ArtsATL > Art+Design > Mayor Reed’s fractional tax for art could provide long-sought support, but questions remain

Mayor Reed’s fractional tax for art could provide long-sought support, but questions remain

Illustration by Sarah Lawrence.

Editor’s Disclosure: Louis Corrigan serves on the board of Atlanta arts nonprofit Flux Projects, which has received grants from all of the public funding entities discussed in this article, as well as MAAF. ArtsATL has received grants from OCA as well as the Fulton County Arts Commission.

Two days before his final State of the City address on February 2nd at the Marriott Marquis, Atlanta Mayor Kasim Reed surprised the city — and some in his administration — by announcing plans to revive a fractional 1/10th of a penny sales tax for art. A fraction of a penny may not sound like much, but the tax could provide $10 – $15 million annually in long-sought dedicated public funding, which would have a huge impact on Atlanta’s arts community.

“Organizations like the Woodruff Arts Center are thriving, but our small and medium-sized groups, our young and emerging artists, need additional support,” Reed said. “We need to give back to the creative community that gives so much to our city.”

Mayor Kasim Reed
Mayor Kasim Reed

Such support would be widely embraced by the arts community. The funding accrued by the tax would dwarf the $3 million in annual government funding now directed to Atlanta’s arts organizations, potentially changing the game for small- to mid-sized groups bubbling with talent, energy and ambition but perennially constrained by low government funding, especially from the state of Georgia. Many Atlanta arts organization leaders have greeted the news with enthusiasm.

“We are very excited about Mayor Reed’s proposed fractional tax for the arts,” said Lisa Cremin, director of the Metropolitan Atlanta Arts Fund (Arts Fund), which awarded $1 million in competitive arts grants last year. The Arts Fund is part of the Community Foundation, which gave about $15 million in total arts grants last year, making it one of the state’s leading arts funders. “Many other cities across the country have various tax-related funding instruments for the arts,” Cremin said. “It provides reliable revenue which is what arts organizations need.”

Reed said his plan is modeled after Denver’s 1/10th of a penny tax. In 2015, it generated $55 million with grants going to 240 organizations. There’s a hitch, though — in Denver 64% of these funds went to just five large institutions, with 21% to mid-sized organizations and 14% to smaller ones.

Without serious tweaking, that’s not a model focused on small- and medium-sized groups and young and emerging artists. If modeled without modification, much of the funding would go directly to the titan of Atlanta’s arts community, the Woodruff Arts Center, which is already thriving. Asked for comment, the mayor’s office reiterated Reed’s emphasis on helping small- to mid-sized groups.

Veronica Kessenich, executive director of the Atlanta Contemporary, said she’s also encouraged. “A lot of what’s coming down the pike is going to be inspiring and motivating and demand a lot of action.” She expects the mayor’s plan “to serve more arts organizations than prior plans,” and thus it’s going to depend on broad support. Her hope is that the initiative will “start a conversation” that will encourage increased philanthropy for the arts in the public and private sectors.

Yet some arts leaders remain cautious. The mayor has not made public a detailed plan. Many wonder how the funds would be allocated and who would manage them.

Significantly, the mayor will seek community feedback. Camille Love, executive director of the city’s Office of Cultural Affairs (OCA), said a public survey will go out in March.

Reed’s plan is rooted in two earlier attempts by Atlanta’s leaders to identify and secure such funding. They offer mixed signals. Mayor Shirley Franklin’s culture Task Force in 2007 proposed a similar $10 million in funds with 40% to 60% earmarked for small- to mid-size groups and only 20% to 40% directed to the large organizations. A follow-up effort in 2011 was modeled on Denver’s plan.

The allocation math also shifts dramatically if, as with Denver, the funds can be tapped by cultural institutions beyond core arts groups such as historical societies, botanical gardens, science museums and zoos. All  were eligible under the 2011 initiative, though, significantly, aquariums were not.

Virginia Hepner
Virginia Hepner

Virginia Hepner is CEO of the Woodruff Arts Center, though she will be stepping down in May. She was deeply involved in the 2007 effort and directed the 2011 drive. Hepner has in the past advised the mayor on arts issues, but she said she has not seen the mayor’s proposal. Still, she said, “I’m excited about it. The mayor really understands how important arts and culture is to a city. He knows a lot about the financial ecology of the arts here.” Hepner pointed out that before becoming mayor, Reed spent six years on the advisory committee of the Arts Fund. Hepner said that when the time is right, Woodruff would certainly share its views to help shape the plan. “Everyone should,” she said.

