How to find an artist:
I recommend looking through art sites such as Deviantart for an artist which suits your taste, or any other site that has a decent art community such as Newgrounds. . . . First of all, they're cheaper. These guys aren't used to making a lot of money for their work so they will be more appreciative of the chance even if they are being payed slightly less than what professionals are payed. Second of all, they're better. . . . Unless you have a specific price you want to pay in mind, ask THEM what they are willing to charge for the project. This usually causes people to give offers that are lower than what you normally pay, and will make them happy.
How NOT to find an artist:
Do not look for either professional artists, or an artist that has done a lot of game design work in the past . . . they're usually expensive . . . they know how much flash games can earn so they expect a decent percentage of the profit. It's ridiculous to pay something 50% of a sponsorship when you can find someone else who would accept $500 for the same job.
Artist payment:
Keep them in the dark:
This relates back to what I talked about earlier. If an artist knows how much their artwork will increase the value of the game they will then feel they deserve that amount of money. This is not how a market economy works, you hire whoever is able to do the best job for the lowest amount of money, anything else is a loss of money on your end.
Timelines:
Give strict dates about when you need the art done (even if you don't) and give consequences by deduction in pay if the art is not completed by the date. Unless the person you've hired happens to be very punctual, you will need strong motivation to make sure they finish the art in a timely manner. Try to only hire people ages 18+ (I may sound a little hypocritical here), kids are generally less reliable and have more IRL things come up that they can't control.
I strongly advise all DA/Newgrounds artists to treat any proposition from Christopher Gregorio / Kaitol Flash Development with extreme caution.