FRANKLIN COUNTY — A tentative solution to the 85-day state budget impasse could make a number of organizations, school districts and municipalities happy, but arts and entertainment venues are not among those rejoicing.

The new budget deal, which is yet to be officially passed and approved, extends the statewide 6 percent sales tax to arts and entertainment venues and performances.

Tickets for concerts, plays, ballets and other performances were previously exempt from the sales tax but will soon lose that exemption if the budget is approved. Museums and zoos are also included in the tax, but tickets to movie theaters and professional sporting events remain exempt.

Local theaters react

Several local arts organizations say they are concerned and confused at the news of the new tax as they continue to watch their revenue from the state decline.

They expect it to harm their already-wilting budgets and deter patrons from attending as many shows as before.

“That’s an awful amount of tax when ticket sales are already down,” said Linda Boeckman, manager of the Capitol Theatre in Chambersburg.

She said the tax comes at a difficult time for theaters and play houses as they suffer with the recession.

Ticket sales took an “absolute nosedive” for the theater last year as the economy worsened, Boeckman said. Sales picked up this year, but they are still down by about 10 percent compared to average years.

Now, the theater’s $30 ticket price would jump by about $1.80.

That’s not a significant amount, Boeckman said, but it would cost a family of five almost $10 more to attend a play. Those families would probably cut back on buying concessions items, she said, which affects the theater’s bottom line.

The Capitol Theatre’s budget is approximately $430,000. In an average year, ticket sales accumulate $80,000 to $100,000, including sales from Chambersburg Community Theatre and Chambersburg Ballet.

When all is said and done, the theater breaks roughly even.

Sally Herritt, executive director of CCT, said she fears that the new tax could ultimately lead to the death of some arts organizations.

She expects the ticket price hike that would come as a result of the tax to impact the accessibility of arts to the public.

“It could very possibly cause someone to go out (of business),” she said. “If we disappear, then that’s one less opportunity for people to be schooled in the arts.”

Holly DeKarske, executive director of Chambersburg Area Council for the Arts, said arts companies can only tighten their belts so far as state funding decreases.

“At some point you’ve cut it so tight that you cut of circulation,” she said.

Although big cities with large theater communities might fair just fine with the ticket tax, she said, sooner or later the smaller grassroots organizations could go under.

Such a downfall would hurt local economies, Herritt said.

Fewer theatergoers means fewer people in the downtown, she said. They won’t be eating in the nearby restaurants and they won’t be browsing the stores.

As director of an organization that distributes state funds for local performances, DeKarske wants to see the funds recovered by the tax come back to arts funding.

“I think in the end it’s just going to end up costing everyone more money,” she said. “This is just going to the state budget somewhere, to fill that magical black hole we’ve all heard about.”

Budget negotiators say the funds will be reserved for arts and cultural institutions.

The lawmakers’ take

Legislative leaders came to a budget agreement last week without removing any sales tax exemptions.

That agreement, however, did not meet Rendell’s two goals.

A spokesperson in the governor’s press office said Tuesday that he wanted the budget to include enough recurring revenue to sustain the budget for this year and next, while avoiding cuts to health care and education.

Erik Arneson, spokesperson for Senate Majority Leader Dominic Pileggi, R-Glen Mills, said Rendell told legislators to remove the sales tax exemption from one or more specific items in order to get enough recurring revenue into the budget.

He said the governor gave them a list of acceptable taxes, telling them to choose.

Theater, dance, music and performing arts were included on the list, as were museums, historical sites, zoos and parks.

“Very reluctantly, legislative leaders agreed to impose those taxes with two conditions,” Arneson said. “First, that the bulk of the revenue generated be used to create a special fund to support the arts and cultural institutions; and second, that this would close the budget negotiations.”

He added, “By refusing to include any growth in his revenue estimates for 2009-10, Governor Rendell forced the legislature to choose from a menu of bad options.”

When asked why the tax did not extend to sporting events or movie theaters, Arneson said Rendell had “serious reservations” about extending it to those venues.

