What, Exactly, Was Cut?

The details behind a few line items in the City of St john’s Budget 2016-2018 have been making headlines since December. In particular, line item 7551 Grants & Subsidies (GS) under “Other Recreational & Cultural Services” encompasses the 50% cut to “The Arts” that started a wave of protests in early January.

Of the $200,000 initially cut from the $1,305,000 (2015) that comprises the entire Grants & Subsidies line item, $170,000 (85%) came from what could be classified as “the arts”; $100,000 from “grants to individual artists and arts organizations” (down ~50% from 2015)*; $20,000 from Arts Procurement (down 100% from 2015); $50,000 from “Special Events and Festivals” (which could affect other community sector festivals as well,  down 50% from 2015). Inferentially the other $30,000 in cuts come from the remaining community, sports and recreation subcategories.

*203,000 was the amount reported as available (in 2015) on the grant applications on the City’s website. Councillor Sandy Hickman mentioned the original as 206,000$.

Policy Changes

Changes to the GS policy in 2016 have consolidated all community, arts, sports and recreation applications into one pool. The efficiency behind this “experiment”, as described by councillor-at-large Sandy Hickman, is simple and meant to be beneficial.

Each year some of the money allocated to each category was held back in the event of a late application of strong merit: a contingency fund. No one wanted predominantly volunteer-run community organizations, and the communities they served, to be penalized for one missed January deadline.

But each year, money was left in the pot. In multiple pots. A contingency was turning into untapped resource. (Side note: this “money left in the pot” is precisely from whence came the restoration of the Arts Grants to Individual Artists/Organizations announced by City Council in response to the protests).

Allocation vs Spending: Are They Fatal Stab Wounds or Cuts in Name Only?

Ideally, consolidating would cut out these inefficiencies so that a larger percentage, overall, of the money allocated for grants will be spent each year. But the fact that arts were disproportionately cut to begin with, from the allocations making up the larger line item, has many arts organization concerned that their field was not considered as vital to the city as other groups competing for these dollars.

As for the specific subcategory of “Festivals and Special Events”, according to councillor-at-large Dave Lane, the allocation there had increased in recent years, but the awarding of it had not kept pace, leaving a larger portion in the pot and unused each year. Lane explains that this cut, while still a 50% cut in allocation within the budget, will not be likely, in practical terms, to result in a 50% reduction in money granted for festivals as compared to previous years.

But according to at least one local Arts organization with an annual festival, their grants from the city have declined the past three years (though what they are contractually required to give the city in return each year in the form of acknowledgment, advertising and continually verbalized support, never declines in kind) even as the allocation was growing and money was being left unspent.

Healthy Art Organizations Matter Whether You Like “the Rubber Boot Gang” or Not

The importance of spending what is allocated becomes clear when considering where the money goes. Last November, The Community Sector Council of Newfoundland and Labrador (CSC) published a pilot study, “Demonstrating the economic contributions of Community Sector Organizations in the St. John’s Region.”

This study developed a methodology for measuring direct, indirect and induced economic impact of Community organizations (non-profit and volunteer run) in our larger metropolitan region. Their sample of 45 participating organizations included those from the arts, health services, tourism, sports&recreation, disability support, justice and more.

While these community groups are generally appreciated for their societal contributions, Penny Rowe (CSC ’s Chief Executive Officer) emphasized that “in addition to the fundamental work they do [to fulfill their various mission statements], they generate economic opportunities … The pilot participants alone directly employ 804 full time (or equivalent) staff with an implied 475 jobs indirectly created through spending.”

In addition to documenting the expansive employment effects of the community sector, the study shows that these groups spend their money. They spend it in taxes, on payroll, on supplies and marketing, on event space rental and caterers. The vast majority of that spending is done locally. With national grants/donors funding a large portion of the revenue for the community sector budgets, and the majority of expenditures happening in-province, these groups have a significant and positive affect on our local economy.

If the portion of community sector revenue coming from the municipality is small anyway compared to other sources, and technically it is just being recycled within the city, why are advocates so vocal in their work to maintain or grow those small grants and subsidies?

Community and volunteer organizations, including arts organizations, work within very small overall budgets. With each grant cycle the organizers of the festivals and the creators of the theatre, dance, written and visual arts must “cut the cloth to fit [the budget]. We don’t go in the hole; we just size accordingly” says Sound Symposium Director Kathy Clarke Weary.

This efficient and “make-do” attitude permeates every aspect of community organization planning. But necessarily, when the size of a project decreases, so does the targeted local spending. And isn’t there some inevitable cut off, where the cloth is cut so small that nothing much can be made from it, even by the most creative among us?

Longtime arts advocate/filmmaker/actor Ruth Lawrence says that, for several festivals with whom she works closely, “this cut [to festivals and special events] is devastating …  If the cuts remain, our flagship festivals, some of the main tourist and cultural attractions our city has to offer, will suffer untold consequences.” If that happens we might expect the small engines of economy that are our arts and community groups to slow or halt, and so a diversified infrastructure of pipelines for Money from Away erodes.

The Larger Picture of our Entrenched Budget Woes:
the Good, the Bad, the Realty Tax

And this stems from just one line item in a complex budget. Just one place where future economic health (and quality of life) seem to be compromised for a short term balance. Everyone loves the arts when quoted (except within the cesspools of online commenting where there is no love for naught) and the city’s revenue should intuitively benefit from these small investments which amplify the health of the local economy.

But the balancing of the budget is not intuitive. It is straightjacketed. While the pre-budget public consultations with stakeholders set up by the city produced call after call to “achieve savings in innovative ways” (budget 2016 preamble), that is tricky when medium and long term “savings” inherently incurred by bolstering local economy, health and wellbeing of the citizens, have no path to find their way back to increased city revenues.

The vast majority of the city’s revenue is from realty taxation. Any growth of the city’s budget remains tied to housing starts. There is no current direct positive feedback loop to city Hall from any gains of a healthy economy unless accompanied by more building. While development is one potential effect of a healthy economy, there are limits to it, and, like all else in life, there are inevitable cyclical slowdowns.

To make up for slowing housing starts, we have witnessed a large jump in assessed value of both residential and business realty for 2016. This, paired with the scrapping of exemptions from the realty tax for vacant properties, allows the city to project a steady current revenue, a balanced budget, no matter if the economy as a whole weakens. Even if the burden of this revenue source itself is a cause of some local economic collapse.

The positive side of this is that services can, in theory, be maintained during hard economic times; the downside is that the city may end up being a factor in bringing on those hard times.

There are a multitude of examples of the city supporting the arts daily in innovative and collaborative ways from large commitments like the Quidi Vidi Village Plantation to the small but magical moments like when they agreed to turn off a section of street lights to increase the ambience of a Reveen impersonator being borne to shore across the harbour as a part of an avant grade festival event.

But the city budget is not fundamentally built to succeed when the city succeeds. It is built to succeed only when the city spreads.