Tuesday, May 25, 2010

Ready? Set? Open...

It's been around since long before I became director of the Arts Council. It has grown much bigger than even the tallest mountain in Vermont. It has its roots in dozens, if not hundreds, of Vermont communities. It is one of the quintessential Vermont happenings that define our collective character. And this year it is turning 20 years old.

Happy Birthday, Open Studio Weekend.

And while I'm at it, a big shout out to Martha Fitch who is the brains and the heart of this magical event that this year involves more than three hundred artists and artisans throughout the state organized by region and by type.

This annual event is a celebration of all artists and artisans--yes, even those who for a variety of reasons aren't part of the official tally of participants--who call Vermont home. Many of the participants view this as one of their primary "retail" opportunities; to connect with either an in-state or out-of-state buyer, and make enough sales to carry them through and beyond the summer season.

In most cases, artists and craftspeople open their own studios, but increasingly groups of artists are collaborating with each other; renting out empty storefronts for a short period of time, experimenting with ways to extend the luster of Open Studio Weekend by gracing an otherwise shuttered downtown street with their vibrant and colorful presence which reminds us, ultimately, of why we need art in our lives.

For the Department of Tourism, this event kicks off the Summer Travel Season which extends through fall foliage in mid-October. During these 4 1/2 months, Vermont shows off its plumage in a variety of ways. First is Open Studio Weekend, followed in short order by the Discover Jazz Festival, The Vermont History Expo, July 4th Celebrations everywhere, Yellow Barn in Putney, The Vermont Symphony's Summer Festival, Vermont Mozart Festival, Music at Marlboro...

...well, I am going to get in trouble because I can't possibly list the hundreds of extraordinary artistic offerings Vermont offers up in this column, nor have I even mentioned all the recreational and site-specific events and festivals that are out there to be enjoyed. But you really should keep track of what's going on in Vermont by visiting the statewide arts calendar frequently. It's worth your while

And after all, this post is about the Open Studio Weekend.

One of the ways the Open Studio Weekend is celebrating this anniversary is by working with the Bennington Museum to create a 50 year retrospective of the Vermont Crafts movement. State of Craft is an extraordinary exhibition that opened last weekend and will run through October and is absolutely a must for everyone this summer. Plan your staycations now, and be sure to include Bennington on your itinerary.

Well, that should do for now. Enjoy the coming weekend. Enjoy the summer. It may be short but it's packed!

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A follow-up to my last post on the Sales Tax issue (scroll down).

The final legislation was a little bit different than the draftI first reported on. It turns out the law will not change the current exemption for schools or student performances, but the law will go into effect on April 1, 2011 and not June 1, 2011 as I had been led to understand. Performances by artists after April 1, 2011, but who are under contract by June 1, 2010 will be also exempt from this law.

We will soon be dropping an organizational survey to ascertain how many arts organizations are likely to be impacted by this law--so please be on the lookout for it and get it back to us as soon as possible. Thank you!

Monday, May 10, 2010

Sales Tax and the Performing Arts

Vermont is in a deep hole financially and our elected and appointed officials have, understandably, been turning over every rock and pebble looking for new revenue. One of the rocks the tax department turned over a while back was the idea of levying a 6% sales tax on tickets sold by non-profit cultural venues that present live performances.

Based on this, they conducted an audit on a couple of our major institutions which resulted in a $190,000 tax bill being presented to one of them for sales taxes and penalties owed for the last two years. The Legislature, thankfully, has agreed that levying a sales tax retroactively is unfair, but it appears that it is their intention to put it into place effective July 1, 2011, with an exemption for those with less than $50,000 in ticket sales revenue and a second exemption--as yet not clearly defined--for educational institutions/programs.

One very compelling argument in favor of levying the tax, aside from the fact that Vermont needs the money, is that it is essentially a consumer tax borne by those who attend the events and should have no material impact on the operations of the institutions that have to collect and remit it to the state. This is a point well taken, and certainly well-argued by the several legislators who are in favor of it.

A second argument in favor has to do with equity. “Isn’t it inequitable NOT to tax the non-profits?” one legislator fairly shouted at me. “One person pays a sales tax at the movie theater which is the only entertainment he can afford. Why should someone else be exempted from paying a similar tax on the $100 ticket to the opera she purchases?” Again, good point well taken.

