Hilton Head Island has pointed the Arts Center of Coastal Carolina in the right direction, telling center officials to look for significant spending cuts in the short term and to come up with a business plan that doesn't assume "significant public subsidies."
No discussion should take place about the town's taking ownership of the arts center or providing any more tax support until that is done. The realities of the arts center's finances, including the cost to operate and maintain the facility, must be addressed.
That reality includes a $230,314 operating loss for the fiscal year that ended Aug. 31, according to an unaudited financial reported provided by the arts center.
And let's be clear that the financial report would look much worse without the town's annual accommodations tax grant. The center asked for -- and received -- its 2013 grant of $346,000 early this year. Annual grants have ranged from $346,000 to $350,000 since 2002. In fiscal year 2012, that represents about 10 percent of center's annual income.
In a letter to the arts center's board chairman, Mayor Drew Laughlin sought to clarify the town's position. He states that the town wants a review of performing arts on the island and to work with the arts center's staff and board to identify savings in this fiscal year and beyond.
Arts Center president and CEO Kathleen Bateson has said she wants the town or some other entity to buy the 16-year-old building and assume the maintenance costs (about $400,000 a year) and needed repairs (about $2.5 million).
But the annual subsidies the arts center has received since it opened in 1996 suggest something besides ownership must change for the center's financial ship to get righted. The center needs a major course correction.
Some also worry about that a precedent that would be set if the town became owner of the center. But the arts center wouldn't be the first nonprofit group to receive ongoing funding from the town's operating budget.
The Island Recreation Center, operated by the Island Recreation Association, is owned by the town and built on Beaufort County School District property. The town leases the property from the district for a nominal amount. Accommodations tax funding helped build the center, and it receives annual funding from the town. In fiscal year 2012, that totaled about $620,000. Recreation capital projects also are paid for by the town.
The nonprofit Coastal Discovery Museum also has a financial relationship with the town. The museum leases the town's Honey Horn property, the site of its operations, for a nominal fee, and it, too, received bed-tax funding to rehabilitate the buildings that now house the museum. The town pays the museum $75,000 a year to manage the Honey Horn property.
That is not to say the town should take on the arts center, too. Town officials will have to weigh whether the town's already significant financial role should be expanded. And they will have to determine the town's role with regard to all of the town's many arts groups.
The overall study Town Council has asked for should help with that.
In the meantime, arts center officials need to get their financial house in order for the short term and the long term.