The Woodruff Arts Center is a single nonprofit with three divisions: the Atlanta Symphony Orchestra, the High Museum of Art and the Alliance Theatre. It’s a one-stop-shop for high-level culture donors, including corporations, which is reflected in its $110 million in operating expenses for 2014, the last year on file. It recently raised $110 million — including $1 million from the city — in a special two-year fundraising campaign to boost endowments, renovate the main Alliance theater and provide greater access to families. This initiative exceeded its goal by $10 million and came on top of its normal annual fundraising campaign.

Woodruff is a critical Atlanta institution, but it is also an outlier, whose heft often eclipses the rest of Atlanta’s vast arts ecosystem. “Atlanta has a united arts fund, but it only funds the Woodruff,” said Jan Selman, former board chair of the Georgia Council for the Arts. “In other places, the united arts fund supports a lot of institutions.”

Metro Atlanta’s next largest arts nonprofits – the Center for Puppetry Arts, the Atlanta Ballet and the Atlanta Opera — have budgets in the $5 million to $12 million range. MOCA-GA and the Atlanta Contemporary, the city’s leading institutions devoted to contemporary visual art, have budgets just below $1 million compared to $5 million or more for comparable organizations in other cities.

A past survey by the Arts Fund showed that most small- to mid-sized arts groups in Atlanta had less than three months of operating cash on hand. As the leader of one organization said recently, “We’re so busy trying to survive that we can’t thrive.” The Arts Fund has led the way in addressing such issues by providing large, stabilizing grants, but those groups still need help.

Jessyca Holland is executive director of C4 Atlanta, a small nonprofit focused on helping artists build successful careers in the city. It’s become increasingly involved in advocacy in support of its 700 artist members. “There’s still much to learn about the mayor’s initiative,” she said. “But I’m hopeful that this stream of funding will be dedicated support for organizations that have a wide and diverse community reach.”

“As arts organizations in Atlanta are increasingly expected to compete for ever-dwindling pools of funding, Mayor Reed’s pledge to prioritize small- and mid-sized organizations is leadership I can get behind,” said Chris Appleton, executive director of WonderRoot, a growing nonprofit that provides support for emerging artists and community initiatives. “Sustainable, non-competitive funding is critical for organizations that don’t have large development teams and should be made available to organizations serving individuals who deserve increased access to arts and culture.”

Equity and access are important twin issues circulating within the nonprofit arts sector. Both are highly relevant to justifying a regressive sales tax that has a greater impact on lower-income families underserved by arts organizations.

Economics and political timing

The mayor’s timing does seem auspicious. The tax initiative must first be blessed by the Georgia General Assembly, which blocked a related statewide proposal in 2011. The mayor hopes legislators will look more favorably on a tax limited to the city. Atlanta residents easily approved a 4/10ths of a penny transportation tax increase last November, and that effectively left 1/10th of a penny lying on the table to top off to a 9% sales tax.

Supporters in the General Assembly have not yet introduced the required bill. But if the mayor can overcome that hurdle, a referendum could go before Atlanta’s voters in November, coinciding with the mayoral election. “I really want to see the politicians who are against funding for the arts,” Reed told the Atlanta Business Chronicle.

Past arguments for government support were tied to the multiplier effect. Atlanta’s Regional Arts Task Force in 2001 noted that “every dollar contributed to nonprofit arts organizations generates 13 additional dollars of economic impact.” Studies show that cultural tourists tend to stay longer and spend more at area restaurants and hotels.

Since then, the arts have become an increasingly important part of the business community in Atlanta and the state, justifying a public investment like other leading industries do. Americans for the Arts’ Arts & Economic Prosperity Study IV  found that in 2010 Atlanta’s arts and cultural nonprofits directly generated $300 million a year in spending while employing 9,400 people.

The last decade has brought an influx of creatives to the metro area, as state tax breaks attracted Hollywood production companies. Atlanta is now the third-largest TV and film production center in the US and fifth largest in the world, according to Reed, who said nearly 100,000 people work in creative jobs in the Atlanta region. Corporations like Mercedes-Benz have relocated to Atlanta, drawn in part by this cultural vitality.

Statewide, creative industries employ 200,000 people, generating $12.1 billion in earnings, $37 billion in revenue and $62.5 billion in economic impact, according to the new data released by the Georgia Department of Economic Development. The creative industries now represent 5% of all jobs in the state. Arts and culture comprises 31,000 of these jobs, generating $690 million in wages and $2.2 billion in economic impact.