Barry Ciccocioppo, a spokesperson for the governor, told the Philadelphia Inquirer Monday that taxing professional sports teams’ ticket sales would contradict agreements the respective cities hold with them. It would end up forcing the cities of Philadelphia and Pittsburgh to foot the bill.

The governor’s spokesperson contacted by Public Opinion Tuesday said he would not have enough information to address questions about movie theaters or sporting events until the bill is introduced to the conference committee.

Local backlash

“It’s disappointing that the government feels the arts and entertainment fields need to be taxed, but they don’t seem to feel all the arts should be taxed,” Boeckman said.

DeKarske, a sports fan, agrees with Boeckman.

“If they’re going to tax our arts tickets they should be taxing our sports as well,” she said. “It should be across the board.”

Meanwhile, a lack of information about the bill, and contradiction between the governor and the legislators, has arts institutions scratching their heads.

“This just raises a big cobweb of questions,” Herritt said. She is unsure whether she will be forced to levy the tax on her patrons, since Chambersburg Community Theatre is made up of amateur actors, rather than professionals.

Although budget negotiators are clear that the taxes will not affect school performances, they seem unsure whether amateur community theaters will be taxed the same as theaters that employ professionals.

No one had an answer Tuesday.

The budget agreement cuts spending from $28.1 billion in 2008-09 to $27.95 billion in 2009-10 and relies heavily on reserves and fund transfers to balance the budget. The agreement includes $1.2 billion in “recurring revenue”; however, some of the revenue sources are temporary. Based on media reports, the major components of the revenue plan are:

• $300 million from business tax changes. They include temporarily freezing the Capital Stock and Franchise Tax at the 2008 rate for the next three years. The increased revenue is offset by further tax cuts for large businesses. On balance, this will raise $300 million in 2009-10 and $458 million in 2010-11. The tax cuts represent a permanent revenue loss in exchange for a temporary tax increase.
• $200 million for the introduction of table games in casinos.  Most of this first-year revenue is for licenses; the revenue declines to $121 million in 2010-11.
• $100 million from lifting the sales tax exemption on admissions costs for theater, dance, concerts and performing arts, as well as museums, historical sites, zoos and parks.
• $171 million by redirecting to the General Fund 25 cents of the cigarette tax that was used to help offset doctors’ malpractice premiums.
• $97 million in 2009-10 and $146 million in 2010-11 from a 25-cent increase in the cigarette tax.
• $30 million by adding mini cigars – cigarette-sized cigars – to the state cigarette tax. These products fall under the federal cigarette tax.
• $20 million in 2009-10 and $45 million in 2010-11 from taxing small games of chance.
• $65 million in leases from drilling on state park lands in the Marcellus Shale.
• $40 million in cuts to tax credits.

By Stephan Salisbury
Inquirer Culture Writer

The budget deal reached late Friday in Harrisburg, which includes an extension of the state sales tax to cultural performances and venues – including museums – has stunned and angered the arts community.

“We heard nothing about this until late last night,” Peggy Amsterdam, head of the Greater Philadelphia Cultural Alliance, said yesterday. “It must have been a very last-minute deal. Not only will it hit the arts organizations, but it will make it harder for people to pay.”

Details of the ticket tax began to become clearer yesterday.

Sources familiar with the final package said the deal calls for the creation of a special fund for cultural institutions and the arts.

The fund would get the bulk of the ticket-tax revenue – the exact percentage was unclear – and use it to support institutions previously subsidized by the general fund, such as museums, theaters, and zoos.

Senate Republicans, who had steadfastly opposed any new taxes, insisted on the fund.

Even though state officials said some portion of the new cultural sales tax would flow back to venues – and the exact nature of this remained murky – arts administrators pointed out that state support had already been radically reduced. In fact, in the case of historical museums and sites, it has been eliminated. Now cultural officials contend that audiences and visitors will be hit in the pocketbook, possibly reducing their desire to attend events and further reducing revenue.

