Tacoma's arts world: Ticket tax would hit at worst possible time

For at least 50 years, Tacoma’s nonprofit museums, theaters and performing arts groups have been exempt from paying taxes on ticket sales. That practice might come to a halt if Tacoma’s City Council institutes a proposed 5 percent tax on ticket sales to raise revenue and reduce potential layoffs.

Tacoma arts groups are not relishing the idea of passing the tax on to their patrons.

The proposal is one idea of several before the city that could potentially reduce cuts to city jobs and services – the result of a projected budget shortfall of up to $31 million. The city estimates that by adding the tax to admission tickets for performances, movies, museums and other events hosted by nonprofit groups, it could raise $600,000 per year.

The council will hear the first reading of the ordinance, which would remove the long-standing exemption for nonprofits, and take public input on Tuesday. The council will hear the final reading and vote on the ordinance Dec. 13.

The proposed ordinance has a $250,000-per-organization admission-revenue threshold, according to city finance director Bob Biles. Only groups with sales that exceed that figure would pay the tax, and only on the portion of the revenue over $250,000.

“We tried to pick a figure that would exempt the smaller organizations,” Biles said.

Implementation details are still being worked out. Biles said the city wants the ordinance written so to minimize the nonprofits’ administrative burden.

As written now, the ordinance would take effect July 1 and apply only to institutions and events within city limits. Biles said the admissions tax was established in 1943, and nonprofits were exempted sometime between 1943 and 1958.

While Tacoma arts groups are sympathetic to the city’s budget situation, but they are concerned about how the added tax will affect ticket sales.

“I totally understand the city is in a bad financial situation. But I think taking this out on the nonprofits that have really grown and changed downtown Tacoma is a risky way to do it,” said Philip Cowan, executive director of the Grand Cinema. “We’re not in it for the money, we’re in it for the product. And this is making it less accessible.”

Cowan predicted demand for tickets at the nonprofit independent movie theater will drop if the ordinance is implemented. That, in turn, would reduce traffic to nearby businesses such as restaurants, he said.

The Grand charges $7 for matinee tickets and $9 for evening screenings. Cowan estimates the prices will jump to $7.50 and $9.50 with the tax. Before the ordinance was proposed, Grand ticket sales for 2012 were projected at just less than $1 million, Cowan said. That would equate to about $37,000 in tax revenue annually from the Grand alone.

Seattle and Olympia don’t tax nonprofit ticket sales.

The proposal comes at a time when many arts groups are already struggling. Though the Tacoma Symphony Orchestra would most likely not be affected by the ordinance (its most recent season brought in $181,200 through ticket sales), executive director Andy Buelow said the group is still dealing with the effects of the recession.

“We’ve never gotten out of it. We have deliberately not raised our ticket prices in that time,” he said. To boost sales, TSO added $12 seats that have proved popular, he said. Ticket sales have remained steady, but the number of subscribers has dropped.

Ticket sales at Tacoma Musical Playhouse might be affected if the tax proposal passes, said Jon Douglas Rake, managing artistic director. Ticket revenue for the non-profit theater was $700,000 in its most recent season. Rake fears that seniors on fixed incomes might think twice about paying more.

TMP also has programming for families that likely would be affected, Rake said.

“That’s what were trying to build here: the next generation of theater goers.” Current ticket prices are $21 for children, $25 for seniors and $27 for adults.

Rake has other concerns. Ticket revenue does not make up 100 percent of the theater’s operating expenses, he said. TMP, like most nonprofits, relies on donor support, he said.

“In a sense, (we will be) asking the patron to help us twice – once for the city and again for our budget.” And if the theater has to raise its base ticket prices next year, it will be a triple hit for patrons, he said.

David Fischer, the executive director of the Broadway Center for the Performing Arts, has a different take on the proposed tax. Fischer says he wants to work with the city and thinks the BCPA can handle the tax.

“If we can be part of the solution, we’ll support that,” he said.

The BCPA rents its buildings (which include the Rialto and Pantages theaters) from the city but is otherwise independent. It had $1 million in ticket sales for its last season.

But Fischer does not want the proposal to be a tax on the arts. He wants the city to evaluate ticket sales to all events across the city to create “a level playing field.”

And when the budget crisis is over, Fischer would like to see the tax used to market Tacoma attractions. Cowan and Rake would like the tax to be discontinued.

Tacoma’s newest museum, Lemay – America’s Car Museum, will not open until June, but the proposed tax is already raising concerns.

“The negative impact on our situation is significant,” said Scot Keller, marketing and communications officer for the museum.

The car museum expects 425,000 visitors each year. Ticket prices have not been set but will be about $16 for general admission, Keller said. That doesn’t include special events such as the Kirkland Concours d’Elegance, which will move to the museum in September. Keller said ACM’s effect on the local economy is projected to be $34 million annually.

“Now with this tax potentially looming, it’s certainly giving us pause” about whether it will affect the number of admissions, Keller said.

At downtown Tacoma’s Museum of Glass, which draws about 150,000 visitors per year, director Tim Close acknowledges the situation the city is in but said he would like to have more discussions with the city before anything is adopted.

“I’m not for (the tax), but I’m willing to work with the city,” he said.

Craig Sailor: 253-597-8541

craig.sailor@thenewstribune.com