Friday, September 25, 2009

What They Were Thinking: The Arts Sales Tax Issue

So no sooner did we succeed in getting the bill passed in Harrisburg that averted the disastrous Plan C (on 9/17) than we were forced (the evening of 9/18) to face the sudden announcement that the budget agreement in Harrisburg included a new sales tax on arts and culture, an action that had received absolutely no discussion or debate beforehand. Surprise!

So what exactly happened?  In Pennsylvania, like most states, arts activity admissions and tickets are exempted from sales tax. The budget deal in essence removed that exemption, which would impose the 6% state sales tax on all such revenue. Since Philadelphia has an extra 2% sales tax (or will, after the new 1% for five year tax is added) the local tax in Philly would be 8%. Another wrinkle - the state budget deal also eliminated the exemption for commercial entertainment activity such as concerts and commercial theatre. This would cover everything from small music clubs to major rock concerts. Since Philadelphia imposes a 5% amusement tax already on this activity (and over 100 other PA municipalities also impose similar amusement taxes), the tax on them would be 13% unless some special action is taken! However, under the law municipalities may only tax sales the state is not already taxing, so unless the state "grandfathers" existing amusement taxes, the state's sales tax would trump the amusement tax. The net result for Philly would be a loss of 3% of our amusement tax.

The legislators estimated $100 million in revenue from these taxes, a figure that further investigation suggested might be considerably above reality. They were seeking ways to close the budget with new revenue to deliver a budget with a funding figure for education that would be acceptable to the Governor. There has also been an uproar over the exclusion of sports and movies from the new sales tax. It appears the reason for excluding sports is that stadium agreements essentially prevent the tax from being imposed (too complicated to go into the details), and with movies it is probable they were not considered because they are not subject to sales tax in ANY other state, making it a step that would arouse huge wrath from the motion picture theatre industry nationwide that would not want that precedent set.

The arts community throughout the state has now mounted a full-court press to fight the tax. It is not clear yet if that fight has a real chance for success. There is a simultaneous "Plan B" of trying to be at the table to ensure that if it is imposed it is structured in a way that does the least damage to this fragile sector - and I include the commercial concert business and small music clubs that are also very fragile right now. Can "memberships" be excluded from the tax - an issue of huge importance to museums?  Would already sold subscriptions for this season be exempted?  Since there has been talk of an "arts fund" being created with at least some of this revenue, can we ensure that these new taxes at the very least go towards ensuring sustained support for arts and culture without cuts at the state level, or maybe even generate some extra $ to go into an actual fund?  Many of the larger arts group had dedicated funding in the past, funding which is now threatened - does this new deal restore those funds with part of this money?  Similarly, funding for heritage museums and sites was also cut in earlier versions of the budget - can this now be restored? Finally, can we find a way to not "double tax" and damage our vital music clubs and concert venues?

This an extremely complicated and rapidly changing issue, and arts leaders and their lobbyists have been aggressively pressing their case. Of course, so have all the other areas negatively impacted by the budget. And ultimately, a balanced state budget is desperately needed. So if this tax is successfully beaten back, it would  probably only be because a substitute revenue stream was found, which is likely to arouse the ire of whatever "special interest" group might be negatively affected by a different new tax or fee.

Also of concern - and this raises a larger issue for our field as a whole - is that it appears this tax was "easy" to impose because of the perception that the arts are an activity benefiting the wealthy, educated elite who can easily pay the extra tax. This tax was not seen to affect a broad public constituency, and therefore was seen as politically easier and less painful to impose because it would have minimal impact on the average citizen. This is one of the biggest challenges our field faces - changing this perception. An even bigger challenge is that for many institutions this percpetion may be accurate. Demographically arts patrons ARE richer, more educated and - frankly - whiter - than the average population. We tout the wealth and education of our patrons when we want to secure a sponsorship from Lexus or BMW, and we love those black tie galas, but when we advocate with the government we are transformed into champions of average folks, school children, diverse populations, the elderly, neighborhood transformation. And we ARE those things as well - the arts touch every citizen whether they know it or not, and have a profound effect on our communities and our lives. We are both sides of that coin, Janus-like, and that makes for very complicated messaging, and challenging advocacy.

More information on the advocacy effort is available here on the Greater Philadelphia Cultural Alliance web site.

Wednesday, September 16, 2009

Global Creative Economy Convergence Summit 2009

OK, maybe the title is a bit of a mouthful - how many buzzwords can we fit into one conference title? But this upcoming conference in Philly should be really worthwhile for anybody in the creative industries. Full disclosure: I am a little self-interested because 1) I have been serving on the steering committee for the summit, 2) it is in Philly, 3) I am speaking on a panel.

The Global Creative Economy Convergence Summit 2009 features some great keynoters, including Elizabeth Gilbert, author of Eat, Pray, Love; Peter Shankman, founder and CEO of The Geek Factory; Jane McGonigal, Director of Game Research and Development, Institute for the Future;and Randall Kempner, ED of the Aspen Network of Development Entrepreneurs (part of the Aspen Institute). There are sessions geared towards creative economy entrepreneurs, as well as those more like myself who are looking at this issue more from a public policy and strategy perspective. There are a bunch of tracks, including one on the connection between creative economy and sustainability.

The GCECS conference is being produced by Innovation Philadelphia, and takes place October 5-6 at the Pennsylvania Convention Center. You can register here.

