Anaheim and Disneyland are set to sign a deal that would protect the mega-resort from paying entertainment taxes, a notice published in the Anaheim Bulletin indicates.
According to a city news release, the 30-year deal would require the city to reimburse Disneyland for any entertainment taxes levied on the resort. In exchange, Disneyland would embark on an expansion of the resort valued at $1 billion and completed by Dec. 31, 2024, the release states.
The agreement, up for a council vote at its July 7 meeting, would extend a current reimbursement requirement on entertainment taxes that goes back to 1996 and runs through 2016. That deal was part of a half-billion dollar expansion of the resort district.
City officials are pitching this new deal as an investment that will increase tax revenue due to the additional tourism from Disneyland's investment. The news release claims a KPMG study completed for Disneyland shows the proposed resort expansion would result in $600 million in new revenue over the next 40 years.
“This proposed entertainment tax policy is a pragmatic way to facilitate investment and future revenue for City services,” Interim City Manager Paul Emery states in the news release.
Anaheim Mayor Tom Tait disagrees. He says the decision would "bind the hands" of future generations from being able to tap the largest financial well in the city during times of fiscal duress.
Tait pointed out that the city's future budgets could be burdened by pension obligations and tax subsidies for hotels. He compared the possibility of an entertainment tax to a family "insurance policy."
"Hopefully there won't be a need. But if there is, the people, this City Council, should not give away that ability" to levy an entertainment tax, Tait said.
Disneyland officials refused to be interviewed by Voice of OC, instead emailing a statement from company President Michael Colglazier.
"We are asking city leaders to continue with a policy set two decades ago that has driven unprecedented job creation, growth, and prosperity, and enabled the city to invest in vital services that benefit every Anaheim resident," Colglazier said in the statement.
The idea of an entertainment tax has been a politically charged issue in Anaheim. Under some tax proposals, visitors to Disneyland would be required to pay a $1 gate tax to get into the park.
Debate over such a tax has intensified since last November's election, when voters passed a new governing structure that expands the council and requires council members to be elected by district, a system that advocates say would give greater representation to the city’s working-class Latino neighborhoods.
It’s no secret that some potential council candidates, like Los Amigos President Jose Moreno, have expressed support for an entertainment tax to fund city services for underserved neighborhoods.
Following the fall election, Councilwoman Kris Murray persuaded a majority of her council colleagues to back a proposal, dubbed the Anaheim Taxpayer Protection Act, that would require a two-thirds vote of City Council to put any tax measure before voters.
That proposal, which will be on the 2016 general election ballot, was timed to coincide with the implementation of district elections, leading many to speculate the move was payback to the resort, which spent hundreds of thousands of dollars promoting Murray and other council members’ election campaigns.
“What’s the rush here?” Moreno said. “We have to wonder, when they say Anaheim Taxpayer Protection Act, we’re not talking about Anaheim residents, we’re talking about Anaheim corporate interests, at the expense of Anaheim residents.”