Wednesday, September 23, 2009

Pennsylvania's Budget: Sales Tax & Ticket Sales

Last Friday, Pennsylvania's long-delayed budget process got a little bit closer to reaching some kind of resolution. It hasn't been approved yet – they're planning to vote on it this Saturday – but one of the more controversial items came as something of a surprise: adding sales tax to the cost of tickets for arts and entertainment venues.

The $14.5 million dollars allocated for the arts in Pennsylvania has been reduced to $10 million – still better than one proposal that had eliminated it completely. But the likely impact of this sales tax, whether it's fair or not in light of movies and sporting events being excluded from it, is not likely to help the already beleaguered arts communities across the state when ticket revenues, even in the best of times, are already barely able to keep presenters and performers afloat financially.

Here are some recent articles and reactions to this new proposal, including one that appeared on Tuesday.

In an editorial from Harrisburg's Patriot-News, it is mentioned that Rep. Jake Corman (R-Centre and Republican appropriations chairman) considers adding this sales tax only to “professional” arts organizations and that such a ticket represents “the ultimate discretionary buy,” adding that “people could avoid it if they liked.” (I would imagine they could also avoid seeing the latest block-buster movie at the local cineplex, gambling at the casino or buying smokeless tobacco products, but I digress...)

The proposal expects this to bring in a $120 million in tax revenues. Some argue that some of this money will go into a “rainy-day” fund for the arts, though so far there seems to be no such thing.

Sports events had initially been included in this possible sales tax proposal but in the end were not included in the proposal. Considering that would add another $64 million in tax revenues, it doesn't make a lot of sense to drop it.

As the editorial continues, “Instead of the Steelers and Phillies helping close the budget gap, nonprofit organizations, such as the Pittsburgh Zoo, the Academy of Natural Sciences in Philadelphia and Harrisburg’s Market Square Concerts, seem slated for that.”

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UP-DATE: Dr. William Murray, president of the Harrisburg Symphony's Board of Directors, writes the "As I See It" column in Thursday's Patriot-News.
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This post is also intriguing, from a Philadelphia-base financial blog, “It's Our Money.

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'Get mad that it was necessary in part because of a big tax break for corporations…one that will cost you and other taxpayers nearly $100 million, the same amount to be generated by the so-called “culture tax.”

'The “Single sales factor “ is essentially a technical change that will mean big bucks for corporations like Hershey Foods and U.S. Steel – companies based in Pennsylvania that do most of their business elsewhere.'
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Check “Save the Arts in PA” for information as well – like Rep. Corman's explanation that this is designed as a “user fee” - or this re-post of Karen Heller's article from the Philadelphia Inquirer, “Who in Harrisburg Needs the Arts?”

There's also this article that appeared in Monday's Philadelphia Inquirer.

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Another area of concern was what arts people viewed as an unfairness in the budget proposal - that it would extend the sales tax to cultural venues but not sports events and movies.

City and state officials said yesterday that applying the sales tax to pro sports teams would be difficult if not impossible, due in large part to past agreements under which the state helped finance new stadiums in Philadelphia and Pittsburgh for the Eagles, Phillies, Steelers, and Pirates.

Barry Ciccocioppo, a spokesman for Gov. Rendell, said no law prevents the state from extending its sales tax to pro sports events. But such a move, he said, would hit those two cities hard.

Here's how: When the state agreed to help finance the new stadiums, the teams agreed, in return, to guarantee millions in annual tax revenue to the state. In the Eagles' case, for example, that is $2.5 million annually.

If more taxes are collected from sports tickets via a sales tax, the financially strapped city would have to pick up the difference, Ciccocioppo said.
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It continues by urging “members of the cultural community to blitz legislators and inform patrons in an effort to stop the tax extension.”

While there seems to be no plan to collect the tax retroactively for tickets already purchased, you might want to consider getting that season subscription before the budget is officially signed and implemented.

- Dr. Dick

(The opinions expressed in this post are those of its author, Dick Strawser, and do not necessarily reflect those of the management of Market Square Concerts or its Board of Directors.)

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