For Austin’s arts and cultural organizations, the math is frequently unforgiving.
The Puerto Rican Cultural Center has brought music, dance and cultural traditions to Austin for nearly 30 years, operating on a low six-figure budget that leaves little room for financial surprises on top of $5,900 in monthly rent for its East Austin space.
The center’s annual Thrive grant from the city fell from $150,000 to $85,000 between the city’s latest funding cycles, a reduction that founding director Ana María Tekina-eirú Maynard said forced her to let go of an intern and scramble to cover expenses.
“If that money goes away, basically we close down because there’s no replacement for it,” Maynard said of the importance of the city’s operating support. The center has remained open, with Maynard shouldering more responsibilities and seeking additional donations.
That shoestring reality makes the financial outlook for Austin’s cultural arts grants especially consequential. With the Austin Convention Center closed for reconstruction until 2029, the city faces years of diminished convention business and the hotel tax revenue it generates, portions of which fund programs supporting the arts, live music and historic preservation.
But a surge in hotel taxes collected from short-term rentals (STRs) is providing a financial cushion, thanks to a fairly new city requirement that booking platforms like Airbnb and VRBO collect and pay those taxes to the city. Guests in hotels and short-term rental properties are required to pay a 17% hotel occupancy tax on overnight stays, with 11% going to the city.
City figures show hotel occupancy tax collections from STRs more than tripled over two years to $23.7 million, offsetting a decline in collections from hotels and other lodging. Without that growth, Austin’s overall hotel tax collections would have fallen, shrinking the share that flows to arts and music grants.
Since April 2025, short-term rental platforms have been required to collect and remit the city’s hotel tax directly, rather than having individual property operators do it.
The change gives the city a more direct way to collect taxes that rental operators were already required to pay.
The city’s figures show how much short-term rentals have changed Austin’s hotel tax picture. STRs now account for nearly 14% of those collections, compared with about 4% two years earlier.
That additional revenue offers some relief in a creative sector where demand for city support far exceeds supply. Applicants to the city’s last grant cycle requested more than $67 million, compared with roughly $24 million awarded.
Austin’s Cultural Arts Fund had nearly $16 million in funding for this fiscal year, supporting programs such as Thrive, Elevate and Nexus. In a separate funding process, the city’s Live Music Fund awarded about $7.1 million through 399 grants to musicians, promoters and venues in 2026.
Only a portion of Austin’s hotel tax revenue goes toward arts and music grants, so the $16.8 million increase in STR collections since the rule took effect won’t translate into an equivalent increase in funding for those programs.
The additional revenue could support larger grant budgets in future years, since the city generally bases its awards on the previous year’s tax collections. But bigger awards aren’t guaranteed in 2027.
Arts Commission Chair Gina Houston said the strength of hotel tax collections has been a welcome surprise, particularly during the convention center closure.
“We’ve all been very pleasantly, pleasantly surprised by not only the maintenance of the amount of [hotel] tax revenue we’re getting, but the increase,” she said.
Houston said the additional revenue could prompt discussions about whether to increase grant amounts, support more recipients or provide longer-term funding.
“We have to figure out how to balance honoring the people who have been here for decades and have been doing great work for decades and supporting the people coming up in the middle and the brand new people at the bottom at the same time,” she said.
The commission has not yet begun formal discussions about larger grant budgets, but Houston also wants to examine limits on consecutive awards to individual organizations.
Zac Traeger, executive director of the Museum of Human Achievement, said the organization’s Thrive grant supports artist development, grant-writing assistance, fiscal sponsorship and other work that’s difficult to finance through project-specific grants. The East Austin organization, which saw a funding cut similar to Maynard’s, hosts or produces up to 200 events per year.
“It’s so hard to get operational-style support where we can just do the work because everybody wants to see the product,” Traeger said.
To add more predictability and accessibility in the city’s grant process, Traeger has pushed for both multiyear operating grants for established organizations and smaller, more accessible awards for emerging artists.
“The ability to know that next year you’ll have some semblance of the same funding as the prior year so that you can build infrastructure,” he said. “You don’t want to fire somebody. You want to build long-term infrastructure.”
Whether the additional funding remains stable will depend in part on the strength of STR collections during the convention center’s reconstruction.
Houston said members of the city’s Tourism Commission have reached out to the Arts Commission to gather data on how much tourism Austin’s arts and cultural events generate compared with convention-related travel.
“We don’t have that mechanism to collect that data right now,” she said, adding that she wants to avoid imposing additional reporting requirements on artists and cultural organizations.
The Puerto Rican Cultural Center illustrates the connection. Its festivals and performances attract visitors from beyond Austin, while city operating support helps Maynard keep its doors open. With an annual budget that Maynard said typically ranges from $150,000 to $200,000, the center spends more than $70,000 on rent alone.
Maynard said a reduced grant can mean fewer guest artists or scaled-back productions, but the rent is nonnegotiable.
“I can’t tell the landlord that I can’t pay his rent, because he would be happy to put someone else in that spot who can afford it,” she said.
