CINCINNATI — Nonprofit leaders flocked to address City Council Wednesday evening after administration officials earlier this week floated the idea of eliminating their organizations' exemption from the city's admissions tax.
During Monday's Budget and Finance Committee meeting, City Manager Patrick Duhaney outlined possible solutions to plug a looming $1.2 million budget shortfall in the streetcar's operating budget for fiscal year 2020, which begins July 1 — including removing the admissions tax exemption as well as changes to parking policies.
It's the first time since launching in September 2016 that the streetcar operations have faced a budget gap.
The idea has not sat well with people like D. Lynn Meyer, who serves as the artistic director for Ensemble Theatre Cincinnati, a nonprofit theater company that has operated in Over-the-Rhine for more than 30 years. The ETC operates on Vine Street, adjacent to the streetcar route.
"I understand the tough position you're in. We balance a budget every year," Meyer told City Council. "In fact, we have our budget already planned for next year, so the ticket tax would have a significant and dramatic effect on Ensemble Theatre."
The city charges a 3% admissions tax on ticket sales for nonexempt events in the city, such as Reds and Bengals games. It has been longstanding practice for nonprofit organizations, such as Ensemble Theatre, the Cincinnati Zoo, Playhouse in the Park, the Cincinnati Museum Center and other organizations to remain exempt from paying the tax. In 2018, Duhaney said the tax yielded $5.8 million in revenue for the city.
In his recommendations for the 2020 budget, Duhaney recommended removing the nonprofit exemption as part of a larger effort to plug the city's projected $18 million operating budget shortfall. The streetcar's $1.2 million gap is included in that $18 million.
"If we lost the money that it would cost us for this ticket cost, if we absorbed it, we'd lose a full-time employee, probably of our education staff," Meyer said.
In an FYI Memo issued Monday, Duhaney estimated that removing the exemption for nonprofits would generate an additional $1.5 million in tax revenue, which could go toward plugging the streetcar's operating budget.
Cincinnati Zoo and Botanical Garden Executive Director Thane Maynard also spoke Wednesday evening. He called the proposal putting "a Band-Aid on a systemic issue."
"The ticket tax is a bad idea for these nonprofits," Maynard said. "I think you need a common-sense solution to your long-term budget problems, and it's not something like a ticket tax on people that go to the zoo and use the museums and the arts.
"It should come as no surprise that this has many in the nonprofit world's hair on fire."
During Monday's budget committee meeting, Councilman Greg Landsman balked at the suggestion that these are the only solutions to the streetcar's budget problems.
"We have to be very thoughtful about this moving forward," he said, asking city and transit officials why new digital advertising signs — ordered to be installed at streetcar stops last year — haven't been implemented.
"This was revenue we were supposed to realize last year," he said.
In a tweet Thursday morning, Councilman P.G. Sittenfeld — who was absent from Monday's budget meeting — said he does not support eliminating nonprofits' exemption from the admissions tax:
Cincinnati's beloved Arts, Cultural, and Civic institutions are such a huge part of what make people want to live in our city, and they also drive enormous economic activity. (1/2)— P.G. Sittenfeld (@PGSittenfeld) June 6, 2019
The city administration has until June 17 to submit ordinances relevant to fiscal year 2020's budget.