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1st Quarter, Article 2April 2014

Report models hypothetical cultural and entertainment funding options

The Forum released the second installment of its comprehensive research on major arts, cultural, recreational, and entertainment institutions in Milwaukee County on March 14. The report received front page coverage in that day's Milwaukee Journal Sentinel (as well as editorial coverage on March 16) and also was featured prominently by the Milwaukee Business Journal, WUWM, and Wisconsin Eye. Forum staff presented the report at five different venues during the week of March 17 and Forum President Rob Henken participated in a "live chat" on the report on JS Online.

 

A major emphasis of the report is its effort to frame deliberations on a possible new cultural and entertainment funding source around important public policy considerations, including the role of culture and entertainment in the regional economy and the desirability of potential reforms to local government finance and structure.

 

"Discussions in Milwaukee have focused, thus far, on the type and amount of a potential new tax," says Henken. "Our research shows that other communities that have engaged in similar debates also have thought carefully about the types of institutions that should be publicly supported, whether public support for those institutions should be ongoing or time-limited, and whether the need to support important regional cultural assets also should be viewed as an opportunity to promote greater equity and balance in the financing of certain local government functions."

 

The report - entitled The Show Must Go On? - analyzes dedicated funding models in five other metro areas and models four hypothetical approaches for Milwaukee County. The five metro areas and their different funding strategies are summarized as follows:

  • The Allegheny Regional Asset District in Pittsburgh uses a permanent half-cent sales and use tax to provide substantial operating support to nine high-profile cultural assets, pay debt service on new sports stadiums and a new convention facility, and provide smaller grants to dozens of additional arts and cultural organizations.
  • Cuyahoga Arts and Culture in Cleveland uses a 10-year (but renewable) 30-cent-per-pack cigarette tax to provide operating and project support grants solely to arts and cultural organizations. 
  • The Scientific Cultural and Facilities District in Denver uses a one-tenth-of-a-cent sales and use tax, which must be renewed by voters periodically, to support arts and cultural assets in a seven-county region. 
  • Oklahoma City Metropolitan Area Projects (MAPS) uses a temporary one-cent sales tax to finance major capital improvement projects that are considered central to improving the city's economy and quality of life. 
  • The Zoo Museum District in St. Louis uses a permanent property tax mill rate of 27.97 cents per $100 of assessed value as the primary source of operating and capital support for five major publicly-owned cultural institutions.

After considering these approaches and discussing considerations regarding the equity and effectiveness of specific taxing mechanisms, the report models four distinct dedicated funding approaches and their hypothetical application in Milwaukee County.

 

"Our modeling exercise reveals the advantages and disadvantages of using different funding approaches and different types of taxes to address the arts, cultural, recreational, and entertainment needs identified in our December 2013 report," says Henken. "We conclude that there is no right or wrong approach, but the strategy that is pursued should reflect the Milwaukee community's unique objectives."

 

While the report does not attempt to define the correct policy objectives for Milwaukee, it suggests that there are clear pathways for action depending on how they are defined by policymakers and the community at large:

  • A supplemental funding approach could be pursued if the objective is narrowly geared toward addressing immediate basic operating and/or capital needs of arts and cultural institutions and parks, while leaving existing funding structures largely in place and deferring on the issue of a new arena or expanded convention center. The report's modeling indicates that a 30-cent-per-pack cigarette tax or .1% (one-tenth-of-a-cent) sales tax could generate about $120 million over 10 years in Milwaukee County to support this objective.
  •  A high-quality public assets approach could be pursued if the objective is to maintain quality and accessibility only for major publicly-owned arts and cultural assets by providing them with dedicated funding that would eliminate their need to compete for resources with other government functions. The report's modeling shows that a dedicated property tax mill rate of $1.32 per $1,000 of equalized value in Milwaukee County could support that objective. 
  • A major capital projects approach could be pursued if the objective is oriented toward financing major capital improvements that hold potential for boosting the region's image, enhancing tourism, and attracting and retaining talent. The report's modeling suggests that a .7% (seven-tenths-of-a-cent) sales tax for eight years in Milwaukee County could generate a $692 million package of such improvements in Milwaukee, including a new arena and expanded convention center.  
  • A comprehensive tiered approach could be pursued if the objective is to reform local government finance and structure by permanently replacing a portion of the county property tax levy with a dedicated county sales tax for the publicly-owned parks and cultural institutions, while also providing a means to support a new arena, expanded convention center, and annual grants for the broad array of other arts and cultural entities. The report's modeling shows that such an approach would require a permanent sales tax of about .75% (three-quarters-of-a-cent) in Milwaukee County or .35% if applied to a broader five-county region.  

"Obviously, there are several variations of these strategic directions and several possibilities for merging them, and there is also the option of simply maintaining the status quo," concludes the report. "Framing the discussion around these key questions and approaches, however, would allow policymakers, civic leaders, and interested citizens to clarify objectives and determine a possible path forward to achieve them."    

 

The report was commissioned by the Spirit of Milwaukee.