CLEVELAND, Ohio – While cigarette sales continue to decline, the tax revenue they generate for Cuyahoga Arts and Culture has been going up since this year’s tax increase took effect, and that could be good news for those seeking grants this year.
But whether the revenue will continue to grow remains uncertain.
The agency’s board recently reported $1.3 million more in revenue for the first quarter of 2025 compared with 2024, despite cigarette sales tracking down 5.4% for the year. That’s the result of the tax increase, which voters in November approved raising from 30 cents per pack to 70 cents beginning in January.
The tax is estimated to generate $160 million over the next 10 years to support over 300 arts and culture organizations, like Playhouse Square, Apollo’s Fire orchestra and Karamu House theater.
The early figures have CAC Executive Director Jill Paulsen hopeful for higher total grant making in 2026 than the $11.3 million that was approved for this year. But she can’t yet predict whether it will equate to more grants or higher individual grant amounts this fall, when the board sets the budget.
CAC can only make decisions based on money in the bank, she told cleveland.com, and it’s too early to say whether the higher revenue collections will continue.
Budgeting and policy decisions at the state and federal level – as well as the threat of an economic recession – could change consumer behavior, leading people to kick smoking or transition to other products, like vapes or marijuana, which are not subject to the tax. That could result in a loss of revenue sooner than expected, since Paulsen said they’ve always forecasted gradually declining sales as more people quit smoking or never start.
However, even if sales were to remain steady and revenues increase, Paulsen cautions that CAC will still need to plan long-term and consider the budget for not just this year, but the next 10. Arts and culture organizations depend on the funding, she said, and CAC must be able to deliver.
“We know that we need to think about when the money comes in now, how can we save some, smooth it out over time so that in 2034, we still have dollars to give out to the community,” Paulsen said. “Because that’s our sole purpose, right? Making grants to nonprofits.”
The next grantmaking cycle kicks off in May, with applications due July 31. The board will then set the pool of grant dollars to distribute in the fall and announce winners by the end of the year.
Guidelines were tweaked this year to make applying easier, based on grantee feedback. Some panel reviews have been removed and grants for operating support are now open to organizations of any budget size. Several workshops are planned to help organizations understand the new rules.
“We’re just getting started again, but I feel like we’re on good footing,” Paulsen said.