The cigarette tax had two goals: provide funding for the arts and reduce smoking in our region. It worked, but as smoking fell, so did revenue for the arts. Now what?

The Ohio legislature, not known for favoring progressive policies, art, or Cleveland, nonetheless responded positively to Cuyahoga County arts advocates’ early-aughts request to create a revenue stream to fund arts and culture. The General Assembly passed legislation allowing counties with populations over one million to tax cigarettes up to thirty cents a pack to fund regional arts and culture so long as county voters approve it and renew it every ten years. If Cuyahoga County wanted to tax itself, fine by them. The ballot initiative was passed in 2006 and became effective February 1, 2007. It was renewed by a landslide in 2015, and Cuyahoga Arts & Culture (CAC), which administers and distributes the funds generated by the tax, along with Assembly for the Arts, which does regional arts research and advocacy, will have to determine when to place a renewal on the ballot—among other considerations.

The arts and culture cigarette tax joins the existing $1.25-a-pack statewide rate last set in 2005, and the 4.5 cents tacked on in the county to help finance and maintain sports facilities (the Gateway sin tax).

There are a number of reasons cigarettes are targeted for taxing, and while it includes the fact that a lot of non-smokers will gladly add tax to something they don’t use, it also includes the public health goal of reducing the use of tobacco.

Of course, not everyone takes that view.

In 2005, Convenience Store News—because of course there’s a convenience store magazine—quoted the manager of Smokes for Less in Springfield: “People come in and they say, ‘they’re trying to get us to quit.’ I said, ‘no, they’re trying to make more money off you.’”

In fact, though, it has worked to get people to quit, or smoke less.

“Price is the number one deterrent to young people starting to smoke,” says Jeff Rusnak, a political consultant who has observed the arts funding cycle for years and currently consults with CAC and Assembly for the Arts. The World Health Organization WHO backs him up: “Evidence shows that significantly increasing tobacco excise taxes and prices is the single most effective and cost-effective measure for reducing tobacco use.”

The tax, Rusnak says, has been a success for Cuyahoga County arts and culture. As CAN Journal has reported, in 2008, the first full year the tax was collected, the tax brought in $19.5 million.

“We’re in the Top 5 in terms of public funding by any measure for the arts,” Rusnak says. “It’s been in existence for seventeen years. It’s worked and been significant and had a major impact on this county. Cuyahoga County is lucky to have world class institutions along with incredible neighborhood institutions. We have this robust ecosystem here.

“It puts us on the globe. It literally touches people in every corner of the county.”

The tax also succeeded on the public health front, so well that the decline in cigarette sales in the county has translated into steep reductions in the tax yield. The funds fell 3.9 percent on average each year for the last fifteen, and in 2022 it had dwindled to about $12 million. Rusnak points out that Cuyahoga’s cigarette tax is the only tax in the county that has declining revenue.

It was fun while it lasted.

Anticipated Decline

In fact, the decline in tax funds was not unanticipated by arts leadership, including those at CAC.

“From the beginning we knew this was going to happen,” says Jill Paulsen, CAC’s executive director. “Now, has the revenue decreased a little bit faster than I anticipated the last couple of years? Sure.

“Of course. it’s not fun to be managing an organization where we have fifty percent less revenue than we did when we started. Not anyone would say that’s a fun situation to be in. There is an increasing amount of folks involved in the arts, and there are decreasing dollars. That sets up a challenging environment with a lot of opinions and passion and desires. Everyone is doing important valid work—how do you manage through that? So that’s difficult.” Those passions have flared up in a number of public forums and in discussions online; the Plain Dealer described a CAC board meeting last spring as “contentious” and “fiery” (if you are looking here to have the arguments given further voice, you will be disappointed).

Despite the cuts, says Paulsen, “we still are able to offer really substantial grants to most organizations and I think that is something I don’t want to lose sight of that is still really important.”

Jeremy Johnson, president and CEO of Assembly for the Arts, which by state charter as the local arts council can make suggestions to CAC on how to distribute its annual allocation of funds, says his organization is currently concentrating on how to manage through this period, too.

