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Update on State Arts Funding

posted by November 16, 2003

With state budgets suffering, most state arts agencies have experienced cuts in funding in fiscal year (FY) 2004. Of the forty-two state arts agencies reporting a budget decrease for the current fiscal year, ten had reductions of more than 15 percent. Unfortunately, the cuts come after an already bleak FY 2003. The National Assembly of State Arts Agencies reports that forty-two states diminished their arts budgets during the last fiscal year, with California and Massachusetts alone accounting for $44 million in losses. State arts funding plunged from $410 million two years ago to about $350 million in FY 2003. Despite attempts by some state legislators to dissolve completely state arts agencies as a cost-saving measure, currently fifty state and six jurisdictional government arts agencies are still operating. The various arts agencies help to support both established and emerging local artists and art organizations through grants and programs. They also help to bring art to rural and other underserved areas of the country, providing art education in schools and, in some cases, spurring economic development through the arts.

To make up for lost income, state governors are urging arts groups to find alternative funding sources, but corporate, foundation, and individual charitable giving is drying up as well. Total gifts by the nation’s top sixty donors fell from $12.7 billion in 2001 to $4.6 billion last year, according to a survey in the February 20, 2003, issue of The Chronicle of Philanthropy. The following is a more detailed look at the status of state arts agency budgets around the country:

Arizona: Governor Janet Napolitano (D) signed a FY 2004 budget that cuts state arts funding to $1.8 million, a reduction of 16 percent from 2003. In signing, she used her line-item veto for thirty-five sections; three of those affected funding for the Arizona Commission on the Arts.

California: With the FY 2004 state budget approved, the California Arts Council’s funding has been slashed by approximately 86 percent, from $18 million in 2002-3 to $1 million. (The National Endowment for the Arts [NEA] is expected to provide a matching $1 million, and another anticipated $1 million in revenues will come in from designer license plates, bringing the expected state arts budget to $3 million.) The council reports that this total represents a contribution of less than three cents per Californian per annum, with the national average being approximately one dollar. Based on this drastic budget reduction, all of its grant programs will be suspended and half of its staff positions will be eliminated.

Colorado: The state legislature, facing a $1 billion revenue shortfall in FY 2004, reduced the Colorado Council on the Arts’ budget from $1.04 million to $200,000. After this 80 percent cut, the council took another hit when Governor Bill Owens (R) ordered it to reduce overhead costs to $40,000 a year, which meant that it was forced to vacate its office space and reduce its staff from seven to one. For a while it looked as if the state’s action would cost the council an additional $614,000 in federal funding, because the NEA only distributes its grants through viably functioning state arts councils. Fortunately, the NEA backed off their original threat to withhold the money and awarded the council $613,600, allowing it to use some of the grant money for operations expenses. However, the NEA warned that they will keep close watch to make sure federal standards are being met and made clear that the funding was not meant to set a precedent.

Florida: State lawmakers allocated just under $5.9 million for the Division of Cultural Affairs’ grants programs in FY 2004, which received $32 million last year. A $200,279 grant from the NEA boosted the total budget to just over $6 million. The division will continue some of its grant programs, though on a much smaller scale, while temporarily suspending others. The state legislature also voted to eliminate the Corporations Trust Fund (derived from corporate filing fees in the state), which until May functioned as a unique funding source for the division’s operating costs. Now, the division will be funded from nonrecurring general revenue, thus increasing the level of competition for state dollars with other agencies each year.

Massachusetts: The Massachusetts Cultural Council has been level-funded at $7.3 million for FY 2004. Last year, it suffered a 62 percent cut to its state appropriation, resulting in the elimination of eight funding programs and severe reductions to its five remaining grant programs. About 1/4 of council staff were laid off.

Michigan: The state legislature passed a FY 2004 budget that includes a 47 percent cut to art and culture grants awarded by the Council for Arts and Cultural Affairs. The council also saw a 13 percent cut to their administrative budget. That said, it could have been significantly worse, as many in the state legislature had called for a total elimination of arts funding.

Minnesota: Overall arts funding was reduced by 32 percent for the next two years. This included a 60 percent cut to the state money that supports the Minnesota State Arts Board’s operations budget, a 29 percent cut to the Regional Arts Councils, and a 30 percent cut to the board’s grant programs. The Minnesota Humanities Commission fared even worse’it lost all of its state funding for the next two years.

Missouri: Earlier this year the state removed the Missouri Arts Council from general revenue funding, meaning the council will receive none of the $3.9 million it did last year. In just two years, state support has gone from $5.3 million to zero. Despite these cuts, the council has not yet been forced to reduce its operations drastically because it is partially funded by the Missouri Cultural Trust, an endowment for the arts funded by an income tax on nonresident athletes and entertainers. A total of $3,942,520 will be used for the council next year. Of that amount, $1.3 million comes from interest on the trust fund and $700,000 is federal funding from the NEA. Unfortunately, the trust money is also in danger, because the state legislature is using the athlete-and-entertainer tax revenue to fund other state programs in an attempt to close the state’s estimated $1 billion deficit.

New Jersey: Tens of thousands of New Jersey residents spoke out against a proposal by Governor James McGreevey (D) to eliminate the New Jersey State Council on the Arts by cutting its entire $18 million budget, to help close the state’s $5 billion deficit. State legislators listened. They passed a FY 2004 budget with $16 million appropriated to the council, $2.7 million to the New Jersey Historical Commission, and $500,000 for the New Jersey Cultural Trust. As part of the budget bill, a hotel/motel occupancy tax, which provides FY 2004 cultural revenue and dedicates funding in FY 2005 for these three organizations, was also passed.

Oregon: The Oregon Arts Commission lost all of its legislative funding in March as a result of emergency cuts in FY 2003, which applied to all state services other than health and safety. In August, Governor Ted Kulongoski (D) asked that the commission and the Oregon Cultural Trust merge their administrations as a cost-saving maneuver, a suggestion that was endorsed by both organizations as well as state legislators. As a result, the commission was kept alive with a budget of $1.2 million, which represents a 50 percent decrease. The trust will continue to be funded largely by the special tax credit set in place in 2001.

Tennessee: Despite statewide fiscal problems, Tennessee has been able to raise its level of arts funding for FY 2004. The Tennessee Arts Commission’s overall budget will increase to $5.25 million, nearly 17 percent from last year, because the commission’s main funding source is derived from nontaxpayer revenue, mainly the sale of specialty license plates.

Virginia: Due to the state budget crisis, the Virginia Commission for the Arts’ grant funds were slashed by 45 percent in FY 2004. The cut follows two budget reductions ordered in FY 2003 that had already taken away $1 million from the commission’s budget. In total, the accumulated cuts have decreased the commission’s annual budget from $4.9 million to about $2.7 million.

Although states across the country have made drastic reductions to a wide variety of programs and services in order to balance their budgets, cuts to state arts agencies are especially troubling, as they will result in the loss of matching funds from the federal cultural agencies and private donors alike. Furthermore, it is often very difficult to restore an agency’s budget to the funding level it had prior to the cuts, which means that any future budget increases to state arts agencies will most likely be based on these newly reduced figures. A good source of information on state arts funding can be found on the National Assembly of State Arts Agencies (NASAA) website at