Let’s say you’re a mayor of a small town in Indiana. Let’s say that, through the application process set up by the Indiana Arts Commission, you encourage your town council to establish an arts and culture district in your downtown.
If you succeed, congratulations! Your downtown district will join ten other districts statewide that have already approved by the Indiana Arts Commission including the Nashville Arts and Entertainment District, Tippecanoe Arts and Culture District, and the Columbus Arts District.
Before popping open the champagne, however, town leaders might want to turn their attention to some of the arts-related businesses in a town’s district that might need a monetary boost in order to succeed. One of the bills up for consideration in the current session of the Indiana legislature is Senate Bill 255 could help do just that.
Authored by Sen. Jon Ford, Sen. Ronald Grooms, and Sen. James Buck, SB 255 will allow a town (or city, or county) to establish a base tax in the cultural district development area. It then allows towns to grant money to an arts-related entrepreneur via an incremental sales taxes captured within a cultural district to ultimately benefit cultural and arts-related development within that district.
As Miah Michaelsen, Deputy Director of the Indiana Arts Commission, explains, the requirements to establish an arts and culture district in the first place are elaborate.
“Just to put it into context,” she says, “[it] requires them to articulate goals for an arts district, articulate ways they’re going to support a cultural district, whether those are unique programs or funding initiatives, festival development [...] identify their key cultural assets, whether they are actual physical assets, or whether those are people or events; and so forth and then the plans to enhance and improve them.”
Michaelsen also emphasized that no new taxes would be created through this legislation, which would also subject cultural districts certified by the Indiana Arts Commision to annual review by the commission and be recertified every four years.
“It would be an incremental sales or local income tax capture, so a base is set,” explains Michaelsen. “What then would grow then above that base would be sent to the Arts Commission.The community could then apply for those funds to apply to specific arts and cultural projects in their cultural districts.”
For example, if the base tax were to be set at $25,000, and the next year revenue grew to $29,000, then the $4,000 increment would go to an Indiana Arts Commission.
Those funds, Michaelsen says, wouldn’t just be available to nonprofit arts organizations. “This type of incremental tax capture and grant program could potentially support growing an entrepreneurship program for for profit businesses that are creative in nature like a music recording business, a record or art supply store, or a for profit comedy club.”
“Those sorts of things could potentially be ways that this sort of tax might help support those investments. They could still invest in festival or startup nonprofit enterprises as well. The Arts Commission doesn’t have a way to support for profit arts and culture creative endeavors, and this tax could help a community do that.”
Ultimately, SB 255 provides economic development tool that arts and cultural development hasn’t had in the past, say supporters of the legislation. “We have TIF districts, we have CRE districts, we have urban enterprise zones,” says Michaelson.
“We have lots of economic development tools but they don’t really work well for the creative sector from a programmatic standpoint, certainly for other types of arts and culture investments.”