Mayor Muriel Bowser is proposing an unprecedented cap on funding for the D.C. Commission on the Arts and Humanities (CAH), leaving the local arts community concerned about the future of its funding model — despite a projected increase in the commission’s budget for next year.

The commission is funded by dedicated taxes: Roughly 5% of sales tax revenue goes to the Arts and Humanities Fund, which supports the agency’s general operations and grant programs for local artists.

But in her Fiscal Year 2024 budget, Bowser has proposed that the commission only receive a fraction of an increase in tax revenues, limiting the growth of the arts budget to 2% each year. (This means that even if sales tax revenue jumps by, say, 10%, the arts commission’s funding from taxes would not increase in concert.) Critics at some of the city’s performing arts organizations say this cap does not account for inflation.

Theaters are still struggling to recover from early pandemic lows

Theater leaders argue this proposed change to the dedicated tax revenue places an unfair financial burden on the city’s arts and culture sector, which employed nearly 55,000 residents and contributed $13.8 billion to the District’s gross domestic product in 2021, according to the U.S. Bureau of Economic Analysis. These organizations generate revenue for the city and need financial support as they try to pull out of the pandemic-era audience slump, the leaders say.

Bowser’s proposed amendment to the funding model couldn’t come at a worse time, says Rebecca Medrano, co-founder and executive director of GALA Hispanic Theater, the nationally recognized Latino performing arts center in Columbia Heights. Like many other theaters, GALA is behind on ticket sales this year. Medrano expects the box office to fall short by at least $100,000 from last year, when the theater produced a popular musical about the life and music of the Estefans, On Your Feet.

A good year in pre-pandemic times would bring in about $425,000 in ticket revenue, not the $280,000 Medrano predicts to see at the close of this year.

“This amendment would have a negative impact on grantees going forward,” Medrano tells DCist/WAMU. “All of us are struggling now to regain audiences, to stay afloat after this very slow recovery.”

And as pandemic funding dries up, Medrano says local arts organizations will need to rely heavily on the arts commission for financial support. GALA relies on the arts commission to provide three grants that make up close to $290,000 — roughly 14% — of its $2 million budget. If that model were to change, the theater’s programming would be cut significantly, Medrano says.

“As you know, there’s no more emergency pandemic money,” Medrano adds. “In GALA’s case, we lost close to $500,000 that, over the last two or three years, helped us get through the pandemic. Those funds are no longer available.”

Medrano testified before the D.C. Council against Bowser’s proposal, but she’s not the only local arts advocate who’s been outspoken. Amy Austin, head of Theatre Washington; Rebecca Lemos Otero, executive director of HumanitiesDC; and Jenny Bilfield, president and CEO of Washington Performing Arts also testified. Bilfield called the proposed amendment “alarming” and urged the D.C. Council to strike the language restricting CAH’s share of tax revenue and keep the funding model as is.

“The newly proposed scenario for FY24 forward essentially limits the upside to maximum possible growth of 2% regardless of the level of growth in D.C.’s economy,” Bilfield testified. “However, the proposed amendment does not limit the downside impact to public arts funds if the sales tax base shrinks.”

A record year for the arts commission budget

Still, the arts commission could have a record amount of funds to distribute next year as the new calculation goes into effect, because the 2024 budget is funded by 2023’s tax revenues. The mayor’s proposed FY24 allocation for CAH is nearly $51 million, which would be the largest amount it’s ever received — by comparison, the commission received $34.5 million in 2021, so the proposed budget has increased by 48% in just three years, according to D.C. Council records. This increase is likely due to the rapid uptick in sales tax revenue since the 2020 pandemic lows.

In this budget growth, officials saw an opportunity — especially as the city experienced reduced overall revenue, according to the Office of the City Administrator.

“Implementing a 2% growth cap on CAH’s dedicated tax revenues was a prudent and necessary step to close a nearly $1.7 billion budget gap,” OCA said in an emailed statement. “The 2% cap still allows for growth in a budget in which funding for most District programs has been kept flat or returned to pre-pandemic levels.”

The commission’s funding comes almost completely from dedicated taxes — no money comes from the District’s general fund, and it receives just a small amount in federal funding. This funding model was approved in 2018 and received some backlash from organizations like the D.C. Fiscal Policy Institute, which argued that the government was prioritizing arts over other critical needs and disproportionately affecting low-income residents.

The funding model is also unique in that, because the commission is only funded through tax revenue, it can maintain a balance of unspent funds from year to year.

Not a done deal

Bowser’s proposal is not official just yet. D.C. Council committees hold oversight hearings and recommend changes before voting on the budget in late May or early June before sending it to Congress, which has the final say on D.C.’s budget.

D.C. Council Chairman Phil Mendelson, who leads the Committee of the Whole that oversees the arts commission, says he opposes the mayor’s proposed budget cap. The committee has recommended adjusting the budget to reduce CAH’s administrative costs by more than $400,000 and eliminate some newly proposed positions while retaining others. (Currently, about 82% of its budget goes to grant programs, with the remainder going toward its administrative costs.)

The committee also proposed the creation of a large capital grant program that would be funded at 9% of the commission’s total budget each year, “given the additional resources available to the commission year after year.” In FY24, this would mean more than $5 million of the budget would fund “capital improvements in arts venues.”

Notably, the mayor’s proposed cap on growth of the CAH budget is nowhere to be found in the committee’s budget report.

“I’m hoping that we will remove that cap,” Mendelson tells DCist/WAMU. “That came from the mayor, so I can’t speak to the intent or thinking other than that the mayor was hoping to have less money for the commission and more money for her to spend.”

Reggie Van Lee, chair of the arts commission, has remained optimistic — and diplomatic — saying Bowser’s proposal is just part of the budget process: “Nothing is official until the council votes, the mayor signs, and Congress has its review,” Van Lee said in a recent CAH meeting. “At the end of the day, this agency is about equity, so we can work with any scenario as long as it can be done equitably.”

Regardless of what happens with the budget amendment, Bielfield and others say the economic recovery of the broader D.C. community is linked to the financial health of the arts industry — no different, say, than the importance placed on occupancy rates of commercial office buildings downtown.

Bielfied added in her testimony: “As we continue to emerge from the first phase of the pandemic and to take stock of the lasting economic impact in our field and community, we are just at the starting line of what we know — and always knew — would be a multi-year recovery.”