses that donate money, and the state also turned over revenues generated by the sale of surplus state-owned assets to the trust.

Alternative funding vehicles work, Randy Cohen noted, because the public wants arts activities and institutions to receive the money they need to continue. Two New Jersey state legislators -- Senator Nia Gill and Assemblyman Neil Cohen -- are looking to put that notion to the test, offering a plan for a donation fund for the state's Council for the Arts. New Jersey rock singers Bruce Springsteen and Jon Bon Jovi have been asked to hold benefit concerts.

Sounds like a pretty good deal: Continued arts funding and a night with The Boss.


Mr. Grant last wrote for the Journal on artists' archives.


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