Looks like Bethlehem’s amusement tax will be increasing by 50 cents, rather than one dollar.
City Council voted to cut the proposed increase in half Tuesday night, but won’t take final action on approving any increase until its Dec. 16 meeting.
Council president J. William Reynolds said additional amendments can be offered by council members at that meeting and encouraged them to do so.
But he also reminded them any changes could impact the 2015 city budget, which also will be up for final approval that night. The budget will include an increase in city real estate taxes.
One outstanding question is whether City Council should completely exempt small non-profits, and perhaps even small businesses that sell tickets for performances, from the amusement tax.
Representatives from three of those non-profits sought to separate themselves from the for-profit Bethlehem Sands Event Center, suggesting they have loftier missions and many already are struggling to stay in the black.
But a spokesman for that event center argued every performance held there has a ripple effect that financially benefits Bethlehem, including other businesses in the city.
“We’re all in this together,” said Reynolds. “It is important to realize the economic benefit that the whole arts community has — and that includes people that might not be non-profit organizations.”
“There’s got to be some give on our part,” said council member Bryan Callahan, who made the amendment to reduce the amusement tax increase. “At the bare minimum, I would like to reduce the increased tax from a dollar to 50 cents.
“I feel the pain of the non-profits,” said Callahan. “I think it’s too much, asking them to come up with a dollar.
He said reducing the increase to 50 cents “hopefully eases the pain a little bit.”
Callahan also expressed empathy for the Sands Event Center, stressing it is not part of the Sands Casino and saying its operators “took a huge gamble in opening up that facility, with a lot of money out of their own pockets.”
Callahan’s amendment, which unanimously was approved by council, also changes the collection of the amusement tax from quarterly to monthly, beginning Feb. 1.
Council also gave unanimous first reading approval to the amended amusement tax increase ordinance.
The $1.50-per-ticket amusement tax was first imposed in Bethlehem in February 2013.
When the tax was implemented, the goal was that it would generate about $600,000 in new revenue. But the city fell far short of that goal.
This past August, the administration asked council to raise that tax to $2.50, to help close the projected deficit in the 2015 city budget.
The bill increasing the amusement tax was tabled at the Sept. 16 City Council meeting.
More help for non-profits?
Ten dollars is the minimum ticket price that tax applies to, said David Brong, the city’s business administrator.
Council member Cathy Reuscher said raising that minimum ticket price might alleviate some financial concerns of non-profits.
Reuscher said she will look into possible amendments to propose at the Dec. 16 meeting that would ease the burden on struggling non-profits.
Council member Adam Waldron said the compromise to reduce the increase to 50 cents is good “because it takes some of the pressure off the performing arts centers and puts more back on the city to try to close that financial gap.”
Waldron has concerns about the impact not only on non-profits but also on the Sands Event Center, the largest for-profit venue impacted by the ticket tax increase.
“To carve around the small non-profits might be an option,” said Waldron, but he noted ArtsQuest also is a non-profit “and quite a big one. To exclude all the non-profits may not be feasible.”
A couple of council members asked for a breakdown regarding how much revenue is generated by the tax on non-profits vs. for-profit venues.
Brong said he has done that breakdown, but did not have the numbers with him at Tuesday night’s meeting. He said he will provide it at the next meeting.
Mayor Robert Donchez has said Sands Event Center pays the most amusement taxes to the city.
Revisit the issue next year?
Council member Eric Evans said he had initial concerns about Callahan’s amendment “because that creates a gap we’ve been working so hard to try to fill.”
But he called it a fair compromise that will allow the city to reach its budget expectations, at least in 2015.
Evans indicated he was swayed by a memo from Mark Sivak, the city’s budget & finance director.
That memo explains the city will collect $550,000 additional revenue on a 50-cent increase in 2015, by collecting the tax monthly and because the payment for the fourth quarter of 2014, as the tax now is collected, won’t be received until 2015.
Evans said everyone might be happy if the city just completely axed the amusement tax increase, but then council may have to cut firefighters or police officers to help balance the 2015 budget.
He warned council will have to revisit the issue next year, because a $90,000 deficit is projected for 2016 by only increasing the tax by 50 cents.
