What's included in entertainment tax?

Bubblegum the clown is not smiling.

The children's entertainer considers a proposal to put an extra tax on businesses such as hers like a pie in the face.

Donna Kerr-Roth, who formally calls herself Bubblegum T. Clown, said Wednesday that a 2 percent entertainment tax would hurt her bottom line. She already has to charge for local and state sales taxes.

“If I had to take (another tax) out separately, I wouldn't be happy about it at all,” Kerr-Roth said.

Omaha Mayor Jim Suttle is pushing for an entertainment tax in his 2010 budget proposal as a way to generate extra money for the cash-strapped city.

Business owners and arts organizations are finding out that a wide variety of entertainment would be subject to the tax. It would apply to more than just restaurant meals and tickets for concerts, movies and sporting events. Also falling under the tax would be clowns hired for kids' birthday parties, zoo and museum memberships, bar cover charges and other activities.

“If you have to pay a fee to get access to entertainment services or products, you pay the tax,” said Deputy City Attorney Tom Mumgaard. “It taxes not the necessities of life but the things adding to life. The ordinance we're looking at taxes things that are more discretionary.”

Some of the city's biggest arts organizations say the tax would hit them hard at a time when many groups are struggling with lower attendance resulting from the poor economy.

Several City Council members have expressed reservations about the proposal, saying that more cuts in spending should be considered instead. The Metropolitan Entertainment and Convention Authority, which runs the Qwest Center Omaha, also has been a vocal opponent, worrying about the effect on concert ticket sales.

Suttle told The World-Herald on Wednesday that he isn't opposed to putting a sunset date on the tax. However, he said it will be needed for at least the next three to four years.

If approved by the council, the tax would bring in an estimated $10.3 million a year.

Eleven of the city's biggest arts organizations estimate that they would pay $2 million of that total, said Rob Hallam, president of the Omaha Symphony, and Joan Squires, president of Omaha Performing Arts.

They said the figure came out of a recent meeting with representatives of those groups, including the Henry Doorly Zoo, the Omaha Community Playhouse, Lauritzen Gardens and Joslyn Art Museum.

“Our role is to add value to the community and make what we do accessible,” Hallam said. “This certainly doesn't support that mandate.”

The tax would apply to tickets and drinks at performances, as well as to memberships in arts groups. The tax would not apply to donations to those groups, said City Finance Director Carol Ebdon.

She said groups collecting the tax would receive some benefit. They would retain 2 percent of the total collected. So if a business collected $20 in tax, it would keep 40 cents.

While the arts community is worried that the tax will encourage patrons to stay home, restaurant owners are worried about their customers. The entertainment tax would apply on top of the 7 percent state and city sales tax. That would bring the total tax to dine out to 9 percent.

Upstream Brewing Co. President Brian Magee said business is down about 10 to 20 percent at Omaha restaurants because of the economy. They will take an even bigger hit if the entertainment tax is approved, he said.

“People are already trading down,” Magee said. The tax “is another reason not to go.”

He said he'd rather the city pursued an increase in its 1.5  percent sales tax rate, which would require a change in state law. “Sales tax affects everybody,” he said.

Suttle has eyed a half-cent sales tax increase to help deal with a $500 million shortfall in the city's police and fire pension fund.

Kerr-Roth, who has been a clown for almost 30 years, has watched her business slow recently as families opt to rent inflatable jumping toys for kids' parties instead of hiring clowns or magicians.

“My business has suffered anyway the last two or three years,” she said. “Because there's a lot of ... new entertainment for kids.”

The arts community, meanwhile, is banding together to lobby the council to reject the entertainment tax.

Said Squires of Omaha Performing Arts: “It does not make sense to balance the city budget on the backs of the nonprofit arts community.”

But Jim Williamsen, general manager of the Happy Hollow Club, said Suttle is doing the best he can in rough economic times. Williamsen did not voice opposition to the tax, which would apply to memberships at country clubs, private swimming pools and health clubs.

“The mayor has got a very difficult problem he's trying to fix,” he said. “I don't know what the answer is, but if the tax happens, we'll deal with it.”

Contact the writer:

444-3100, maggie.obrien@owh.com

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