FRP update: Henderson County BOC examines Playhouse's finances

The power to tax is the power to destroy.

- Daniel Webster (1819), McCulloch v. Maryland

From the Times-News:

The chairman of the Henderson County Board of Commissioners said last week he continues to research the fiscal management of Flat Rock Playhouse, and that what he learns likely will decide his vote on whether to raise the county's hotel occupancy tax to help fund the theater.

The board decided during its July 18 meeting to postpone its vote on a proposed 1 percent room tax hike until a special-called meeting Aug. 8, when commissioners, the Playhouse, local municipalities and members of the accommodations industry can have their say on the matter.

A brief agenda has been posted on the county website for the 1 p.m. meeting, which will begin with comments from the public.

“In my opinion, to make a decision (July 18) would have been very foolish for the simple fact that I didn't have all the information, and quite frankly, I don't think the rest of the county commissioners had all the information either,” Board Chairman Tommy Thompson said last week. “They don't and I still don't. And until I can garner all the information that I think is necessary to make a decision, I'm not going to make one.”

Finally, realization that it's not a good idea to raise taxes when no one's sure why or what for (and when the economy is down).

Thompson, however, expressed concern about Playhouse tax records and said he would vote against the room tax hike if it was determined that the nonprofit has exercised poor business management. He said that after reading through the Playhouse's 990 tax forms, he noticed a “tremendous amount of expenses” and a “great shift in spending” in 2009 and 2010, though he acknowledged it could be due to the opening of the theater's downtown Hendersonville venue.

And will the Playhouse have filed their 990 for 2011 before a decision is made on increasing the occupancy tax? I don't see how the commissioners can commit tax money to any group without having available to the public the most recent audited tax data.

Thompson added that many in the public have come to premature conclusions about the matter before the Playhouse has had a chance to present its case.

It will at the Aug. 8 meeting.

But initially it seems as though the commissioners were going to vote on this without the Playhouse presenting its case. It is only because of the concern expressed at the July 18 BOC meeting that it was decided to let the Playhouse address those concerns.

Producing Artistic Director Vincent Marini said last week that financial records will reveal “we had some really good years; we had a really bad year in 2010; we improved a lot in 2011; we've come even further in 2012 — we had a surplus in 2012 — and it's like any other organization that was facing a very difficult economy.”

According to unaudited financial statements the Playhouse provided the Times-News last week, the Playhouse had a $1.4 million net operating shortfall in 2010, with $3.2 million in revenue and $4.6 million in expenditures. The Playhouse whittled its deficit to just more than $500,000 in 2011, while a financial summary to date this year shows a projected $60,000 surplus.

So if the Playhouse has a projected surplus for 2012, why do they need taxpayer money now? And how will it be used? (And why is the Flat Rock Playhouse the sole beneficiary of the tax increase?)

Marini said, however, that he thinks all the talk about the Playhouse's finances has become a distraction from the issue at hand, which is how the Playhouse would utilize the roughly $450,000 in additional funding it would receive over two years if the room tax increase passes.

“I'm really having a difficult time understanding what this other discussion is about,” Marini said. “I mean, we've been so public about everything that we have done and what we need, etc., over the past couple of years, I'm having a difficult time understanding what everybody thinks is going to come from this other stuff except for wasting our time and everybody else's time...."

So it's a waste of time for the accommodations industry to ask why taxes are going up that will affect their ability to attract paying guests? It's a waste of time for county taxpayers to ask if the private business recipient of tax money will be a good steward of that money? I'm sensing a whiff of entitlement here that's very unattractive. 

Hendersonville City Councilman Jeff Collis expressed support for the Playhouse, though he said the new Henderson Travel and Tourism Authority — on which the city will have three representatives — should decide where the extra room-tax revenue goes rather than automatically giving it to the Playhouse....

So is the county raising taxes just because it can? It seems as though no one really knows what this money is going towards but they're for raising taxes anyway.

“I really feel like they've been demonized over this whole thing,” Collis said. “You can't really single out any one particular agency for requesting funds. I hate a lot of the stuff that has come out of all this, because they really do a good job out there. It's a top-notch facility, and I don't want to see them demonized. To have people (accuse the Playhouse) of bad business practices — I don't agree with that for a minute. You can scrutinize a lot of different agencies with the economy the way that it's been.” 

I don't think the Playhouse has been singled out for requesting funds--I think that because they, a private business, have requested money from a tax increase, the commissioners should do their due diligence and make sure this is the right thing, economically and politically, to do.

Does Mr. Collis just hand out taxpayer money because a group asks for it? Doesn't he check to make sure any group he gives tax money to will use the money wisely?

During the July 18 meeting, however, Commissioner Larry Young — an outspoken opponent of the room tax increase — said he, too, has examined the Playhouse's 990 forms and found they revealed poor business management. He told the Times-News last week that he invited the Playhouse's Board of Trustees to discuss the matter, “and see if they recognize the problem,” but he didn't get an immediate response....

Young wanted to disclose his findings on the Playhouse's finances during the July 18 meeting, but Thompson said it needed to wait until the special-called meeting when all parties involved could be heard.

“There's a lot of questions that need to be answered at that meeting,” Young said, “and I plan on asking them.”

Read it all. August 8 should be fun.