“We are focused on how CAC will be able to fund the sector for the next two calendar years (2024 and 2025) with the current tax. This is a sobering task since CAC reports cigarette tax receipts are declining precipitously.”

Assembly “is gathering the input of individual artists through a survey and a series of listening sessions (assemblycle.org/sfa24). CAC and the George Gund Foundation are underwriting this process. We are also checking in with organizations of various budget sizes,” Johnson says.

“It’s really important to have this feedback. The arts and culture sector needs to feel heard and seen. Their feedback now will help unify the sector for the much-anticipated cigarette levy later.”

Self Destruct Mechanism

A funding device with a built-in self-destruct mechanism might prompt the question: Is this any way to fund the arts? It might be the only way. There’s little political will to provide arts funding anywhere near even the reduced amount from general state funds. It’s a bad-behavior tax or nothing.

“They settled that seventeen years ago,” says Rusnak. “That’s not a question (currently) being raised.

“There isn’t an alternative. Love it or hate it, someone else decided to use [sin taxes] to fund sports facilities. We did the research, all the due diligence, for alternatives and, frankly, there wasn’t an alternative.”

The lingering distaste some might have for sales taxes—which always have a larger impact on lower-income populations—must be weighed against the public health benefits, a calculus Dr. David Margolius, the director of the Cleveland Department of Public Health, isn’t bothered by.

“Over the last fifty years Big Tobacco pivoted their targeted marketing to poor communities, to Black communities, Latino communities and youth—that was in all of their documents now available to the public as a result of the Master Settlement. Anyone can read about how they specifically went to Cleveland to give away menthol cigarettes to addict new customers,” Margolius says.

“So Black communities and poor communities suffer much more of the burden of tobacco than wealthier communities and whiter communities.”

Relative to the rest of the country, and owing, he says, to a number of Ohio-specific policies, Cleveland’s smoking rate has gone up, and is now at is 35 percent.

“With Cleveland having one of the highest smoking rates in the country and smoking being our number one preventable cause of death, we should be laser focused on raising the tax on cigarettes to levels of our peer states.”

Even if the tax doesn’t get people to stop, he says, any reduction in smoking is helpful.

“It’s not binary—the cumulative negative impact of cigarettes is proportionate to how much you smoke. And so certainly a reduction in smoking is going to help our community become healthier. In addition to it being the leading preventable cause of death, it’s the leading preventable cause of illness and disability.”

No Tax is Perfect

Most Clevelanders agree that providing more arts and culture money would be fab, but not everyone agrees on how.

“No tax is perfect,” Rusnak says.

True dat. In the early days of looking at revenue streams, taxing video sales and rentals was floated.

Rusnak says the folks in Columbus—again, not big Cleveland fans—were determined to figure out a solution. “The state said, ‘we want to help you guys.’”

Toward the end of 2022, advocates successfully lobbied to have the tax changed from a per-unit (i.e., pack or cigarette) to a percentage of sales, and to include vaping products. That way, even if consumption continued to dip, the resulting price increase would yield higher revenue for the arts. But the Ohio Department of Taxation nixed that and the legislature subsequently rescinded it.

An initiative on the November ballot would legalize and regulate recreational marijuana—could that be a future source?

“That’s a tricky question. I think it’s premature at this moment. Let’s wait to see how the election goes,” Rusnak says. The measure already includes a ten-percent tax, which would be directed toward “establishing a cannabis social equity and jobs program.”

In the absence of a viable option to build back the lost revenue, lawmakers and the governor’s office agreed to a new plan: remove the 30-cents-a-pack cap on what proposals could be presented to voters.

Rusnak says before they determine how high of a tax to levy, he believes CAC will need to communicate to voters what their money is, and will be, spent on. “There’s no consensus yet on what that number should be. What makes sense? What should the amount be? What should we ask voters to approve? But the bigger question is, what is use of the funds.”