I am especially looking forward to the conference, because as my Office shapes its creative economy strategy it will be extremely valuable to soak up ideas and best practices from around the country (and world - Global is in the title after all!).

Wednesday, September 9, 2009

The Arts and "Plan C"

The State House is scheduled to act this Thursday on the bill that would allow the City to close a $700 million gap in its five year budget. Without this action the City will be forced to implement the "Plan C" budget which would be crippling to the City on many fronts, and would effectively eliminate all City cultural programs.

For those that have not been following this saga closely, the budget approved by the City Council and the Mayor required action from Harrisburg on two items - authority to raise the local sales tax by 1%, and some changes in the City's pension plan. The House eventually passed a bill - 1828 - that gave the City what it needed. The Senate then considered the bill and passed it with an array of amendments designed to rein in pension expenses throughout the state. That bill is what is now going back to the House. If the House passes it without amendment it will be signed by the Governor and the City's budget will be balanced. If the House passes a budget with further changes that the Senate does not agree to, the City will be forced to begin the process of implementing Plan C.

In the Arts, Culture and Creative Economy area, this means that notifications will begin going out to the field late tomorrow, providing details on what programs and services will be lost. Much has been written about all the horrible cuts included in Plan C - closure of all branch libraries, closure of recreation centers, 50% reduction in trash pickup, suspension of most programs and operations of Fairmount Park, police officer and fire fighter layoffs. But there has been relatively little coverage of the arts cuts included in Plan C.  Here is a summary of what will be eliminated:

  • All funding and staff or the Office of Arts, Culture and the Creative Economy, including suspension of the Art in City Hall program and the Public Art program.
  • City funding for the Philadelphia Cultural Fund
  • City support for the Philadelphia Museum of Art, Atwater Kent Museum, and African American Museum of Philadelphia
  • City support for Mural Arts Program
  • City funding for Avenue of the Arts
In related areas, the cuts to Commerce will include virtual elimination of the Art Commission and the Historical Commission. Other cultural programs and support that take place through Recreation, Records, City Representative and other departments are also largely eliminated. In terms of timing, staff will be notified if they are being laid off on September 18th, and all cuts and layoffs will become effective as of close of business on October 2nd. This is also when all program eliminations will take effect. If the House and Senate agree prior to September 18th, the notices will never go out, and in fact if there is agreement anytime up until October 2nd, we can pull back from the precipice. After that point, while programs and staffing can still be restored it gets much more complicated. Some staff may take retirement and not be able to or interested in returning to work; they may also find employment elsewhere. It will be complicated in many cases to restart programs, reopen facilities, etc.

There is hope that with pressure from their constituents, state legislators from both legislative bodies and both sides of the aisle will find a compromise before this comes to pass. It goes without saying these cuts will be crippling to the City and a significant blow to its citizens.

The shame of all this - if it does come to pass - is that there was so much hope and so much progress being made in our City arts and culture work and the sector as a whole, despite the difficult economy.

So let us hope this is not the case, that this becomes just a bad memory. BUT, citizens must take action to ensure that Plan C is just a piece of history - it won't happen by itself. Citizens can't just assume it will all work out, or leave it to others to act. And those that care about arts and culture need to ensure their voices are heard - that they care about the cultural life of the City and view these cuts as unacceptable.

Chief Cultural Officers - or whatever titles they have - come and go. But the existence of the Office itself should not come and go. Now that the Office has finally been reopened, let's ensure it stays open, and becomes so firmly established in the coming years that no future economic crisis or change in administration could ever again threaten its very existence.

Thursday, September 3, 2009

"On the Wings of Music": Fostering cross-disciplinary, multi-organization partnership - a case study

I spent part of yesterday watching two huge sculptures by the artist Jun Kaneko be un-crated and erected in the courtyard of City Hall. Very exciting!

The temporary installation of Kaneko's giant "Heads" at City Hall is part of a City-wide celebration that has been dubbed "On the Wings of Music: Art, Opera and You." Stimulated by the Opera Company of Philadelphia's production of Madama Butterfly, which opens on October 9th, a production with set and costume designs by Jun Kaneko, a quite extraordinary multi-faceted partnership has been created:

* From now through 10/24 the two "Heads" will be facing off in the City Hall Courtyard.

* Also through 10/24 five of the artists equally large and dramatic "dango" sculptures will be installed in Commonwealth Plaza of the Kimmel Center.

* From now through April of 2010 the Philadelphia Museum of Art will be displaying four of the "dangos" at their Perelman building.

* The fabrics for the costumes of Madama Butterfuly were custom-made by students at The Fabric Workshop.

* The Locks Gallery, a private art gallery, will be mounting an exhibit of the artists work from 9/22-10/31.

* And, of course, there is the Opera Company production, which runs 10/9-10/18. Plans are afoot to add even more exciting elements, if funding allows. Stay tuned!

The Web site for the program goes live in around 9/8, and is

All of this makes me think how good - relatively speaking - Philly is at these sort of partnerships. People here can be self-critical, talk about how we need more collaboration and partnership, and that is certainly always the case - we can always do better. But I think this partnership is just one of many examples of multi-faceted, multi-organization, public/private partnerships that seem to happen a lot here. I frankly think such partnership is the wave of future, not just here, but throughout the country and even the world. Even the largest arts organizations need to learn how to forge partnerships, for example: to serve underserved communities not by trying to duplicate the work of community-based organizations or compete with them, but to PARTNER with them.

I encourage everyone to check out Kaneko's work all over town!