Unfortunately both of these arguments ignore what I believe are some very important reasons to move forward slowly on this issue, if at all.

The first is that the “price point” of a particular show, in the context of all the other events and services offered by a not-for-profit venue in a season, is a very delicate matter. A non-profit board, along with its manager, probably has an intuitive sense of what happens to their ticket sales when ticket prices are increased by only a dollar or two.

It may be that the difference between paying $25/ticket or $26.50/ticket is incidental to most of us who are accustomed to paying those prices. But the point is that it isn't a big issue on the consumer end of the transaction, it's a big issue on the institutional end. If even as few as 25 subscribers decide not to buy the full season of a venue’s offerings because the cost is just 6% higher than it was last year; or if just 10 single-ticket purchasers whose self-imposed "outer limit" is $50 now have to pay $53, and therefore they don't make the purchase; that loss in revenue is where the impact truly hits. Non-profit margins are just that slim…or at least that is what my own experience has been.

Also, the measurement of success for for-profit venues is profit, and the measurement of non-profits is the degree to which they successfully live up to their mission—usually to educate, inspire, transform, or transcend. For-profit venues can change their mix very easily, or extend the run of something that, like a hot Broadway Musical, is profitable. A non-profit takes far greater risks with its programming; it is hard to justify changing its program mix once it has committed to a season; and the small “benefit” of not charging sales tax--which encourages the folks who will pay $50 but not $53—ends up often being the difference between solvency and insolvency.

The second argument against the sales tax is that it represents a significant change of policy in the State’s taxing authority with regard to the non-profit sector—a change that has come about with almost no opportunity to study its impact and to hear from a broad cross-section of those most impacted.

A third argument is that (as of this writing) the tax is going to be levied without regard to the kind of performance that is being presented. Thus, a five-dollar student matinee, a very reasonable charge for educational programs, will cost $5.30. Is this wise policy to create income from the sale of tickets to our schools, even though most of the money schools use to pay for those tickets come from car washes and bake sales? It all seems penny-wise and pound-foolish to me.

There is a fourth argument against this that is far more troubling. This new interpretation of existing statute opens the door a crack to the State to consider what other taxes it could/should be levying on non-profit cultural institutions. Sales tax this year…what will it be next year? Property taxes? What would the impact on operations be if every venue that owned its own building suddenly had to pay property taxes?

Arguments in favor of the tax are simple, direct, and speak to equity from the consumer perspective only. I am far more worried about the impact on the institutions where there will, trust me, be an adverse impact.

We have until July 2011 to figure out which argument is more likely to be true. My ultimate belief is that non-profit institutions whether they are big like the Flynn or small like Vergennes Opera House are economic engines in every community in which they are allowed to flourish. The only guaranteed thing this tax will accomplish is to make it 6% harder for these economic engines to run sweetly and in tune.

My question is, will stepping out onto this slippery slope be worth the revenue gained?

* * * * *

On a related note, I wish to extend a huge thank you to the many arts constituents who contacted their legislators over the weekend. Dozens of phone calls were made, hundreds of individual email were posted, and in the words of one of my trustees, we did what we needed to do--buy our field a little time (six months) to get some good information, analyze it, and bring it back to the Governor and legislature next year before the law goes into effect on July 1, 2011.

Particular thanks are due to several individuals whose efforts in the Vermont State House were the backbone of our advocacy: Chico Lager (Flynn Center), David Coates, David Grimm (Champlain Valley Expo), Dan Casey (Barre Opera House), Alan Jordan (Vermont Symphony), Mark Nash (Vermont Stage Company), and Eric Mallette (Paramount Theater) all testified in person or by telephone before the House Ways and Means or Senate Finance committees.

My understanding, however, is that it was in large part due to the outpouring of messages from the field that turned the tide and bought us the extra six months. For that, and on behalf of all non-profit presenters, I thank you.

Speaking of thanks, the best thing you can do now is send a message back to your legislators thanking them for being so responsive to your earlier message and yes, we are very pleased with the final result of the committees' work.