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Issue 18 Tax Now in Effect

Friday, February 23, 2007 at 11:19 AM

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Smokers in Cuyahoga County may have noticed a hike in the price of their cigarettes. Since February 1st, the county has been collecting a 30-cents-a-pack tax imposed by the voter-approved Issue 18. The excise tax will eventually go to nonprofit arts organizations. But first, ideastream's Mhari Saito reports, there's a lot of work that needs to get done.

As most Cleveland-area smokers will tell you, the price of a pack of cigarettes is well over $4 a pack. Some of that money is being collected by the state bureau of taxation, and will be doled out as grants to qualifying nonprofit arts organizations. Many area artists are anxiously waiting word on the new funding.

Tom Schorgl: It provides a new revenue stream at a local level which has up to now been nonexistent within the city and counties within this region.

Tom Schorgl is the president of Community Partnership for Arts and Culture, a local arts service organization.

Tom Schorgl: Cuyahoga Arts and culture - also known as the CAC - is the legal entity that can receive the excise tax and distribute through the grants process.

The CAC taxing district was created by the Cuyahoga County Commissioners two and a half years ago. In coming weeks, the County Commissioners will appoint an independent board of three trustees to the district. That board will be in charge of hiring an executive director and overseeing how Issue 18 money is divvied up. Schorgl says tough financial times at area arts organizations will probably set immediate funding priorities.

Tom Schorgl: The first program we believe the CAC will launch is for general operating support grants. These would be matching grants to arts and cultural organizations to help them with their operating expenses.

Schorgl’s organization is applying to help administer the grants. County Commissioner Peter Lawson Jones says while organizers anticipate as much as $20 million a year for the next ten years, he recognizes that the fund has limitations.

Peter Lawson Jones: Fewer people smoke every year. People find alternate ways to secure their cigarettes because of the tax imposed in Cuyahoga County. Probably many will simply go over the border to Lake or Lorain or Summit Counties to purchase their smokes. So this is a diminishing source of revenue.

Jones says that’s why there has been some discussion for setting up a trust fund - something for the county and arts organizations to draw on when and if tax revenue starts to slow. Studies of similar taxes in other parts of the country have shown that tax revenues decline slowly and then level off as higher cigarette taxes offset losses in lower sales.That decision will ultimately be up to the incoming tax district’s board of trustees, but Jones says he doesn’t seeing a trust fund being set up in the near future.

Peter Lawson Jones: Its clear that the need is so great and so urgent for operating funds, that I’m kind of doubtful that at least this year and perhaps next year, I don’t expect to see a decision made to set up a trust fund.

The county will get its first idea of how successful Issue 18 is in mid-May - that’s when Cuyahoga Arts and Culture will receive its first payment from the new cigarette tax. But arts organizations may have to wait through the summer before any cigarette money hits their coffers. County officials say it will be October before they will be able to write any checks to Issue 18 recipients. I’m Mhari Saito, 90.3.

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