Lara Smith, managing director of Dad’s Garage, one of the city’s most successful independent theater companies, said, “Atlanta has an incredibly diverse ecosystem of arts organizations, and anything that will strengthen that is exciting to me personally and professionally. Our city has been a hub for creative industries, and we know people working in these fields seek out the arts. A dedicated funding stream would have a meaningful impact not just on the individual organizations but on our growing population.”

Atlanta’s search for a dedicated source of arts funding

Atlanta’s leaders have known for years that the city needed a dependable funding source for the arts. Mayor Reed’s proposal is grounded in former Mayor Shirley Franklin’s Arts and Culture Funding Task Force convened in April 2006.

The Task Force included a cross-section of the city’s business, philanthropic and civic elite, with Chair Penelope McPhee of the Blank Foundation, Vice Chair Dr. Andrea Barnwell Brownlee of the Spelman Museum, high-profile members like Hepner and Suntrust’s Raymond King (now CEO of Zoo Atlanta) and advisers like the Arts Fund’s Cremin.

The group’s March 2007 report called for a $10 million annual Cultural Investment Fund for Atlanta “to increase access to and enhance the presence of arts and culture in the city.” This money would provide “dependable operating support” for the city’s arts organizations and nurture a culture to attract mobile knowledge-workers, dubbed “the creative class” that “makes a city economically successful.”

The group said the city should seek an earmarked portion of a new or existing tax tied to the hospitality and tourism industries. The funds would go to a new nonprofit-granting organization separate from the city’s Office of Culture Affairs to allow for potential regional participation.

The money broke down into three buckets with the bulk — $4 million to $6 million a year – going to Vitality Grants split evenly between small- and mid-size organizations. Aspiration Grants totaling $1 million to $3 million would go to artists and organizations that didn’t receive the Vitality Grants. Only $2 million to $4 million in Engagement Grants were directed specifically for the largest organizations. All grants were competitive.

MAACC’s efforts

Flora Maria Garcia
Flora Maria Garcia

The Metropolitan Atlanta Arts and Culture Coalition (MAACC) eventually took up the Task Force’s cause. MAACC was founded in 2002 as a non-profit with financial backing from the city, ten counties in the metro area, and private donors. Its early high-profile initiative to support arts organizations involved creating AtlantaPlanIt, an event listing calendar now owned by public broadcasting’s WPBA.

In October 2007, MAACC hired Flora Maria Garcia as its new CEO to identify and secure dedicated arts funding.  Garcia was knowledgeable about funding options. She had just spent seven years running the Arts Council of Fort Worth, where she secured 2% of bond issuances for the arts. Prior to that, she had led the Missouri Arts Council in St. Louis where she worked to get private donors to match entertainment tax revenue to fund a cultural trust.

Cities such as San Francisco generate millions for culture from hotel and tourism taxes. But those sources were already claimed by the Atlanta Convention and Visitors Bureau and Georgia World Congress Center Authority. A chunk of that money has now been committed to support the Atlanta Falcon’s new Mercedes-Benz Stadium. Garcia determined that a fractional tax for art was the best option for Atlanta and turned to Denver’s model.

MAACC became the research and administrative arm for a larger effort directed by the statewide Georgia Communities for Growth (GCG), a coalition of 80 statewide groups representing cities, counties and arts and culture organizations. GCG was led by Hepner as CEO and then-Woodruff CEO Joe Bankoff, who served as secretary.

Lawmakers introduced a CGC-driven bill to the Georgia Assembly in 2010 and a modified version in 2011. It asked the legislature to let local governments propose a referendum calling for at least a 2/10ths of a penny sales tax to fund arts and economic development, with two-thirds going toward arts. The tax would have generated $28 million for arts and culture in Fulton County alone.

Qualifying organizations included nonprofits such as museums, visual and performing arts centers or organizations, historical societies, botanical gardens, natural history organizations and zoos. The funds would go to a new “supervising organization.”

The bill laid out a complicated allocation formula, but the largest institutions would have gotten about 15% of their budgets from the fund with mid-sized groups capturing 17% and smaller organizations receiving 19%.  As in Denver, every qualifying organization was guaranteed some baseline support, but 20% of funds within each group were competitive.

Yet, most of the funds would have gone to the top 10% of organizations by budget. An organization with a $100,000 budget would have received around $19,000, whereas an institution with an $100 million budget would have booked $15 million. Critics outside Atlanta called it the “Woodruff bill.” The proposal passed the Senate with bipartisan support but got blocked in the State House.

