Special taxes and fees have long been used by local governments to support the arts, but are less common at the state level. In fiscal year 2016, nine state arts agencies received funding through a special tax or fee.
These nine states received a median of 55.0% of their state funding from special taxes and fees in FY2016 and a median of only 27.8% from their state’s general fund. The median funding received from the general fund for all state arts agencies is 89.5%.
SAAs have been receiving revenue from special taxes and fees in a variety of ways. In Arkansas and Minnesota, voters amended the state constitution to create new taxes, a portion of which are used to support the arts in each state. It is more common that the new taxes are created by the legislature. In some cases these taxes and fees are meant to replace general fund appropriations, and in other cases the statute specifically states that these funds cannot supplant the agency’s general fund appropriation.
For more information on special taxes and fees, contact NASAA Research Director Ryan Stubbs.
|Arizona Mechanism: corporate filing fees
Statute: Arizona Revised Statutes 10-122The Arizona Arts Trust Fund receives one-third of the total annual filing fees applied to domestic and foreign corporations. The Arizona Commission on the Arts administers these funds. In FY2016, this mechanism was the only source of the agency’s state funding.
|Arkansas Mechanism: sales tax
Statute: Arkansas Constitution, Amendment 75Nine percent of a special sales tax (1/8 of 1%) is given to the Arkansas Arts Council’s parent agency, the Department of Arkansas Heritage. This tax also provides funds to the state environmental and tourism departments. This funding source made up roughly one-half of the Arts Council’s state funding in FY2016.
|Delaware Mechanism: recordation fees
Statute: Delaware Code Title 9 § 9607The Delaware Division of the Arts receives $25 in recordation fees from each document filed with county recorders throughout the state. This funding source was created to replace a portion of the general fund appropriation for grants, and made up about one-quarter of the agency’s appropriation in FY2016.
|Minnesota Mechanism: sales tax
Statute: Minnesota Constitution, Article XI, Section 15Three-eighths of 1% of sales taxes support the Arts & Cultural Heritage Fund in Minnesota; 19.75% of those dollars are then appropriated by the state legislature to the Minnesota State Arts Board and its 11 regional partners. This sales tax also benefits funds for outdoor heritage, clean water and parks, and will expire in 2034. The Legacy Amendment states that these funds should supplement, not replace, each department’s legislative appropriation. This funding source provided roughly four-fifths of the Arts Board’s state funding in FY2016, and is the largest single supplemental funding mechanism in the country.
|Mississippi Mechanism: sales tax
Statute: Mississippi Code § 37-61-33A portion of state sales tax is deposited into the Education Enhancement Fund each year. The Mississippi Arts Commission is authorized to receive up to $450,000 from this fund each year, and has received that amount nearly every year since the mechanism began. This funding source provided roughly one-quarter of the Arts Commission’s state funding in FY2016.
|Missouri Mechanism: income tax
Statute: Missouri Revised Statutes Chapter 143, Section 143.183Sixty percent of a 2% income tax on nonresident professional entertainers and athletes is deposited into the Missouri Arts Council trust fund. This income tax also funds the Missouri Humanities Council trust fund, the Missouri State Library networking fund, the Missouri Public Television Broadcasting Corporation special fund and the Missouri Historic Preservation revolving fund. This income tax expires in 2020.
Due to state budget constraints around the Great Recession, the Missouri Arts Council was directed by the state legislature to spend the principal of the trust, while revenues from the tax have been diverted to other state expenses. In FY2016, money coming from the trust comprised about 5% of the agency’s legislative appropriation.
|Nevada Mechanism: hotel/motel room tax
Statutes: Nevada Revised Statutes 244.3354; Nevada Revised Statutes Chapter 368AThe Nevada Arts Council received funds from two different taxes in FY2016. First, The parent agency of the Arts Council, the Department of Tourism and Cultural Affairs, receives 3/8 of 1% of the state’s hotel and motel room tax. Some of these tax revenues are transferred to the Arts Council. This funding source provided roughly two-thirds of the agency’s FY2016 legislative appropriation. Second, Nevada has an admission tax on live performances at a rate that varies from 5-10%. A transfer from the Depart of Taxation of funds generated by this tax amounted to 1/10 of the NAC’s state funding.
|New Jersey Mechanism: hotel/motel room fees
Statute: New Jersey Permanent Statutes 54:32D-2The New Jersey State Council on the Arts is appropriated a minimum of $16 million from state fees levied on hotel and motel rooms. While the agency has received more in the past, it has been appropriated the minimum amount allowed over the past two years. This funding source provided about 98% of the agency’s FY2016 legislative appropriation.
|South Dakota Mechanism: tourism tax
Statute: South Dakota Codified Laws Chapter 10-45DThe parent agency of the South Dakota Arts Council, the Department of Tourism, receives the 1.5% tax levied on a variety of tourism related activities. A portion of these tax revenues is used to fund the Arts Council. This funding source made up the entirety of the agency’s FY2016 legislative appropriation.