The Scientific and Cultural Facilities District (SCFD) is a metropolitan district that generates funding for nonprofit arts and culture organizations across Denver, Boulder, Adams, Arapahoe, Jefferson, Douglas, and Broomfield Counties through a 0.1 percent sales tax. Devised in the mid-1980s, after several major Denver cultural institutions lost state subsidies during an economic downturn, the district tax was first authorized by voters in 1988. Reapproved three times by voters, most recently in 2016, the SCFD tax has generated a total of more than $1 billion in funding for arts and culture over more than three decades in operation, helping to provide some stability to the otherwise turbulent finances of nonprofit cultural groups.

Origins

The SCFD started as a response to budget cuts. Before the early 1980s, four major Denver cultural institutions—the Denver Art Museum (DAM), Denver Botanic Gardens (DBG), Denver Museum of Nature & Science (DMNS), and Denver Zoo—received annual appropriations from the city as well as the state, which provided funding based on attendance by non-Denver residents. But when a market glut caused the price of oil to fall after 1980, that public funding dried up. In 1981 the state cut its subsidies to $1 million before eliminating them entirely in 1982. The city, which had been contributing 47 percent of the institutions’ total budgets, could not make up the difference, instead slashing its own contributions by $2 million as it faced not only the oil glut but also the gradual erosion of its tax base owing to suburbanization.

As a result of those cuts, the institutions’ budgets plunged: by about a quarter at DBG and DAM, nearly 50 percent at DMNS, and nearly 60 percent at the zoo. Yet they faced high fixed costs that couldn’t be reduced: animals at the zoo had to eat, for example, and tropical plants at DBG had to be heated. Unable or unwilling to pivot quickly to private philanthropy to make up the shortfall, the institutions laid off staff, raised ticket prices, or started charging admission for the first time. Attendance dropped and programming was cut, causing a vicious downward spiral. The art museum even had to close some floors to the public.

To help relieve the crisis, DAM named Rex Morgan to its board in 1983. Known as the “people’s lobbyist,” Morgan had made money in agricultural chemicals before coming to Denver in 1968 and working as an unpaid advocate of reforms in areas such as public health and criminal justice. Building on his knowledge of state government, he developed a plan to use the legislature to start a new stream of culture funding.

Initially focused only on securing money for the art museum, Morgan soon realized that a tax to prop up a single institution would not garner enough support. By 1984–85 the four major Denver organizations were working with Mayor Federica Peña’s administration and state lobbyists to draft legislation for a new metropolitan tax district. The plan was based on the St. Louis Metropolitan Zoological Park and Museum District—which had been approved in 1972 to fund the city’s zoo, art museum, and science center—and was later expanded to include the botanic gardens and history museum. The difference in Denver was that the tax base would be larger, encompassing the six-county metropolitan area (the seventh county, Broomfield, was not created until 2001), and the revenue would go not only to a handful of major institutions in the city, but also to dozens of smaller groups in the suburbs, which would get to divide 20 percent of the money. The measure’s backers considered adding some other cultural organizations in the main group of four, but the Denver Symphony rejected the opportunity, fearing that accepting tax revenue would reduce private donations, while the Denver Center for the Performing Arts (DCPA) was excluded because of concerns about how it would look to give public money to a group already backed by Bonfils family money.

Authorizing SCFD

In January 1986, the Cultural Facilities District Act was introduced in the state senate. It called for a new 0.1 percent sales tax (one cent on ten dollars) overlaid across the existing Regional Transportation District boundaries, subject to voter authorization. Opposition was unexpectedly fierce. Large cultural groups that had been excluded from the big four—including the Children’s Museum of Denver, the Arvada Center, Opera Colorado, and the Colorado Ballet—descended on the State Capitol to decry the greed of the big institutions that were claiming 80 percent of the cash. According to the excluded groups, the 20 percent of funding that would go to county-level grants was just a sop to state legislators, not a sincere investment in metrowide cultural development.

In response to the criticism, state legislators told the squabbling cultural organizations to work out their differences and come back with a new bill. Initially the rewrite simply adjusted the formula to increase the funding available for county-level grants (from 80–20 to 65–35), but then the largest seven of the other groups decided that they, like the big four, deserved their own dedicated funding tier. A final revision resulted in a proposal for tiered funding of 65 percent to the big four, 25 percent to the seven other groups with budgets over $1 million, and 10 percent for county-level grants. The bill went back to the legislature in mid-February. It passed the Colorado Senate but then stalled amid continued infighting among the cultural groups (Rex Morgan tried to revive the original 80–20 split) as well as legislator concerns about imposing new taxes during an economic downturn.

Bitter infighting continued when competing versions of the bill were introduced again in 1987, but eventually all groups agreed to return to the 65–25–10 funding division from the previous year. With political consultant Floyd Ciruli now on board to help pitch the bill to legislators, it passed both houses and was signed by Governor Roy Romer on May 22, 1987.