Public funding for the arts has not recovered from the recession

A bold new public investment in the arts is not just long overdue; the money is also needed.

Overall government funding for Atlanta’s cultural community remains depressed. The Great Recession officially started in late 2007 and hit the arts hard throughout the US. At the local level, property tax revenue collapsed, budget deficits increased and severe belt-tightening ensued. With arts funding often the first to be cut and the last to be renewed, the pain has lasted years beyond the recession’s official end in mid-2009.

Of the three key public sources of Atlanta arts support, only the city’s OCA stands above its pre-recession funding level, with $1.25 million of its $2.55 million budget earmarked for grants, compared to $470,000 in 2012 and $600,000 at the 2007 pre-recession peak.

In 2016, OCA provided $620,000 to 18 larger organizations, $312,500 to 38 smaller ones, $38,500 to 13 individual artists and $200,000 in matching grants for 48 cultural projects under its crowdsourcing Power2Give initiative. OCA also administers grants from the National Endowment for the Arts (NEA), such as $100,000 for an Atlanta BeltLine partnership.

Graphic by Sarah Lawrence.
Graphic by Sarah Lawrence.

The NEA supports the arts in Atlanta and the state via the grant to GCA, partnerships with entities like OCA and direct funding to arts organizations like the $305,000 in grants to 16 Georgia organizations announced in December.

But that funding could be at risk if the Trump administration proves serious about eliminating the NEA. The Endowment’s funding has remained steady over the last five years at around $148 million – 0.004% of the federal budget, or about the cost of a single Air Force F-35 fighter jet. Still, that’s well below its 1992 peak of $176 million, especially adjusted for inflation. The Endowment became politicized during the culture wars that began during the Reagan Administration and has never fully recovered.

The Fulton County Arts Council (FCAC), long the largest local public funder, has budgeted $1.55 million for fiscal 2017 Contracts for Services arts grants, a slight increase this year. That’s up slightly from the 2012 post-recession nadir but still well below the $2.72 million allocated in 2008 and the $3.58 million peak funding in 2003.

FCAC serves broad areas outside the city of Atlanta’s footprint, so only part of these grants go to Atlanta-based organizations. Executive director Lionell Thomas, who joined FCAC last May after working for years at the DC Commission for the Arts and Humanities, said, “We are trending up in terms of funding.” But he noted that the Council is creating a new panel this year to ensure “geographic equity” in how it disburses funds. That may mean less funding for city-of-Atlanta focused organizations.

Graphic by Sarah Lawrence.
Graphic by Sarah Lawrence.

Meanwhile, state funding for the Georgia Council for the Arts (GCA) increased to $1.02 million for fiscal 2017, double the 2012 level but still a stunning 76% below the $4.19 million in 2008. Nationwide, state funding for the arts troughed in 2012 and fully recovered this year, leaving Georgia a major outlier.

Georgia now ranks 48th in state arts funding (up from 49th in 2012) at a meager 10 cents per resident, according to the National Assembly of State Arts Agencies (only Kansas and Illinois are worse). Regionally, Georgia’s per capita arts spending is dead last by a long shot, trailing neighbors like Florida ($2.12), Tennessee ($1.06), Alabama ($0.97), North Carolina ($0.83), South Carolina ($0.71) and even Mississippi ($0.58).

North Carolina has a comparable population and economy to Georgia’s, and yet it devotes $8.4 million to arts funding. Georgia’s failure to keep pace is baffling given the growing importance of creative jobs statewide.

GCA’s total 2017 budget includes an additional $772,000 from the NEA, on par with recent years, allowing the Council to issue $1.15 million in grants. Metro Atlanta organizations secured about 29% of GCA grants but 45% of the dollars available. Atlanta’s larger organizations are more likely to get the highly competitive partner grants, whereas the new Vibrant Communities grants instituted last year and Arts Education grants, introduced in 2017, are smaller but impact communities around the state that otherwise weren’t being served.

Karen Paty
Karen Paty

Karen Paty became director in 2011 just as Governor Deal reduced the Council’s budget and moved it into the state’s Department of Economic Development. She started with a statewide tour to get feedback and reset priorities for the post-recession funding reality. She gets high marks from arts organizations. “Karen works tirelessly to promote and provide opportunities for Georgia artists and art organizations,” said Amy Miller, executive director of Atlanta Celebrates Photography. “With such a small budget, efficiency and creativity are essential.”

The NEA requires a 100% match for grants, but for four straight years GCA’s funding could not qualify Georgia for all of the money the NEA was offering. Part of Paty’s creativity comes through in GCA’s partnerships with other state agencies that allowed the Council to capture these full resources while also enhancing its impact.