“What we are really hoping for is a funding source that will help organizations operate in a stable manner,” said Hal Real, founder of World Cafe Live and board chair of the cultural alliance. “Now what we’re looking at is for these arts organizations to bail us all out.”

The $27.9 billion state spending plan announced Friday night includes expansion of the state sales tax to performing-arts programs – dance, music, theater – and other cultural venues, such as museums and zoos, to generate about $100 million.

The tax would not be imposed on movies or sports events.

“It’s sad,” said Hal Sorgenti, immediate past board chairman of the Philadelphia Orchestra. “It would affect not only the orchestra but every single organization in this town. The ballet, the opera, Verizon Hall are all desperately affected. What’s needed is the opposite. What’s needed is significant support to bridge the gap, not a tax to increase prices.”

A spokesman for Gov. Rendell, Gary Tuma, said he could not confirm specific elements in the budget package. But “we cannot do a budget without pain,” he said, “and there is widespread pain in this budget.”

The budget deal was reported the same day The Inquirer reported that the orchestra faced an immediate financial crisis requiring the infusion of $15 million.

“The juxtaposition is ironic,” said Gary Steuer, head of the city’s cultural programs. “This is a significant [tax] increase on an industry that is already struggling and is already losing significant state and local support. It’s a bad policy decision.”

Steuer noted that the state budget also would increase taxes on cigarettes and small cigars, a bump that could cut sales of those products, “things that are arguably bad for you,” he said.

“Cultural participation is actually a good thing,” he said. “It makes people feel good, and it generates economic activity. Yet you’re imposing this tax on it that will depress the sector.”

Bernard Havard, head of the Walnut Street Theatre, said the tax would mean the imposition of a deficit. If the Walnut generates $10 million in ticket sales annually, he said, the sales tax would amount to at least $700,000.

Several arts lovers going to see a matinee showing of the musical Chicago yesterday at the Kimmel Center for the Performing Arts said they would rather pay more for a ticket than lose firefighters or police officers because of budget cuts. But some also wondered why movies and sporting events would be spared the sales tax.

“I don’t think that’s fair at all,” said Darryl Aiken, 48, of the Logan section of the city, who said he tries to see a show about once a month. “Why not movies? It’s entertainment, it’s pleasure, just like coming to the play.”

“I don’t like it at all,” said John Wnukoski, 41, of Northeast Philadelphia, who said he attends cultural events once a month. “You’re taxing the things that are educational.”

Those interviewed yesterday said the tax would not discourage them from going to shows, but they worried it might hurt ticket sales for occasional theatergoers.

“It would be tough if you want to bring your children or your family,” said Bea Easton, a member of the Philadelphia Museum of Art who said she attends musicals or plays a few times a year. “When families want to come, every little bit counts.”

The tax is bad news for the arts community, which has already suffered in the tough economy, Easton said.

“They’ve lost a lot of their contributors,” she said.

Tom Kaiden, chief operating officer of the alliance, said the idea of an amusement tax had been floated this year in City Council but had been dropped.

“You’re essentially taxing one of the most vulnerable sectors, but one of the most vital,” Kaiden said, noting that arts organizations generate sales not only for themselves but also for industries such as restaurants and tourism. “The orchestra is at risk, yet we rely on the orchestra to convey the message about life in the community, attracting jobs and visitors. This puts nonprofits at a real competitive disadvantage.”

Havard, of the Walnut, said his organization would be unable to continue all manner of educational programming and support – activities Rendell has said his budget supports.

“This is so retrograde, so destructive,” Havard said. “I would not remit this tax. I would refuse to do it. They’ll have to cart me off to jail.”

Contact culture writer Stephan Salisbury at 215-854-5594 or ssalisbury@phillynews.com.Contributing to this article were Inquirer staff writers Mario F. Cattabiani, Joelle Farrell, and Michael Matza.

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Tomorrow is week two of artless Wednesdays in Pennsylvania.  How will you be participating?  For tips visit http://bit.ly/4r8vX.

