To fully realize the vision underlying Boston Creates, the City will need to identify new sources of revenue and form strategic partnerships with state and federal counterparts as well as with local private, foundation, and corporate supporters.
Mayor Walsh has repeatedly expressed the desire to identify a sustainable revenue stream for the arts and has made great strides using the restricted tools at the City’s disposal. It essential to note, however, that the possibility of further increases in City funding is, indeed, severely limited within the current system of municipal finance.
The City faces increasing fiscal pressure from different sources, including statutorily limited revenue tools, rising fixed costs, underfunding of charter school reimbursement, decreasing local aid, and the growing need for a wide range of city services. Under Massachusetts law, municipalities cannot levy taxes without express state authority. What this means in practice is that Boston, like other Massachusetts municipalities, relies heavily on a limited number of revenue sources—most notably, property taxes.
Boston currently depends on property taxes for 67 percent of its total revenue. This overreliance on a single source of revenue is compounded by two additional factors: Proposition 2 ½ and the tax-exempt status of most land within the city. Proposition 2 ½ is a Massachusetts statute that limits cities and towns to a 2.5 percent increase in levied property taxes each year. This means that Boston cannot raise its total levy limit above that amount without a citywide referendum. It becomes even more challenging to identify new sources of revenue when one considers that over 50 percent of land in Boston is exempt from property taxes—the great majority of that segment is land owned publicly or by religious, educational, or medical institutions.
One program that helps ameliorate Boston’s funding challenges is Payments in Lieu of Taxes (PILOT), in place since 2012. Under PILOT, the City requests voluntary contributions from tax-exempt organizations with land holdings valued in excess of $15 million. Boston is unique among American cities in that its largest cultural organizations are included in its PILOT program. Throughout the Boston Creates community engagement process, we heard from the arts and culture sector that the PILOT program should not include cultural institutions because they rely for funding on individual donors, who are reluctant to provide funding for PILOT payments.
It is in this context—with the City trying to rectify an inherited structural deficit while advocating for further investment from other public partners—that we affirm the City’s identification of a sustainable public revenue stream for arts and culture must be strategic, and will require a long-term effort by community organizations and individuals advocating for increased support for the arts.