But with so little to work with and a current staff of four (down from 12 a decade ago), GCA’s impact has diminished.

Longtime observers, such as former GCA Board Chair Selman, say the Council’s prior director alienated even political allies in the General Assembly, making GCA an easy target for cuts. And while nobody wants to blame GCA’s funding issues on partisan politics, it’s clear that Council funding rose steadily under Democratic governors and started its decline once Republicans gained control of the governor’s mansion and the state General Assembly.

Political leadership and community support

Political leadership and community lobbying both seem required to ensure arts funding.

In 2011, with the city budget tight, Mayor Reed initially considered cutting OCA’s grants in half from the $470,000 level. Arts supporters rallied to OCA’s defense, both in the streets outside of City Hall and before the City Council. Shortly thereafter, the mayor had an awakening. He surprised a crowd at the annual Arts Fund luncheon by supporting a $1 million budget for OCA arts grants.

Similarly, FCAC’s funding has stabilized thanks to vocal community support. Arts leaders like C4’s Holland have gotten used to an annual ritual where the threat of severe budget cuts demands immediate action. Some proposed reductions have highlighted a gaping divide in priorities between the cultural community and Fulton County officials. In mid 2013, for example, an interim county manager proposed slashing $1 million from art grants to cover the lease on a jail. Arts organizations pushed back, and Fulton’s Commissioners rejected the cut.

New FCAC director Thomas said an Atlanta tax would have a positive impact on the Council’s funding. “It would begin to tell a strong story about the value of investment in the arts and encourage elected officials to make that investment.”

But Thomas also noted the need for effective lobbying. He grew the budget for the DC Commission from $7 million to $17 million in four years thanks to support from DC Advocates for the Arts. This association of arts organizations and supporters consisted of about 150 people who met with elected officials in small groups several times a year and organized letter-writing campaigns.

Others suggest that informal lobbying driven solely by arts administrators and organizations can look self-serving. Advocacy groups must involve the local business community. That kind of partnership is exactly what Atlanta’s largest cultural institutions and business leaders have engaged in for years.

Will the city’s young creatives make their voice heard?

Funding matters to Atlanta’s artists and small organizations. But they also face issues tied to displacement and gentrification like other city residents. Musicians lost the Old Fourth Ward’s band rehearsal space ThunderBox due to development. MINT Gallery lost its Beltline location when the rent doubled several years ago and, after interim spots, is again looking for a home. Rising costs are pushing artists out of in-town neighborhoods as developers build luxury apartments and affordable housing initiatives along the Beltline and elsewhere are slow to materialize.

These issues resonate with younger creatives drawn to South Broad Street. This area just south of the Five Points Marta station had many vacant buildings in 2013 when the nonprofit Dashboard staged a performance in one space and OCA’s Elevate arts festival followed with wall murals and street performances. Mammal Gallery opened shortly thereafter, followed by other newcomers Murmur and Downtown Players Club and underground art stalwart Eyedrum. These groups have succeeded through years of bootstrapping, and yet they will soon face removal as developers gobble up this prime real estate.

State Senator Vincent Fort is running for mayor as a progressive on what he calls a “people’s platform” concerned with such displacement. He recently held a town hall meeting at Mammal to listen to ideas from a standing-room-only crowd of a hundred young creatives. When one attendee said Mayor Reed’s tax plan was modeled on Denver, where the large groups got most of the funds, the crowd booed loudly.

Fort said, “I’m conceptually in support of” Mayor Reed’s proposal. But he warned the crowd, “You’ve got to cut your deal upfront. If you wait until after the election, anything can happen.”

Will these young creatives engaged with small, emerging spaces find their voice to shape the mayor’s plan? Unlike some cities, Atlanta’s grassroots arts scene has seen steady waves of new energy that leave behind significant organizations, whether that’s the Atlanta Contemporary, Eyedrum, WonderRoot or Living Walls. Such grassroots vitality is crucial to a city’s cultural health. Yet financial support to nurture the grassroots has always been too scarce.

Former MAACC director Garcia now runs Orlando’s United Arts Fund, amply funded with an annual budget of $6 million supporting 60 organizations despite serving a much smaller population than Atlanta. Yet Garcia remains wistful about her time here. “Atlanta has a dynamic arts community,” she said. “It deserves to be well-funded.”

It will be historic if Atlanta gets to vote to make that happen and even more historic if the funding gets widely invested.

 

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