His comments sounded very familiar to me and could easily apply to the advocacy that we do in Pennsylvania surrounding the Pennsylvania Council on the Arts.  Frequent and personal contact with legislators and their staff could only help our case.  Inviting legislators and staff to events that are funded with PCA grants helps create friendships.  So I urge you to contact your legislators today and tell them that funding $14 million for the PCA grants to arts organizations and $1.2 million for the administration of the Council is a priority to you and tell them why.  What do you do with the funds that you receive from the PCA?  Do you fund a artist residency in an elementary school?  Do you provide free admission to your event to senior citizens?  Please visit or call your legislators TODAY!

Contact information for your legislators can be found at http://capwiz.com/artsusa/pa.  Or give me a call at 717-234-0959 and I’ll locate the information for you.

Thanks,

Jenny Hershour
Managing Director
Citizens for the Arts in PA

9/9/09 marked the beginning of “Artless Wednesdays” being held across the state each Wednesday until a state budget is approved.

Elk County Council on the Arts, located on Main Street in Ridgway, was closed yesterday as it participated in the statewide arts advocacy mission.

The gallery windows were draped in black fabric with signs posted on the windows in demonstration of the 50 programs and projects in Elk, Forest, Jefferson and McKean counties which received funding from the Pennsylvania Council on the Arts since 2007.

“As citizens we deserve a responsible state budget, to be passed in a timely manner,” noted Abbi Peters, ECCOTA executive director. “I urge residents to continue applying pressure to our legislators, call, e-mail, stop in their offices and remind them of the faces, the lives, the jobs that are affected by the drastic cuts and elimination in programs and services that are currently being proposed in the budget. These programs and services are vital to the quality of life and future of our community.”

The Artless Wednesday initiative was started by discussion of arts advocacy groups, Save the Arts of PA and Citizens for the Arts in PA.

The groups passed along the word to statewide arts organizations, encouraging them to demonstrate.

Among the proposed demonstrations arts organizations are considering include hosting a string quartet minus the instruments or covering artwork in public spaces.

“This shows how much art is in our lives and our community and how we’d be impacted if we lose that funding,” Peters said.

If the Pennsylvania Council on the Arts (PCA) is eliminated from the state budget, Pennsylvania will be ineligible to receive federal level arts funding and become the only state without a state arts council.

The current budget provides $14 million in funding for arts grants and $1.2 million for the administration of the PCA. Broken down this would cost each taxpayer a nickel a week or $2.60 for the entire year.

“Arts funding ripples out further than the actual projects,” Peters noted.

She explained that Kane’s Art in the Wilds receives state funding and attracts a crowd of 4,000 people. Those people spend money in the area on food, gas and lodging, therefore supporting other businesses and industries.

“These programs provide jobs, tax revenue and quality of life in PA,” Peters added.

In 2007/08 art projects and programs funded by state dollars totaled $34,442 in grants to 24 organizations across four counties; in 2008/09 funding was $34,211 to 25 organizations and in 2009/10 the budget decreased to $22,618 to 16 organizations.

Among the possible programs which may be eliminated if the art grand funding is not included in the state budget are Art in the Wilds, Ridgway Chainsaw Carvers Rendezvous, University of Pittsburgh at Bradford’s Arts Programming, Bradford Creative and Performing Arts Center, First Night Bradford and The Punxsutawney Groundhog Club.

LAWRENCE, Kan. — Ben Ahlvers is a full-time arts education coordinator, but his passion is with the fanciful creatures, human figures and oversized hammers he fashions from clay.

The nationally recognized ceramic artist was chosen to receive a fellowship from the Kansas Arts Commission to attend an artist residency in Montana. But after Kansas officials cut the commission’s budget midyear by $300,000, he didn’t receive the $1,000 check.

“They were still going to have a reception and I joked to somebody that I was going to go and eat $1,000 worth of finger food,” said Ahlvers, 35, who said he and his wife had to live off their credit cards and sell more of his artwork to fund the trip.

