You may have heard that the Austin arts community rose up in arms in late March over an 11th-hour revision to this year's application for cultural contract funding. The change suggested a new narrow reading of the Texas Tax Code that covers arts groups receiving Hotel Occupancy Tax funds. The broad interpretation that's been guiding the city of Austin for years is that Austin's overall reputation as a creative capital brings tourists to town, so the city is free to distribute its HOT funds for supporting the arts – just 12% of the HOT total – without each grantee having to quantify how many out-of-towners it puts in local hotel beds. But in a March 12 letter, Cultural Arts Program Manager Vincent Kitch noted that cultural contract applicants for the next two-year funding cycle would need to start estimating tourist audiences in their applications due May 1. Allegedly, someone suggested last fall that the city was out of compliance with the state statute's stipulation that HOT funds for the arts be used "directly" for the promotion of tourism, and a new opinion from the city's legal department opted for the strict constructionist approach to cover the city's backside.
The letter garnered little attention at first, arriving as spring break and South by Southwest hit, but once artists realized what was up, they mobilized with uncommon speed. E-mails of alarm were fired off across the creative community, dozens attended a Monday Arts Commission meeting and a follow-up forum at the Dougherty Arts Center the next day, artists paid visits to City Hall, and e-mails flooded council member inboxes by the hundreds. The size and intensity of the response caught staff and elected officials off-guard – and got results. The Arts Commission drafted a letter to council urging repeal of the cultural contract changes, and the Economic Growth & Redevelopment Services Office, which oversees the program, complied. In a March 26 letter, new EGRSO Director Kevin Johns – just two months on the job, bless him – fell on his sword, calling the revision's launch "poor" and the message "unfortunately horrible" and apologizing to all concerned. But he also made clear the matter wasn't closed. He would be holding further discussions with a group of representatives from the arts community, the Arts Commission, and the hotel industry (at press time, that group was still being assembled) and would ask city legal to review the opinion.
And therein lies the issue: The Tax Code statute is open to interpretation. The hotel folks, who understandably want HOT monies going to entities that will boost their industry, interpret it to say that groups such as Austin Jazz Workshop, which may be culturally valuable but don't put heads in beds, don't qualify. The arts folks say that by contributing to the city's overall cultural life and making it more appealing to visitors, they do. Previous opinions by the state attorney general have indicated that the statute gives municipalities the leeway to decide what's appropriate or not. So the city gets to make the call, but it may well have ramifications on a statewide level. New opinions are being sought, both publicly and privately. This could be a precedent setter. More details as they develop.
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