CLEVELAND, Ohio — Arts advocates in Cuyahoga County rejoiced in 2015 when county voters approved a 10-year renewal of the county’s excise tax on cigarettes to support arts and culture by a landslide, with 75.2% in favor.
But it was clear even then that revenues from the 30-cent-a-pack tax would decline because fewer and fewer people were smoking, and because tobacco companies were raising prices in order to maintain profits, which also suppressed consumption and tax revenues.
Now arts supporters have come up with a new proposal to strengthen public support for the arts in the county and across the state of Ohio.
An alliance of four countywide arts organizations is drafting proposed state legislation that would enable county voters to replace the existing per-unit excise tax on cigarettes with a new, 8 percent tax on the wholesale price of all tobacco products, including vaping devices.
The organizations behind the effort include Cuyahoga Arts and Culture, the government agency that distributes the cigarette tax money for the arts; the nonprofit Arts and Cultural Action Committee, which led the campaign to renew the levy in 2015; Arts Cleveland, a nonprofit education and advocacy organization; and the Northeast Ohio Chapter of the National Independent Venue Association, which represents for-profit music and entertainment venues.
Aiming for November
Members of the alliance hope the state legislation could be approved in time to place an issue on the Cuyahoga County ballot in November, 2021, said Fred Bidwell, chairman of the Arts and Culture Action Committee.
Yet at the moment, the proposed state legislation lacks a Republican sponsor in a GOP-dominated General Assembly that often is reluctant to consider tax increases.
The new local tax would bring revenues back to where they were in 2007, the first year in which the levy took effect. The ballot language would be written in such a way that a “no” vote would not cancel out the existing excise tax, Bidwell said.
Supporters say the revenues from the new tax would buttress a critically important sector of the local economy heavily damaged by the coronavirus pandemic.
“The need was important before, but it’s urgent now,” Bidwell said.
In addition to broadening the local tax to include all tobacco products, the proposed legislation includes two other elements.
One would enable all counties in Ohio with counties that have populations greater than 200,000 to levy taxes on tobacco products to support the arts, if local voters approve. Today, only Cuyahoga County has that authority.
Some 13 additional counties would qualify, including Lake, Lorain and Summit counties in Northeast Ohio, plus Franklin, Hamilton, Montgomery, Lucas, Butler, Stark, Warren, Mahoning, Delaware and Clermont counties.
The second new idea is to exchange the state’s $1.25 excise tax on a pack of cigarettes for a 35 percent tax on the wholesale price.
That move would restore an estimated $100 million a year in revenues lost since 2016 due to declining cigarette use statewide, similar to the decline in Cuyahoga County. And it would bring the method of taxing cigarettes in Ohio into line with the way most other tobacco products are now taxed by the state, advocates say.
Proponents hope that enabling more counties to enact levies to support the arts would improve the appeal of their proposal to members of the state legislature. The same goes for the proposal to raise additional revenue by changing the way the state taxes cigarettes.
“We tried to craft a proposal that checks a lot of boxes,” said Mike Caputo, a partner of Capitol Partners, the lobbying firm advising the Cuyahoga County arts groups. “There’s a lot of people in Columbus who don’t support taxes in any shape or form, but we think that giving local communities this tool, if they choose to use it, is good public policy.”
Lisa Hanson, executive director of Dayton-based Culture Works, a nonprofit organization that serves the arts in Montgomery County, said the Cuyahoga County proposal has the potential to earn wide support.
“It’s not just one county’s initiative; it’s statewide,” she said. “I don’t know how it couldn’t strengthen the ask.”
Caputo, said he has not surveyed legislators about the proposal, but added: “I know that other communities are very eager to have this option, and I’m hoping they would reach out to their delegations and encourage them to support this as well.”
Waiting for details
State Sen. Matt Dolan, the Chagrin Falls Republican who chairs the Senate Finance Committee, told cleveland.com and The Plain Dealer that he couldn’t commit to supporting the tobacco tax proposals until he sees final language.
Dolan, whose committee oversees legislation affecting the state’s budget, said that the desire to support the arts through a new tobacco tax is “entirely appropriate.” But he added, “whether the mechanics are appropriate, we have to see.”
Counties near state borders usually oppose taxes that could cause consumers to cross state lines to make a purchase, he said. He also said that, “if you have dwindling tax revenue and you increase the tax, you are punishing those who are buying cigarettes.”
Dolan said he doubts there’s enough time to have the legislation introduced as a separate bill during the current lame-duck session, which ends in December, in part because the pandemic may shorten the session.
It’s more likely that the proposal could be considered as an amendment to the state’s new budget in 2021, he said.
Dolan added that, “I will look for ways the state can support through local initiative or otherwise our great cultural institutions.” But he said: “We have to make sure it’s fair.”
In order to meet the deadline for introducing ballot language in Cuyahoga County, the new taxing authority would have to be approved by the state by June, Caputo said.
If approved by county voters, the new tax would generate an estimated $25 million a year, an amount equivalent in inflation-adjusted dollars to the $20 million a year generated by the original excise tax on cigarettes in Cuyahoga County in 2007, advocates said.
The existing cigarette tax generates roughly $12.5 million a year now. Adjusted for inflation, the $12.5 million in revenues is actually equivalent to $10 million in 2007 dollars.
With the Cleveland Museum of Art, the Cleveland Orchestra, Playhouse Square, the Rock & Roll Hall of Fame and other gems, Cuyahoga County’s arts and culture sector has played an increasingly important role in the region’s economy.
But the sector is vulnerable to severe and lasting damage because of the pandemic, Bidwell said.
Cuyahoga Arts and Culture, reported in September that in the second quarter of the year, 65 organizations that receive general operating support through the cigarette tax had to lay off, furlough or reduce hours for 2,533 full- and part-time employees and contractors.
That number equates to 30 percent of the 8,250 workers employed by the 65 organizations in 2019.
And arts officials said the financial damage probably far exceeds those numbers by now because theaters and concert halls have been shuttered, and museum revenues have been decimated by the pandemic.
Enabling the new tobacco tax is about “making a very prudent investment in legacy assets that is very much needed now,” Bidwell said.
“It took us 100 years to build this,” Bidwell said, referring to the county’s cultural sector. “We could lose it in a year, and it would take us another 100 years go get it back.”