“I always worry about a Mapplethorpe moment: ‘You’re funding THAT?’” So far, he says, the grantmaking has successfully avoided controversy, although a few grants—such as those centered around LGBTQ issues—have generated a stir among a small circle of mostly online right-wing gadflies.

This has been true despite the fact that CAC’s emerging grants sometimes go to projects that are untested and not well known. “It’s important to note that, the CAC has been for many groups and emerging nonprofits doing arts and culture in our community, their first grant sometimes,” says Jake Sinatra, CAC’s director of grantmaking strategy and communications. “That’s something we’re very proud of.

“Of course, we have our criteria and our guard rails to make sure that we’re making good, sound investments with our public dollars. But at the end of the day, it’s opened up a lot of doors for a lot of groups to continue to then be able to tap into other funding sources, or be able to say [they] have what they’ve called the stamp of approval from CAC [so] others can say that’s worthy of investment.”

Paulsen is continuing a fundamental outlook shift that accelerated during her tenure in leadership over the last half decade.

“For us there’s been increasing focus on equity and, for CAC, that generally means racial equity, but we’ve kind of expanded it far enough to say how do we make sure organizations of all sizes, organizations run by Black and brown people, get funding, have access to the dollars that our community deserves, so people can see themselves on stage and see themselves in galleries, so the public money is really for the public. That’s been an arc we’ve had to go through ourselves, to say what does success look like, and for us it’s bringing more people to the table and making sure organizations run for and by people of color tap into and have access to dollars.

“That is a new mark of success and we’ve made some good improvements but there’s way more to go as always.

“I’m excited to think about what can the arts community do if and when we come together beyond just for a levy. What if we came together around voting rights? What if we came together around equity in our sector? What if we came together around making sure that artists had access to health insurance and the full set of supports that they need? I’d love to see that moving forward—that’s more of a future goal. But I’d love to see the arts community be more cohesive in efforts that change our community and improve our community outside of the individual yet super important work that the organization does itself—working together around bigger goals. I think that would be huge.”

Leader of the Pack

But first: The levy.

CAC and Assembly have to figure out some number. How much they can give away depends on how much they can raise through the cigarette tax, but make it too high, and voters might reject it. They also have to choose the date—during which election cycle should the renewal appear. When it does happen, the campaign will be conducted by Assembly for Action, a political action entity which Johnson heads as president and CEO, and it will take money and effort. “It should be obvious that to raise this level of support, it will take a unified front,” he says. “We need to use the next several months to generate excitement and confidence for this funding.” He believes a recent study from Americans for the Arts, which found arts and culture generated $533 million in economic impact last year, will help buttress the campaign’s case.

“Voters in Cuyahoga County have supported the arts twice before and they are likely to support a tax going forward in the future,” says Rusnak. “They recognize the importance of the arts and what they contribute economically and to the quality of life in this county. They value arts and culture institutions. They’re a source of endless pride.

“But we’re not taking anything for granted. We want to make sure people know where their investment goes. But we have a proven commodity that’s been successful for sixteen years.”

Following voter research and economic trends, they will attempt to arrive at a magic number for how much per pack to tax. 

Dr. Margolius, the city’s health director, has some ideas.

“The number one killer of people in poverty—and everybody—is smoking. And at my core the work I’m trying to do is close health disparities and extend lives and improve quality of life. The best way I can do that is by reducing our smoking rate, reducing our lead poisoning rates, fentanyl overdose rates, etc. So, raising taxes is, according to the World Health Organization, the single best most effective intervention to reduce smoking rates and for that reason I’m in support of it.

“If the taxes from cigarettes were going to just extend a tax break for the wealthiest in Cleveland or Ohio, that would I think be most concerning for me. But as a public health intervention, the tax alone is really effective, so I’m completely comfortable with it going to the arts. And you could make the case that public art and art in general improves the health of our community, so I’m really comfortable with that.”

How high would Margolius go with a cigarette tax?

As high as the highest rate—currently New York State, whose cigarette tax following a September 1 one-dollar hike, stands at $5.35 a pack.

“There’s no reason we shouldn’t aim to be number one.”