While arts and tourism leaders emphasized how their industry makes significant cultural and economic contributions to the state, Assembly Tourism and Arts Committee members told them to be prepared for state aid cuts.

The newly formed committee held its first meeting at the Paper Mill Playhouse on Wednesday afternoon, calling witnesses from several arts and tourism organizations. Among them was Paper Mill Executive Director Mark W. Jones.

Assembly Majority Leader Joseph Cryan, D-20, said often people lose perspective on how important the arts are to New Jersey. State officials focus on return on investment, and one of the strongest returns on investment is in the arts.

The restaurants in downtown Millburn thrive when the Paper Mill is busy, he said, and his brother's business in South Orange, Cryan's, does well when SOPAC has a performance.

Committee Chairman Matthew Milam said the arts and tourism industry generates billions of dollars to the state's economy and creates at least 500,000 jobs. And there are indirect benefits to the local businesses.

Jones said Paper Mill's success can be seen in the community because the theater creates jobs, brings income to the many shops and restaurants downtown and adds to the tax base in the state. Paper Mill alone adds $25 million to the state's economy. And the theater brings in an audience from outside New Jersey—7 percent of subscriptions are from outside the state.

"There is no greater return on the public funding dollar than investing in the arts in New Jersey," he said.

He warned that the downturn in the economy and cuts in state funding "imperil every publicly supported charity that relies on the (state arts council) as the lynchpin for its programs and other funding."

Jones cited Paper Mill's hard financial times, which almost closed the theater and led to the sale of the property to the township in 2008. Since then the theater's leadership has worked hard to change the way it approaches its finances.

When he first became executive director, the Paper Mill had a $19 million budget and was operating at a $5 million loss. But it had an additional $3 million loss from grants and contributions. That meant half the budget was missing, Jones said. But now Paper Mill will present its first balanced budget at $15 million with the need for $4 million in grants and contributions.

The playhouse also has cut back on its season from six to five performances and the number of weeks from five to four. Jones said there was a time when the theater could afford to run performances for eight weeks.

Today's ticket prices—with a top price of about $93 for a Saturday night—don't cover all of the costs of a performance. Jones said the Paper Mill performances would cost much more—$125-$130 per ticket—if they were produced on Broadway. The playhouse has no intention to raise ticket prices, he said, but it means the theater will need to raise more money.

Gary Chiusano, R-24, a committee member, said the Assembly is facing long-standing financial problems from across the state. As an example of questionable practices the state may no longer be able to afford, he cited the example of five public employees retiring in New Brunswick who have cashed in their unused sick and vacation time for $1.4 million.

"There are a lot of things we need to fix and will benefit everyone," he said.

A part of the discussion centered on improving arts education throughout the state.

Robert Morrison, of the New Jersey Arts Education Partnership, said New Jersey's education is at a crossroads, and some students aren't even being educated. A census of art programs shows 72,000 students in New Jersey public schools do not have access to art education. Only 3 percent of elementary schools give the art education required through sixth grade through state mandates.

Morrison said there is no accountability on curriculum. Students are tested, and the score results are posted in the newspaper. But there's no measure for instruction to ensure every student has equal access to art.

He would recommend another census in 2010-11 to see if there have been any changes in arts education since 2005-06. Plus New Jersey needs to catch up with other states in its data systems detailing what districts have included in their curriculum.

Jones cited the playhouse's efforts in every New Jersey county working with 130 schools on education programs, including artist in residency programs. School districts should be working with more artists, who many times need work, to supplement their education programs.