Some members of the local arts community are voicing sharp concerns about the City expanding its amusement tax to include non-profits.
Speaking during the public comment portion of the Jan. 27 City Council meeting, Arts Council representative Toby Sachs told aldermen that it might make sense to levy a tax on the for special events [concerts and other live performances] that Northwestern University plans to start holding at Welsh-Ryan arena, “but we ask you to be careful to avoid unintended consequences through a blanket removal of the non-profit exemption.”
During the 2020 budget process last year, aldermen approved an increase to the amusement tax from 4% to 5%, requesting a follow-up to discussion to expand the tax to cover a broader base of amusement providers.
The possible changes include removing non-profit exemptions, which would result in an amusement tax being applied to all non-profit performances and exhibits that charge an admission fee, including all events sponsored by Northwestern University.
Addressing Council members, Mr. Sachs cautioned the move would “tax the revenues, the jewels of our performing arts community, organizations like Northlight Theatre, just as they move home to Evanston.”
He said other performing arts groups that would be affected include Mudlark Theater, the Evanston Symphony Orchestra, the Fleetwood-Jourdain Theater, the Actors Gym, Evanston Dance Ensemble, Piven Theatre and the North Shore Choral Society.
“They all benefited from Arts Council grants to support their outreach to schools and equity initiatives,” he said, “and imposing the amusement tax would cost them more than they receive from us in grants.”
“Those costs can only result in ticket price increases,” he continued, “driving down participation in the arts and equitable access to performances — that is just the opposite of what the Arts Council is working to do on your behalf.”
Another speaker, BJ Jones, the artistic director of Northlight Theatre and also a member of the Arts Council, told aldermen that the idea “that the non-profit cultural assets — that we value, and that distinguish Evanston from other communities — should become subject to taxation, is simply regressive and misguided.
“There are no other communities in this country that impose an entertainment tax on non-profit entities – not Chicago, not New York, Los Angeles, no, not even Skokie [Northlight’s previous home],” Mr. Jones said.
“Certainly, the cost would have to be imposed on our customers,” he said, “and the impact on our already modest budgets would be detrimental to our growth and our audience base.
“Statistically, ticket prices impact audiences,” Mr. Jones said. Northlight, for instance, is predicting its presence here will “spin off some $56 million dollars over five years – not in ticket sales,” he said, “but from intended expenditures like restaurants, shopping, parking and employee’s expenditures while working in Evanston.
“The average expenditure customers make while attending nonprofit events is $24.60” he said. “Fewer attendees mean less business for the community.”
Northlight’s mission includes a growing education department, serving many of the City’s non-profits, such as the YWCA, Family Focus, and the schools, he said.
Evanston “needs to find its welcome mat again,” he declared, “and open doors for the arts, for equitable housing and for new businesses. The arts are a path to more creative solution than regressive taxation.”
Another speaker, Diana Hamann, owner of the Wine Goddess, at 702 Main St., expressed concern that her shop would have to impose a 5% amusement tax on tickets sold for the store’s special events. The store currently offers Wine 101 classes pairing food and wine and also holds events with live music.
“I am here to vehemently oppose a small business like mine that has to solicit Evanstonians for yet another tax,” she told Council members.
The store is already “forced to collect a whopping 16.25% in sales tax, including 6% of which goes to the City in the form of liquor taxes,” she said. “I’ll remind you that no other community around here has such a liquor tax.”
“The point I’m trying to make is that liquor businesses such as mine already collect boatloads of money for the City,” she said. “To add another tax is to nickel and dime that same set of businesses time and time again.”
In Council discussion of the issue, Alderman Ann Rainey, 8th Ward, suggested aldermen “start a list of things we want to absolutely exclude from the tax and, conversely, things that we have no problem including in the tax.”
In her case, “I absolutely want to exclude from the tax any not-for-profit performing arts company that does not have a permanent venue,” she said.
At the same time, “any activity that takes place at Northwestern under the guise of the approval we just gave of 7,000-seat events, that’s got to be taxed,” she argued.
“These folks [Northwestern] have a hotel – they ought to have a hotel tax, but it’s not taxed,” she said. “I don’t want us to lose the opportunity to have an entertainment tax when … [performer Bruce Springsteen or] anybody comes here. I don’t care how many people are sitting in the audience – they have to be taxed. I don’t believe we can make Northwestern pay the tax, but the people who come to that venue, they have to pay the tax.”
Ald. Donald Wilson, 4th Ward, argued for exclusion for businesses such as the Wine Goddess and others throughout town that “have been doing a great job of creating experiential opportunities. So what I don’t want to do is punish them for doing that.”
Ald. Peter Braithwaite, 2nd Ward, also shared that viewpoint.
“If entertainment is not their major source of income, I see it more as just a marketing tool,” he said. “And I don’t think it’s worth the resources of our staff – and I’ll use the words ‘nickel and diming’ when they [the businesses] are spending money to bring in entertainment.”
Alderman Cicely Fleming, 9th Ward, acknowledged she has heard from non-profits wishing to be excluded from the tax.
Granted, the non-profit community “is not in it to make the money,” she said.
At the same time, “you also have buildings that are not on the tax rolls,” she said, addressing the audience. “And that burden is then picked up by our commercial properties or residential properties.”
While that reality might be frustrating, she said, “I would hope they [the organizations] understand this is going to the financial health of our City. We really want to be able to keep the income diversity that we have,” she said.
City staff held the discussion, hoping to get direction from the Council in drawing up revisions.
Some sort of non-profit exemption is common among neighboring municipalities, with certain restrictions, officials noted.
For instance, Chicago, with a 9% amusement tax, exempts certain amusements sponsored by religious, charitable, and not-for-profit organizations for fund-raising purposes, but limits such events to two per year, officials pointed out.
Both Chicago and Cook County also use a seat minimum for the tax to apply for live cultural events.
The exemption does not apply to movies and other forms of entertainment, they said.
Interim City Manager Erika Storlie said officials hope to come back to the Council in March with recommendations on the issue, taking into account some of the comments at the Jan. 27 meeting.