Tax reform and a lean budget — these are the two elements driving proposals by the N.C. General Assembly to generate revenue and create a balanced budget for the state.

But in the wake of proposed changes, there may be devastating effects, especially for those who lives, and livelihoods, depend on the arts.

At the same time the state Senate’s budget proposal eliminates all funding for Partnership for the Sounds, a move that could force Washington’s North Carolina Estuarium to rely heavily on private fundraising in order to operate, it also puts forward deep cuts to the N.C. Arts Council’s funding. The cuts represent a $1.78 million decrease in arts council grants over two years: a $500,000 reduction the first year, a $780,000 reduction the second.

“This recommendation represents a 8 percent reduction in support of the North Carolina Arts Council for the Biennium budget and is significantly more than any other agency in the (Department of) Cultural Resources budget recommendations,” reads a statement on the NCAC website. “This reduction follows a pattern of dismantling the North Carolina Arts Council as the agency has experienced a 37 percent reduction in per capita funding over the past six years.”

By contrast, the N.C. House budget proposal recommends a $96,000 reduction in arts funding over two years.

As funding for NCAC is cut at the state level, the decrease will be felt locally, according to Beaufort County Arts Council Executive Director Joey Toler.

“If our Grassroots (grants) funding is cut, which is the main source of funding from the state, it will affect the organizations and programming we support, like the choral society, music festival, Traditional Music Association, quilters guild. Smaller things like the Boys & Girls club mural for 300^th anniversary — little things that pop up during the year, we might not be able to fund anymore. And it may be that we have to reduce funding to the orchestra and many of these more established organizations,” according to Toler.

Causing further concern are the cuts to BCAC’s Regional Arts grant from the state. Toler said the BCAC grant has been reduced from $15,000 last year to $10,000 in the 2013-2014 budget, and currently there are rumblings in the capitol that Regional Arts grants may be eliminated altogether. If that happens, it could potentially decimate arts programming in Hyde County, Toler said.

The BCAC serves as a conduit for Hyde County’s arts funding, funneling it into the mainland’s and Ocracoke’s various programs and arts events throughout the year: the Down East Crafts Show, concerts in the Mattamuskeet region for special audiences, including the developmental center and for seniors, Music Across the Sounds, Ocracoke’s community theater, Arts Week at the Ocracoke School, funding for the Ocracoke Preservation Society, including its Porch Talks and Heritage Crafts classes and the Engelhard Seafood Festival.

Toler said since 2008 he’s been focused on keeping funding for the programs with “good reach,” focusing on cultural events and education targeting the broadest audience.

“If Regional Arts grants are cut completely — those programs may be gone. We’ll still have the Hyde County Grassroots money, but that doesn’t go far at all,” Toler said.

“When the economy fell in 2008, we all understood we had to tighten our belts, we did it at the arts council,” Toler said. “But now that the economy is improving, I’m less understanding of the cuts being made.

“Cuts to the arts council are disproportionate to other cuts within the Department of Cultural Resources. … If we’re going to be cut, we just want it to be fair. We don’t understand why we would be cut disproportionately to others.”

Budget aside, the senate’s tax-reform plan does further damage to arts funding, calling for the elimination of deductions or tax credits for charitable donations for individuals and corporations, as well as eliminating the nonprofit arts organizations’ exemption from charging sales tax. In regard to the latter, other nonprofits are still exempt.

“Tax reform is a big threat to nonprofits,” Toler said. “Some of the things being discussed are really concerning. What I see: if you cannot get a deduction for a charitable donation, it eliminates the motivation to give.”

While BCAC rarely offers ticketed programming, some of the nonprofit organizations operating under the BCAC do.

“We would ultimately be responsible for any taxes collected under our umbrella organization,” Toler said. “How significant that would be, we would just have to wait and see. It’s hard to tell. But it would increase the workload of our already lean staff.”

Toler pointed out that the budget and tax-reform plans are still in the discussion phase — nothing has been solidified yet. Until that point, he said, arts organizations across the state have a little breathing room, time to lobby and let their voices be heard.

“The arts council is already a very lean organization to start — we really count our pennies,” Toler said. “It’s really hard to imagine where we’re going to make more cuts yet maintain the programming that we do.”