Zoellner director’s opinion
Representatives of three non-profits and the Sands Event Center addressed council before it acted to cut the amusement tax increase in half.
“Non-profits must be viewed differently,” declared Andy Cassano, administrative director for Zoellner Arts Center at Lehigh University in Bethlehem,
Cassano said he was speaking on behalf of several not-for-profit organizations that will be impacted by the amusement tax increase.
He said it is time for the city to “differentiate” the Sands Event Center, “a multi-million-dollar, for-profit commercial venture,” from “the dozens of smaller, not-for-profit arts organizations that are dramatically impacted by the additional costs to our valued patrons.”
Cassano said city officials also should acknowledge that dozens of small local dance, theater and music businesses — such as the Lehigh Valley Ballet Guild, Nardi School of Dance and Touchstone Theater — rent facilities in Bethlehem for their performances and also will be impacted by the amusement tax increase.
He said the not-for-profits and those small businesses have been serving Bethlehem “for many decades, much longer than the casino,” and are important to the image, education and economic development of the city and the rest of the Lehigh Valley.
“We raise the standard of living in the area, provide entertainment and generate related business revenue,” said Cassano. “But we also promote learning opportunities and give local citizens the opportunity to participate in the arts.”
He said the cost of attending events is increasing but the organizations aren’t getting additional revenue because it is being re-directed to pay for an entertainment tax.
Sands Event Center not part of casino
While Cassano tied the Sands Event Center to the Sands casino in south Bethlehem, Atty. Matthew Croslis, who represented the event center, stressed it is not the Sands casino.
Croslis said the center is owned by three local businessmen who put their own money into developing that performing arts space — space that is leased from the casino.
He provided City Council with information about how increasing the tax would impact, not only the event center, but the local economy.
He said a $1 tax increase on tickets that cost $50 or more would effect 90 percent of the shows put on by the event center.
If the increased tax had been imposed last year, said Croslis, “15 shows could not have been booked, because a lot of performers don’t allow you to pass these taxes on. That would have cut into the revenue the performers would gotten and the performers would not have booked the shows.”
He also said the event center would have lost money on another 35 shows. He explained the center’s operators have to pay for shows up front, then hope they sell enough tickets to cover their expenses.
Based on that information, Croslis predicted the event center will be dark on 50 additional nights in 2015 if the amusement tax increases by $1.
He noted there also is a trickle-down effect: “The hotels don’t have as many people staying in them, the restaurants don’t have as many people eating in them and we don’t has as many employees working.”
Croslis said in 2013, the event center paid $185,000 just for the amusement tax. So far this year, he added, it has paid $238,779 for the tax— for a total of nearly $424,000.
He also said the center also pays for on-site EMTs and police at every event, “that are not required, but we do it for public safety.” In the last two years, he said, a total of $179,000 was directly paid to the city for those personnel.
Croslis said the event center’s owners realize the city is faced with raising taxes and laying people off, are thankful “to be part of the discussion” and would like to be part of an alternative solution.
Others speak
Bridget George, executive director of the Bach Choir of Bethlehem, stood to say she supported Cassano’s position on the issue and ask council to consider an exemption to the amusement tax for all not-for-profit arts organizations.
She said not-for-profit organizations are “mission driven, not bottom-line driven. I do believe it’s very important to make that distinction.”
George said she recently visited Cleveland, “where the arts have made a very important contribution to the turning around of the economy of that city.”
She said Cleveland has an amusement/entertainment tax but not-for-profit organizations are completely exempt from that tax.
Also addressing council on the issue was Christine Roysdon, who serves on the board of the Chamber Music Society of Bethlehem.
She said for more than 60 years, her organization has provided “classical chamber music concerts, string quartets, piano trios and the like for the Lehigh Valley, with performers from all over the country and in fact the world.”
“Last year, for the first time in my four years as treasurer, I was embarrassed to see that our operating budget was in the red,” said Roysdon. “And the ticket tax accounted for a full 40 percent of that redness.”
She encouraged council to think very carefully about an exemption for non-profits “and think carefully about the potential damage this tax might do to what is currently a lively and very diverse set of cultural offerings in our downtown.”
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