“The $1,000 would have made it a lot easier and I wouldn’t have had to fret as much,” he said.

States across the country are slashing their arts funding for the second year in a row as they cope with falling tax revenues. Those cuts, which often happen during recessions, are a serious blow to arts agencies and individual dancers, painters and actors at a time when private donations are down and many art organizations are being more selective in what they produce.

Julie Britton, vice president of development or the Tampa Bay Performing Arts Center in Florida, said officials may have to skew away from avant-garde art designed to push boundaries in favor of things more certain to sell tickets.

“Part of our mission is to bring people things that are new,” said Britton. “That’s very difficult to do when you have to be risk-averse in this situation.”

The Tampa Bay center’s state grant is expected to be $25,000 or less this year, which is down from $200,000 a couple years ago.

The National Assembly of State Arts Agencies estimates states reduced their arts funding an average of 7 percent in the fiscal year that began July 1. That average doubles to 14 percent when Minnesota is not included because the state almost tripled its art budget to $30.2 million thanks to a new sales tax.

In financially strapped states like Arizona, South Carolina, Georgia, Ohio, Louisiana and Florida, the reductions are steeper, falling 30 percent or more, forcing agencies to trim the amount or value of grants, shutter programs that provide arts education and lay off employees. In two states that haven’t completed their annual budgets — Pennsylvania and Connecticut — lawmakers are considering eliminating their state arts agencies entirely.

States did get a boost this year in funding from the National Endowment for the Arts and some one-time job preservation grants through the federal stimulus bill. But administrators said the money won’t make up for all the funding they’ve lost.

“It’s really going to have a devastating effect,” said Terry Scrogum, executive director of the Illinois Arts Council, which saw its budget fall 51 percent this year to $7.8 million. “We’re going to try to maintain as many of the operating grants as we can. They’re obviously going to be at a reduced level. Others will be whittled down or suspended.”

Overall, states contribute just 2 percent of the total annual pool of arts revenue in the U.S., according to Americans for the Arts. While a seemingly small percentage, arts advocates say organizations use those dollars to leverage donations from local governments, match federal funding from the National Endowment for the Arts and attract the private donations that make up the bulk of their annual budgets.

That private giving has also suffered during the recession. According to the Center on Philanthropy at Indiana University, private donations to the arts decreased 6.4 percent between 2007 and 2008, the latest years available, and has likely fallen farther this year.

The cuts in arts aren’t universal. Besides Minnesota, a handful of other states, such as Oregon, New York and Texas, have seen increases, either because their states are in better shape or because of one-time surges of new revenue.

The arts typically take a hit during recessions, as state budget writers are forced to balance theater expenses and sculpture grants against cuts to social service agencies, education or transportation. Arts budgets have fallen 20 percent in the past two years, compared with 38 percent during the 2001-2004 recession and 28 percent during the early 1990s, said Angela Han, spokeswoman for the National Assembly of State Arts Agencies,

But arts agency leaders said legislatures make a mistake when they look at the arts as a luxury as opposed to a key source of jobs and community identity.

“I don’t think any government entity in the United States has ever understood the true value of the arts in terms of economic development, arts education or in community revitalization,” said Sue Weiner, executive director of the Georgia Council for the Arts.

In a 2007 study, the Americans for the Arts found that the nonprofit arts and culture industry anually generated $166.2 billion in economic activity and 5.7 million jobs.

Han said that while the recession may show signs of abating, she doesn’t expect state arts funding to snap back soon.

“Following the 2001 recession, it took budgets three years to recover,” she said.

Back in Lawrence, Ahlvers recently found out that the Kansas commission may get funding to give him his $1,000. But with state revenue still hurting, he’ll believe it when he sees it.

“As an artist, I think of course they (states) should put money in the arts,” he said. “But there’s another side of the arts that thrives on an underdog side of life.”

Copyright © 2009 The Associated Press. All rights reserved.