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 2022, 10 state arts agencies received funding through a special tax or fee.
In FY2022, the 10 state arts agencies below received 28% of their total revenue from special taxes and fees. The median percentage of state funding received from the general fund is 76.2%.
State arts agencies 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 is used to support the arts in each state. It is more common that the new taxes are created by the legislature. In some cases taxes and fees are meant to replace general fund appropriations, and in other cases the statute specifically states that funds cannot supplant the arts agency’s general fund appropriation.
For more information on special taxes and fees or other dedicated revenue strategies, contact NASAA Research Manager Mohja Rhoads.
|Arizona Mechanism: corporate filing fees
Statute: Arizona Revised Statutes 10-122
The 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 FY2022, this mechanism accounted for 100% of the Commission’s state funding.
|Arkansas Mechanism: sales tax
Statute: Arkansas Constitution, Amendment 75
Nine 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 about 65% of the Arts Council’s state funding in FY2022.
|Delaware Mechanism: recordation fees
Statute: Delaware Code Title 9 § 9607
The 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 more than 38% of the agency’s appropriation in FY2022.
|District of Columbia Mechanisms: sales tax and delinquent debt fees
Bill: DC B22-0901
Statute: Amends Title 47 of the District of Columbia Official Code and D.C. Law 19-168; D.C. Official Code § 1-350.04
Beginning October 2018, the DC Commission on the Arts and Humanities receives 5% of the tax revenue collected from a 6% sales and compensating use tax. The same bill also authorized the arts agency to receive a portion of funds annually from the Delinquent Debt Fund, not to exceed $2.5 million.
|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 just over four-fifths of the Arts Board’s state funding in FY2022, and is the largest single supplemental funding mechanism in the country for a state arts agency.
|Mississippi Mechanism: sales tax
Statute: Mississippi Code § 37-61-33
A 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 more than one-quarter of the Commission’s state funding in FY2022.
|Missouri Mechanism: income tax
Statute: Missouri Revised Statutes Chapter 143, Section 143.183
Sixty 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. In FY2018, legislation extended the income tax sunset clause from 2020 to 2030.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. The Arts Council still receives the bulk of its funding from this mechanism, which is appropriated yearly through the general fund. In FY2022, money coming from the trust comprised 100% of the Arts Council’s state legislative appropriation.
|Nevada Mechanism: hotel/motel room tax
Statutes: Nevada Revised Statutes 244.3354; Nevada Revised Statutes Chapter 368A
The Nevada Arts Council received funds from two different taxes in FY2018. 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 FY2022 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 8% of the Arts Council’s state funding.
|New Jersey Mechanism: hotel/motel room fees
Statute: New Jersey Permanent Statutes 54:32D-2
The 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 50% of the agency’s FY2022 legislative appropriation.
|South Dakota Mechanism: tourism tax
Statute: South Dakota Codified Laws Chapter 10-45D
The parent agency of the South Dakota Arts Council, the Department of Tourism, receives 1.5% of the tax levied on a variety of tourism related activities. Taxed activities include spectator events and visitor attractions as well as room and campground rentals. A portion of these tax revenues is used to fund the Arts Council. This funding source made up the entirety of the agency’s FY2022 legislative appropriation.