The final step in the process of creating SCFD was to gain voter approval for the tax. A new tax in the midst of Denver’s worst economic downturn since the Great Depression could have been a difficult battle, but the measure had several good selling points. For one thing, it was a small tax, which proponents emphasized was only one penny on every ten dollars in purchases—just one or two cents a day for most people. For that amount, supporters argued, the Denver metropolitan area could cement its status as the cultural capital of the Rocky Mountain region, secure educational benefits for schoolchildren throughout the area, and stimulate the economy through new jobs in the culture sector. At the county level, commissioners could sell the plan to their constituents by pointing to the 10 percent of funding earmarked specifically for small, local nonprofits.

Facing little organized opposition, the SCFD tax passed in November 1988 with nearly 75 percent of the vote. Along with the Denver Public Art Program, which also started in 1988 and set aside 1 percent of large public building projects’ budgets for works of art, authorization of SCFD marked a significant turning point in public support for arts and culture in the Denver metro region.

Operation

As outlined in state law, which has been tweaked a few times over the years, SCFD funding is distributed by tiers. Tier I consists of “national organizations,” which are named in the state statute: DAM, DBG, DMNS, the Denver Zoo, and—since 2006—DCPA. As a whole, they now receive roughly 60 percent of SCFD funds. Tier II consists of “regional organizations,” with organizations qualifying based on annual operating income. These groups receive about one-quarter of SCFD funds, split up by a formula according to annual income and attendance. Tier III consists of “local organizations.” At this level, about 15 percent of SCFD funds go to county cultural councils in proportion to the tax revenue generated in each county. These councils then distribute the money to local groups that must apply for funding.

In 1989 SCFD distributed its first funding, providing a total of $14 million to 135 groups. Because it is based on a sales tax, which provides for built-in growth, SCFD now distributes more than $60 million per year to nearly 300 organizations across metro Denver. In 2019, for example, SCFD distributed a total of $66.1 million, the most in its thirty-year history. The five Tier I institutions received a total of $39 million, ranging from $5.2 million for DBG to $9.6 million for DMNS. Twenty-eight Tier II organizations received a total of $15 million, ranging from $138,000 for the Lighthouse Writers Workshop to $1.7 million for the Children’s Museum of Denver. Finally, 260 Tier III groups received a total of $10 million, with most getting less than $50,000 but a few large nonprofits—such as Cleo Parker Robinson Dance, Wonderbound, and Friends of Dinosaur Ridge, —receiving $200,000 or more.

Tensions

Because it is a relatively small tax—an average of $15–20 per person annually—that funds perennially popular institutions such as the zoo, SCFD generates little organized opposition. It has been reapproved three times—in 1994, 2004, and 2016—with large majorities.

Despite the lack of substantial opposition to SCFD, there remain significant internal squabbles about how the money should be divided. Large Tier II groups, such as the Arvada Center and the Colorado Symphony, sometimes see Tier I as an arbitrary list that privileges collecting organizations over performing groups. Defenders of Tier I’s substantial funding note that collections necessarily require larger, more stable budgets because of inherently higher fixed costs. Meanwhile, Tier III groups believe their tier receives too little money and is overly broad, encompassing everything from small choral groups to local museums and arts councils to nationally known performance groups. Echoing Tier II organizations, they argue that the Tier I institutions are now secure enough to survive with less money.

These complaints have led to incremental changes in SCFD funding allocations. Before the most recent reauthorization of the SCFD tax in 2016, the funding structure was altered to shift money from the big Tier I institutions to groups in Tiers II and III. In addition, qualifications for Tiers II and III were tightened to try to limit the number of groups splitting the funding, and slightly more money was earmarked for SCFD administrative costs.

Today

More than three decades after it started, SCFD is generally regarded as a remarkable success. One of the country’s first regional tax districts for culture, it has inspired similar measures in Pittsburgh, Kansas City, Salt Lake City, and elsewhere. Although some nonprofits worry that SCFD funding discourages private giving, one recent economic study found that such “cultural tax districts may benefit the arts community as a whole by complementing and perhaps even enhancing, rather than replacing, other sources of revenue.” Cultural tax districts like SCFD also have the advantage of providing institutions with a stable base of funding that is not subject to the whims of private donors or the grades of grant judges.

Thanks in part to SCFD funding, Denver arts and culture organizations tend to punch above their weight: the Denver Performing Arts Complex (home to DCPA and the Colorado Symphony) has the highest attendance of any cultural complex of its kind in the country, DMNS has more paid members than any other museum in the country, and Denver has more live-music venues than traditionally music-heavy cities such as Austin and Nashville. SCFD may also have influenced Denver’s growth more broadly by helping to attract a “creative class” driving development and gentrification. According to the Colorado Business Committee for the Arts, in 2017 arts and culture provided nearly 12,000 jobs paying more than $180 million in metro Denver. Cultural organizations had a total attendance of more than 15 million people and provided educational programs to more than 4.3 million schoolchildren.

Even in Denver, however, the COVID-19 pandemic imperiled many arts and culture organizations, which rely heavily on the kind of in-person, indoor events that the pandemic put on hold. Early in the pandemic, SCFD head Deborah Jordy worried that sales taxes would fall by as much as one-third in 2020, but by late summer it appeared that spending had proven more resilient than first feared. As of August 2020, SCFD anticipated that its revenue would be down only 9 percent for the year, and it should rebound as the economy recovers. Currently authorized through 2030, SCFD promises to provide stable funding to Denver-area cultural organizations for the foreseeable future.