Politics & Government

A new sales tax to fund arts could be coming in Mecklenburg as a ‘crisis point’ nears

As Charlotte grows, funding for one of its main arts organizations keeps falling.

Valecia McDowell, incoming chair of the Arts & Science Council, said the local arts sector is at a “crisis point.” To make up for steep losses in private giving, Mecklenburg County could ask voters this year to approve a new quarter-cent sales tax, which would provide a dedicated funding stream for the ASC.

“If we don’t reach some sort of pivot,” said McDowell, “We are going to lose a lot in this community.”

The ASC presented a plan for the new quarter-cent sales tax to Mecklenburg commissioners Tuesday. They will consider whether to take the proposal to voters in a referendum this fall.

The ASC funds local public art installations, education programs, awards and festivals, as well as grants to local arts groups. ASC, which receives a mix of revenue from the city, county and its annual workplace fundraising drive, is the main local arts agency for Mecklenburg and all municipalities within the county.

The group’s funding has not recovered from the shock of the 2008 economic crash and ensuing recession. From 2005 to 2008, the ASC received $16 million or more annually. In 2009, total revenue for the ASC dropped off dramatically, falling to $12 million.

Since then it’s continued to fall or remain stagnant, hovering around $10 million for the past seven years. As a result, ASC grants to local arts groups have fallen, from $13.2 million in 2008 to $6.8 million last year.

Much of the decline in revenue is due to a precipitous drop in the group’s annual workplace fundraising drive, McDowell said. Revenue from that went from raising $7.9 million in 2007 to just over $2 million in the most recent year. The ASC has gone from about 300 workplace fundraising drives each year to 75. A dedicated sales tax revenue stream would allow the ASC to discontinue its annual fundraising drives.

“Workplace giving is no longer an effective model for giving,” said McDowell, pointing to a decline at Charlotte’s United Way that led the group this month to announce a 25 percent across-the-board cut to its charitable grants. Bank of America told the group in December that the bank won’t be doing any workplace fundraising drives this year, a further blow.

The proposed quarter-cent tax would raise an estimated $50 million in fiscal 2021. Under its proposal, the arts community would receive 40 percent of that total, with the ASC managing and disbursing the funds. That would equate to $20 million, with the county receiving the other $30 million for whatever commissioners choose to spend it on.

Mecklenburg County

Mecklenburg County sales tax

The sales tax rate in Mecklenburg County is 7.25 percent, the second-highest in the state (Orange and Durham counties’ rates are higher, at 7.5 percent). That includes 4.75 percent in state sales taxes, 2 percent in county sales taxes and a half-cent sales tax approved by voters to fund transit projects such as the Blue Line light rail.

Adding to the sales tax could be controversial, even though all the commissioners said they support increased arts funding. County commissioners are already wrestling with how to set the property tax rate in the wake of the county’s first revaluation in eight years, which sent most home values soaring and has left homeowners worried about a big increase in their annual tax bill.

“I really, really, really believe that where we are in our culture, the answer is in the arts,” said commissioner Susan Rodriguez McDowell. “That’s what our country is so desperate for right now, bridging our differences.

“Having said that, I’m not a fan of a regressive tax,” she said.

Commissioner Pat Cotham said the revaluation could complicate a referendum on the sales tax this year.

“We have a lot of people talking about taxes,” she said. “The idea of adding another tax is problematic to me because of the timing of it. ... A lot of people are just upset about the reval.”

Several commissioners voiced support for the idea. Commissioners chair George Dunlap said the arts are an economic engine in Mecklenburg, and voters should get to decide if they want to fund the ASC through a sales tax increase.

“Culture really affects our community,” said Dunlap. “Allow the community to make the decision.”

Commissioner Susan Harden said she’s in favor of the proposal.

“I’m looking forward to making this argument to my constituents,” said Harden.

“I support the arts 1,000 percent,” said Ella Scarborough.

Vice chair Elaine Powell said if the ASC gets dedicated revenue from the county’s sales tax, there should be greater public oversight to how the money would be spent.

“People want to know where their tax dollars are going,” said Powell.

Commissioner Vilma Leake said more revenues for the arts is a good idea but could set a precedent for other groups to seek funding.

“If you’re asking for these funds, will other groups do the same?” Leake asked. “I support you, but I’m not sure if I can support the overall taxing the community from this perspective.”

“Arts and science is my thing,” Leake added. “I can dance, if I get my knees right.”

Ely Portillo covers local and state government for the Charlotte Observer, where he has previously written about growth, crime, the airport and a five-legged puppy. He grew up in Maryland and attended Harvard University.