Where the Cuyahoga Arts Tax Comes From and Where It Goes

By Bruce Checefsky

Since 2007, the five-member county-appointed board of Cuyahoga Arts and Culture (CAC) has awarded grants totaling $235,725,317 to more than 445 organizations through general operating support and project support, with the big three — The Cleveland Orchestra,  Cleveland Museum of Art, and Playhouse Square — receiving almost 30% of the total or more than $68 million. Some 32 other organizations were awarded between $1,000,000 and $14,000,000, while the remaining 410 county organizations shared the rest. Individual artists received between 2-3% of the total.

Reports from the CAC website that included annual reports and yearly audits, which are public information, do not have a precise dollar amount awarded to individual artists or a list of artists that have received funding during this period. The issue was the subject of bickering during the last CAC Board meeting between board members Charna Sherman and Nancy Mendez.

With the current tax levy expiring in January 2027, Cuyahoga County officials are trying to determine when to place the new levy on the ballot for a vote. If successful, Ohio SB164, which authorizes Cuyahoga County to convert its existing cigarette tax to a wholesale tax and levy a new tax on vapor products, will begin as soon as it passes. If the levy fails, it will be back to the drawing board for arts funding . Issue 8, which renewed Cuyahoga County’s 10-year, 30-cent-a-pack tax on cigarettes to support arts and culture in 2015, was passed by 60 percent in all 58 communities.

Cuyahoga County Council board member Michael Gallagher said, in an email response to CoolCleveland, that the council has not been asked for opinion nor briefed on the issue. “I suspect that at the appropriate time, we will address the issue,” he said.

Dale Miller, county council board member, replied that the arts community will not wait until just before the expiration. “I’ve heard no talk of placing it on the ballot this year, so I am assuming that is not going to happen; however, a submission sometime next year is possible.”

Critics of the tax say that it hurts low-income people. Americans making less than $35,000 a year have a smoking rate of 20.2%. People living in poverty smoke cigarettes more heavily and smoke for nearly twice as many years as people whose family income is three times the poverty rate, according to the American Lung Association, while every increase in the price of cigarettes reduces consumption among adults and youth.

However, the National Institutes of Health cited a study showing a striking lack of evidence about the impact of increasing cigarette prices on smoking behavior in persons diagnosed with mental health or non-nicotine substance abuse disorders, heavy and long-term smokers. Evidence suggests that increases in cigarette taxes are associated with small decreases in cigarette consumption. A sizable tax increase, on the order of 100%, will decrease adult smoking by as much as 5%.

Leading public-sector organizations have identified the arts as part of a strong state policy portfolio. A strong arts sector is an economic asset that stimulates business activity, attracts tourism and expands the workforce and tax base. Artists play a role in cultural vitality and economy. According to the National Endowment for the Arts (NEA) analysis of U.S. Census occupational data, artists are nearly 3.5 times more likely than the total U.S. workforce to be self-employed (33.6% vs. 9.8%).

Cuyahoga County has an estimated 17,500 artists. In recent years, support to artists through CAC has decreased the individual grants from $20,000 to less than $5000, with more artists receiving less support and generally tied to community partners like SPACES, Julia de Burgos Cultural Arts Center, and Karamu House. The Assembly for the Arts received $140,000 to support projects to focus on redlining, a discriminatory practice of the systematic denial of services such as mortgages, insurance loans and other financial services to residents based on race or ethnicity. Assembly will participate in the program for the first time in 2023.

Some cities have enacted tax policies to fill the gaps in funding their arts organizations. In St. Paul, Minnesota, the Sales Tax Revitalization (STAR) Program, the city applies 10% of total sales tax revenue to arts and cultural projects to revitalize the cultural district. Columbus, Ohio, initiated a ticket tax that charges a 5% fee on any ticket over $10 at Nationwide Arena, home to a National Hockey League Team. This approach generates funds from a sales tax rather than a flat fee. The ticket tax only impacts those investing in arts and cultural activities and does not unfairly burden those who do not have the dispensable income to spend on such activities.

A bill waiting for approval in the Washington State Legislature would allow counties and cities to create a cultural access program by imposing up to 0.1% in sales and use or property tax. In 2018, Tacoma became the first city where voters approved a cultural access program, followed in April 2022 by Olympia. Similar programs exist in St. Louis and Denver.

In three Michigan counties, residents pay a property tax that helps fund the Detroit Institute of Arts, which gives its residents free admission. In St. Louis, property tax revenue generated about $85 million in 2018 for institutions like the Saint Louis Zoo, Saint Louis Art Museum, and Missouri History Museum.

CAC issued a press release earlier this year that said Senate Bill 164 is not a new tax and referred to it as “permissive language that allows the county to decide whether or not to convert and expand the current tax.”

Cleveland State University associate professor of law John Plecnik, who is also a Lake County commissioner, said it’s six of one, half a dozen of the other.

“In a nutshell, you can argue that Senate Bill 164 is conceptually a brand-new wholesale tax on cigarettes and vaping products to replace the old 30-cent-per-pack tax on cigarettes,” he said. “In the alternative, you can argue it is an approximately 80% to 90% tax hike based on the projection that the new tax base and rate will collect approximately $20 million per year from Cuyahoga County as opposed to $11 or 12 million per year. Either way, whether you call it a new tax or a tax hike, if Cuyahoga County decides to place this issue on the ballot and voters approve it, Senate Bill 164 will result in a large tax increase.”

[Written by Bruce Checefsky]