Tax break for Gonzaga events being cut to fund revamped city of Spokane arts office

Spokane officials will recreate a City Hall arts office in part by closing a tax break Gonzaga University enjoyed for eight years on tickets to sporting and other events.

The additional tax revenue, though limited, will allow the city to begin hiring staff for the new arts office despite being unable to access a deeper pool of funding slated to go to the private nonprofit organization Spokane Arts for another two years.

It has been a winding road to get here.

A year ago, Mayor Lisa Brown stood shoulder to shoulder with Skyler Oberst, executive director of Spokane Arts, to announce what many involved believed was a legacy building project for the mayor: recreating the city arts office that had been dismantled a decade earlier by former mayor David Condon.

An in-house office could bring in grants the nonprofit could not, Brown said, and provide direct points of contact in City Hall dedicated to enhancing the arts as a part of Spokane’s economic development strategy.

This would be done, she said at the time, by reabsorbing much of Spokane Arts and the city funding the nonprofit has relied on for years – revenue from the city’s ticket tax for local venues. When the official city arts office was closed in 2012, Spokane Arts had been formed to become its de facto replacement, so it made sense to bring much of the nonprofit back into the fold. Oberst, for instance, would become the director of the newly formed office.

Brown supported another six months of full funding for Spokane Arts, enough time for the two entities to hash out “what positions currently in Spokane Arts should remain there, and which ones should be folded back into the city.”

But the tentative partnership was troubled from the start. After a dozen years of success administering city funds to local artists, the nonprofit balked and privately expressed concerns about staffing cuts, the possible loss of independence, and the mayor’s plans for what would remain of the nonprofit.

Before the six months were up, Spokane Arts turned to the city Arts Commission – the body that oversaw the slice of admissions tax revenue set aside for the arts, but that over time had become seen as much as an arm of Spokane Arts as it was of the city – and effectively asked to be rescued.

“Early on, after the announcement, there was a breakdown in communications between the mayor’s office and Spokane Arts,” Audrey Overstreet, co-chair of the Arts Commission, recounted in a recent interview.

It was a misunderstanding, Overstreet says now, but one that initially led the Arts Commission to come to Spokane Arts’ defense. In May, the Arts Commission recommended fully renewing Spokane Arts’ funding for another five years, raising significant concerns that the city’s transition plans would not be in the best interests of the local arts community.

At the time, Spokane Arts and the Arts Commission spoke mostly about the possible hostility or neglect an arts office could face from future mayors, but a five-year contract would also have put Spokane Arts’ funding out of reach for Brown in particular, given Spokane’s nearly unbroken trend of single-term mayors. The nonprofit, meanwhile, started reaching out to other cities in the area for contracts in a bid to regionalize Spokane Arts, which would effectively diversify its funding streams and ensure its long-term independence.

Spokane Arts remains in talks with Liberty Lake, Spokane Valley, Airway Heights and other jurisdictions and hopes “to have several partnerships penned by the end of the year,” Oberst said in an interview.

But the organization will not receive the kind of long-term funding from Spokane that it wanted. Last week, the Spokane City Council agreed to a two-year contract extension, giving the nonprofit some breathing room for its own transition as a regional entity; after that, for the first time since its inception, it will have to compete for Spokane’s arts funding like any other organization.

“Would I have liked more time? Absolutely,” Oberst said. “But that’s what partnership is; that’s how we work together. We compromise.”

Brown, meanwhile, wants the Arts Commission to take back more of its independence and authority over its slice of the admissions tax.

Spokane charges a 5% tax on the price of every ticket to concerts, sporting events, plays and other events, with a few exceptions for nonprofits and smaller venues. A third of that revenue has always been the Arts Commission’s to oversee, but it has been effectively Spokane Arts’ money. Half of it typically has gone to a grants program for artists administered by Spokane Arts, and the rest has funded Spokane Arts’ payroll and projects managed by the nonprofit, such as the city’s poet laureate and the City Hall art gallery.

“In the past, the funding has sort of been directed to Spokane Arts, and over time, a lack of clarity arose as to who is in the driver’s seat,” Brown said in a recent interview. “And who is in the driver’s seat is the Arts Commission.”

Overstreet agrees that the commission’s sense of independence had waned, though she is quick to add that this was largely due to Spokane Arts’ effectiveness as an organization.

“Thank god we had Spokane Arts filling the gap for the past decade,” Overstreet said. “They’ve been the heroes of the arts. Without Spokane Arts, this nonprofit that worked hand in hand with the city to continue this work, I don’t know where we would be.”

“I really want to be clear,” she added. “This is just part of the process of growing and acknowledging the arts have become a very key driver of our economy and something we need to put more emphasis on and create more opportunities around.”

Nearly half of the commission’s seats are vacant, and Brown plans to fill them. The arts office is also being formed, albeit more slowly now, and its first position is a permanent staff liaison to the Arts Commission.

Funding, ending Gonzaga tax break

With Spokane Arts’ funding continuing but held flat for another two years, Brown is looking to fund the city’s arts office with the growth in the admissions tax. That tax is expected to bring in roughly $100,000 more next year than it did in 2025, according to Spokane’s Chief Financial Officer Matt Boston, and roughly half of that growth will come from closing a tax break Gonzaga University has enjoyed for years. The city collected $1.7 million in admission taxes in 2024.

Nonprofits can request relief from the admissions tax, receiving a waiver on the tax for the first $20,000 in tickets they sell in a given year. In 2017, the city granted Gonzaga University an exceptional tax break, waiving the tax for the first $20,000 per event, not just per year; every basketball game, theater performance, concert, speaking engagement or other event at Gonzaga was not subject to the tax paid by other venues.

Gonzaga has amenably agreed to end this arrangement, City Administrator Alexander Scott said in a recent interview. Boston projected this would bring in an additional $50,000 in tax revenue next year. Due to vacations around the Thanksgiving holiday, Gonzaga officials were unable to provide comment.

“I think it’s a testament to our partnership with Gonzaga,” Scott said in an interview. “We explained to them about the admissions tax and that 33% of it goes to arts funding, and they were excited about that … that it was going to boost our investment in the arts.”