June 5, 2009

Legislative Update

Obama Proposes Arts Funding Increase in 2010

Arts appropriations legislation will be back on the congressional agenda when Congress returns from the Memorial Day recess in June. Rep. Norm Dicks (D-WA), chair of the House Interior Appropriations Subcommittee, expects to begin drafting the fiscal year 2010 funding bill by the middle of June. Arts advocates are looking at the possibility again of an increase in the coming year in federal support for the National Endowment for the Arts (NEA).

President Obama has asked Congress to increase the NEA’s funds in FY10 by $6 million to $161.315 million. For the National Endowment for the Humanities, the president has proposed an increase of $6.3 million, for a total of $171.3 million in 2010. The budget proposal sets level funding of $38.16 million for the Arts in Education Programs at the Department of Education, and no increase from the $35 million for the Institute of Museum and Library Services (IMLS) Office of Museum Services.

The president’s $3.6 trillion budget proposal, released on May 8, includes some $17 billion in spending cuts to 121 federal programs. Total funding for the NEA’s state and regional partnership grants would go to $53.016 million, an increase of slightly more than $2 million over the current level. Within the allocations for partnership grants, the Obama administration proposes shifting $276,000 from the basic state grants to increase the support for underserved populations by $2.292 million. Education funding for partnership grants would remain at $1.7 million above the statutory requirement of 40% in program funds to the states.

Indeed, the NEA’s funding priorities reflect the agency’s mission stated in the budget proposal: “to provide national leadership to encourage and preserve excellent art; to help make it available to all Americans, especially those who traditionally have not had access to it because of economic and geographic barriers; and to connect and engage children and youth with America’s distinguished artistic legacy.”

As with state funding, the budget proposes an increase of just over $2 million in the Arts Endowment’s program grants. However, funds for direct grants would grow by $5.4 million, as $3.3 million from grants for the American Masterpieces program would contribute to fund the general grant support category.

Despite the decrease proposed in support for American Masterpieces, its funding would remain at $10 million, and the other national initiatives developed during the Bush administration would continue. Special mention is made of Shakespeare in American Communities which, “due to its overwhelming success . . . has become an ongoing program — Shakespeare for a New Generation.” Finally, funds for the NEA’s administrative costs would increase by $1.9 million, reflecting in part an increase in office rent of 26% over 2008 for the same amount of space.

According to the NEA’s budget plan, the agency’s programs will benefit an estimated 90-95 million individuals, including 10 million children and youth, and an additional audience of at least 500 million reached through support of national and regional broadcast performances on radio and television. NEA grants are expected to generate $600 million or more in matching support from direct grants alone.

The president’s detailed budget proposal for the NEA acknowledges that in a time of “significant financial challenges for the Federal government and the Nation, the budget request for the Arts Endowment gives recognition to the importance and substantive role of the arts and creativity in the lives of all Americans.” As an example, the documents cite North Carolina, where “the wages and income of workers employed by creative industries (arts and culture-related) infused $3.9 billion into the State’s economy in 2006.” The budget narrative also recognizes the importance of reliable federal support for the arts in the current economic downturn when reductions in state legislative allocations for state arts agencies are proposed.

The Obama administration’s NEA budget also proposes to increase the size of the National Council on the Arts from 14 to 18 members, plus six ex officio members of Congress designated by congressional leadership. In 1996, Congress reduced the size of the Council from the legislatively authorized level of 26 to 14 members, with the appointment for the first time of congressional members.

TARP Update: Congressional Leader Urges Banks to Give

In many cases, banks and financial institutions receiving federal support from the Troubled Assets Relief Program (TARP) are refusing to continue their financial support and sponsorship of arts organizations and other nonprofit groups. The top congressional leader on reform of the financial system, Rep. Barney Frank (D-MA), chair of the House Financial Services Committee, has written to federal regulators to make clear that banks that have received federal bailout money should continue their support to charities.

Frank’s letter was sent to Ben S. Bernanke, chairman of the Federal Reserve Board; Sheila Blair, head of the Federal Deposit Insurance Corporation; John C. Dugan, Comptroller of the Currency; and John E. Bowman, acting director of the Office of Thrift Supervision.

A number of arts groups around the country have raised concerns that TARP banks warned they would sharply reduce or terminate their giving because the companies are receiving federal assistance, apart from whether their precarious financial situations forced banks to decrease their charitable contributions.

Congressional Budget Plan Provides IRA Rollover

The congressional budget plan passed by the House and Senate in April includes provisions calling for a two-year extension of the IRA Charitable Rollover provision, set to expire at the end of 2009 if Congress does not act. In addition, bills introduced in the House and Senate in March and April would make permanent the current tax provision that permits tax-free distributions from individual retirement accounts (IRAs) for charitable contributions.

In the House, Rep. Earl Pomeroy (D-ND) and Rep. Wally Herger (R-CA) have introduced H.R. 1250, the Public Good IRA Rollover Act of 2009. The Senate version, S. 864, was introduced by Senators Byron Dorgan (D-ND) and Olympia Snowe (R-ME). Since first enacted in 2006, the IRA Charitable Rollover has generated significant contributions to a broad range of arts institutions and other nonprofit organizations.

The congressional budget resolution rejected inclusion of a proposal by President Obama to help offset the costs of health care reform by capping at 28% the deductibility of contributions by families earning more than $250,000. The president’s request at limiting the deductibility of charitable contributions, mortgage interest payments and other items has met so far with a poor reception on Capitol Hill.