Art Spurs Economic Development.

• Position: News & Numbers

In Berea, Kentucky, there are a lot of art galleries. The small Eastern Kentucky city is a rare thriving and growing community in a region known for its economic woes, which are largely linked to the collapse of the coal industry. "In the towns, cities and counties where leaders are working to find a way forward, the search is on for a new export. This time, the hope is for something place-based that can keep the economy humming while encouraging businesses to invest locally" the report said. "In Berea, that thing is art and culture."

Art and culture seem to be working. Berea is one of the fastest-growing places in the state, and the unemployment rate is 4 percent. Local officials feel that their investment in building an arts economy has paid off "because it gives people a reason to stay. If they stay, they spend their money locally, and that money feeds back into the local economy."

Local artists started the push, investing on their own, and city commissioners saw a good investment. In 1982, the city commission passed a hotel/ motel tax and started a volunteer tourism commission. It passed a 3 percent tax, and from 1982 to 2007, the tourism commission received about $125,000 a year from the tax. Then in 2007, Berea raised its property tax rate from the lowest in the state (0.03 percent) to 10 percent. Soon after, it instituted a 3 percent restaurant tax, "and the tourism budget quickly shot up to nearly one million dollars a year," the report said. Berea then hired full-time staff for the Tourism Commission and started advertising the city as the Capital of Arts and Crafts. Tourists followed, bringing with them economic activity.

"Berea Economic Development Director Danny Isaacs describes the decision to move away from traditional...