Chicago                                                    

'Very good theater' puts tax squeeze on legitimate theater By MANUEL GALVAN

Often called "very good theater," the Chicago City Council got bad reviews that proclaim its recent action was "not very good for the theater." It passed an amusement tax increase that requires Chicago's major theaters to pay almost double their previous levy, theatening big-ticket productions, off-Loop theaters, millions of dollars in revenue to local business, hundreds of jobs and the city's downtown nightlife.

So much for the overture. Now here's the prologue.

Last year, Mayor Richard M. Daley braced Chicago taxpayers by labeling his upcoming fiscal package a "Bad News Budget." He had failed to get approval out of Springfield for both casinos and a third airport and then hinted that property taxes might have to skyrocket to balance the city budget.

"Never!" cried an aldermanic chorus. Council chambers crackled with dramatic rhetoric and expansive gestures as aldermen quoted chestnut soliloques against drastically raising the dreaded tax: "seniors on fixed incomes" and "families no longer being able to afford homes." Off stage they shared a private reason to oppose a massive property tax hike: elections.

The property tax hike was trimmed from Daley's original request of $48.7 million to $28.7 million. Total property tax revenue for the city's $3.3 billion budget is estimated at $650.2 million.

To offset the drop in the property tax increase, the City Council found other taxes: a one-cent tax per soda can; a $1 admission fee for off-track betting parlors; increases in a variety of business fees; and a boost in the amusement tax, which by itself is projected to raise $4.5 million for city spending. The amusement tax went from 4 percent to 6 percent, effective January 1, but with a long list of exemptions: places with less than 750 seats, not-for-profit groups, symphonies and operas. Hit by the amusement tax hike are sports arenas, like the Chicago Stadium, Comiskey Park, Wrigley Field and Soldier Field, and Chicago's four theaters with more than 750 seats: the Arie Crown Theater, the Auditorium Theatre, the Chicago Theatre and the Shubert Theatre.

The amusement tax went from 4 percent to 6 percent, effective January 1, but with a long list of exemptions: places with less than 750 seats, not-for-profit groups, symphonies and operas

The theaters, unlike the sports centers, can't make up budget shortfalls with television revenue. "You are going to see the largest shows stop coming to Chicago or cut their runs," said Tony Sertich, executive director for the League of Chicago Theatres. "Because

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affect them to the extent they'll say, 'Let's go to Boston.' "

Big shows like "Miss Saigon" (currently at the Auditorium), "The Will Rogers Follies" (just closed at the Shubert) and "Joseph and the Amazing Technicolor Dream Coat" (to open in September at the Chicago) get people interested in theater, according to Sertich. He explained that they'll go on a streak and see a couple more shows after the Broadway smashes. Or, they'll bypass the blockbusters when they see a $60 ticket price and opt instead for Steppenwolf Theatre or the Goodman Theatre, two of Chicago's smaller playhouses. "All the theaters will be affected because the theater industry is driven here by the bigger theaters," Sertich said. "Theaters will be dark over the summer and that will affect other theaters."

"Saigon" producer Cameron Mackintosh blasted the tax hike and said it was influential in his decision to close the show in July, two months earlier than planned. Although the sooner-than-expected availability of the Wang Center in Boston was the main reason for the production's shift, Boston doesn't have a tax similar to Chicago's.

In fact, none of the major cities — New York, Washington, Los Angeles and San Francisco — have an amusement tax for their theaters. But Pittsburgh has a 10.3 percent tax, Nashville's tax is 8.5 and Cleveland's 6 percent tax is the same as Chicago's. None of these cities with the tax, however, have long runs, and to quote Dulcie Gilmore, executive director of Chicago's Auditorium Theater, "I don't want to be Cleveland."

"Saigon" opened in October before the tax hike took effect, and Mackintosh couldn't pass the increase on to his customers. The result was a budget overrun of several hundred thousand dollars. In his December 18 letter to Mayor Daley, Mackintosh said the additional tax would eventually be passed on to the customer. Mackintosh has previously brought "Les Miserables" and "The Phantom of the Opera" to the Auditorium. He pointed out, however, that as "prices increase, one would also expect price resistance from the public to increase, which would inevitably lead us to be more conservative in the number of weeks we present these shows in Chicago."

If the theater runs are shorter, the revenue could fall short of the $4.5 million projection, which was based on the best of circumstances. The city will also lose out on indirect revenue, according to the League of American Theatres and Producers. Its research estimates that for every $1 spent on theater tickets, $2.72 is spent on neighboring businesses such as hotels, restaurants, parking garages and department stores. By this reckoning for a show grossing $700,000 weekly, every week of the show's run boosts the local economy by $ 1.9 million.

If the theater runs are shorter, the revenue could fall short of the $4.5 million projection, which was based on the best of circumstances. The city will also lose out on indirect revenue . . .

Jobs are also at stake if theater patrons fade in Chicago. At the Auditorium alone, Gilmore said there are 200 theater jobs with at least 2,000 jobs in neighboring businesses tied to theater customers. The Shubert, dark for three years, has only been active the last two. The Auditorium went from booking 85 nights a year in 1987 to almost the full year currently. The Loop, for so long usually empty at night, was beginning to come alive with people drawn to big theater productions. The industry now fears that the marquees will be dark more often, meaning that fewer people will spend their nights and money downtown. The Daley administration downplays any such dire impact of the amusement tax hike.

But if the Loop needs filling this summer, maybe the City Council and Mayor Daley could move their meetings to 8 o'clock nightly productions. But then, again, maybe no one would come. *

Manuel Galvan is a Chicago-based writer and marketing consultant.

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