Arts community shocked by new tax burden

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."