Council approves $3M annually from hotel tax for musicians, venues

For the first time, Austin’s city government will provide direct annual funding to the local commercial music industry, including venues and performing musicians.

On Thursday, City Council unanimously approved an ordinance and amendments to city code covering the allocation of the city’s portion of Hotel Occupancy Tax revenue, specifically funding for historic preservation projects and cultural arts. The net effect of the changes will provide an estimated $3 million per year to support the local music industry, with preservation funds going up by an equal amount.

Historically the city’s hotel tax money for cultural arts funding – capped by state law at 15 percent of the city’s total revenue from the tax – was only awarded to nonprofit groups supporting artists and musicians. That meant for-profit music venues, performing musicians and other music-related businesses were prevented from receiving any of the funds from the rapidly growing revenue source.

With Council voting earlier this summer to raise the hotel tax by 2 percentage points to the maximum 17 percent levy allowed by state law, the “buckets” of funding for arts and preservation uses grew in proportion. In recent years, music advocates have stepped up their push to make for-profit entities eligible, in large part because of affordability concerns threatening the livelihoods of musicians and the already slim business prospects of clubs hosting local music.

Thursday’s action came in part as a result of the city’s Tourism Commission recommending that a portion of hotel tax revenue be directed toward the music industry.

“The music community right now is suffering from the development economy right now and we’re at a loss, and everyone knows that. We’re losing music venues and we’re losing musicians,” said Catlin Whitington, chair of the Tourism Commission and an executive with South by Southwest. “This is a small step toward finding some funding that can help bolster the economic drive of the music industry. Our brand as the ‘Live Music Capital of the World’ was built on the backs of working musicians who are putting the shows on day after day, and this is a long overdue way to recognize that by allocating a very small slice of a bigger pie for that industry sector.”

Asked from the dais how the funding could be used, Whitington said one concept music supporters suggest is creating a program to reimburse local clubs for a portion of the money they pay local musicians.

Council members Kathie Tovo and Ann Kitchen debated the need for the city to specifically allocate money to private businesses, both voicing concern that cultural arts organizations could suffer as a result. Staff responding to Council questions said cultural arts nonprofits would not see any of the existing funding source removed because the money for the music industry would come from the additional revenue resulting from the recent increase to the tax levy.

David Colligan, acting assistant director of the Economic Development Department, said the initial funding from the action should become available near the end of the year. Council directed the Music Commission to help determine how the new money will be spent, and Colligan said a wide-reaching community input process will take place to solicit ideas.

“First we have to turn to the community to get a better understanding of the (Visitor Impact) Task Force findings and we have to bring that together with the state guidelines for using those funds,” he said. “The process has got to be equitable and we are going to be looking for inclusion and diversity in this process. We’ll be reaching out to our stakeholders who are already looking with us at ways to help the music industry.”

Cody Cowan, executive director of the Red River Merchants Association, which includes many of the city’s best-known music venues, said the city’s funding will put more money in the pockets of musicians and could provide enough revenue to clubs to cover one or more months’ rent.

He said a partial rebate of state liquor taxes that will be pushed in the 2021 Legislature – the bill failed in this year’s session because it wasn’t given a final vote – could pair with the city funding to provide significant help for music venues.

“Venues are closing and musicians are moving away and the city that has built itself on the backs of hardworking blue-collar creatives like musicians has benefited from that work, and now everyone has to leave because it’s just not affordable here anymore,” he said. “What this does is gives us the first real hope ever in the history of Austin. There’s been zero funding for musicians within the live music ecosystem, and while there’s a lot of work to do between now and when we get these dollars into the pockets of musicians, that wasn’t possible at any point up until today.”

Photo by Jon Fingas made available through a Creative Commons license.

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