Anaheim Council Approves Ticket Tax Protection for Disneyland

At a meeting that pushed into Wednesday’s wee morning hours, the Anaheim City Council narrowly approved a tax shield for Disneyland that effectively strips residents of their power to tax admission to the mega-resort for up to 45 years.

Council members extended the existing entertainment tax exemption, which has been in place since 1996, in exchange for promised investments to the Disneyland and California Adventure theme parks. Disneyland must complete a $1 billion expansion by 2024 to maintain a 30-year ban, and another half-billion dollar investment after that to extend the ban for 15 more years.

The vote to approve the deal was 3-2, with council members Kris Murray, Jordan Brandman and Lucille Kring voting for the deal. Mayor Tom Tait and Councilman James Vanderbilt voted no.

In California, only residents at the ballot box can approve levying a new tax, and policies taking that power away are illegal. But the deal circumvents that prohibition by steering all revenue from any future entertainment tax back to Disneyland.

An entertainment tax under the deal is defined as any tax applied especially for entertainment businesses, such as a tax on admissions or a parking tax.

Groups Line Up to Support, Oppose Deal

Dozens turned out for the meeting, packing the council chambers and spilling out into the lobby. The majority – including construction trade union representatives, hotel managers, restaurant owners, police and fire union leaders, business lobby groups, chambers of commerce of various stripes, and others connected to the tourism industry – supported the deal, saying it would be a boon to the local economy.

On the other side were many residents, including a number of working-class Latinos, who said the deal amounted to yet another giveaway to a multi-billion dollar corporation at the expense of residents.

Disneyland officials say the deal offers the financial certainty necessary to invest in the Anaheim parks, and that they would instead consider pouring money into theme parks in foreign nations like France and China if they didn’t get the guaranteed tax protection.

They also argued that investments would produce thousands of jobs and new tax revenue for the city. According to Disneyland officials, the resort’s workforce has doubled to 28,000 and brought in millions more in tax revenue since a deal 20 years ago to have the city finance over a half-billion dollars in improvements to the resort district and protect Disneyland from a gate tax.

Both Disneyland and the city hired economic consultants who determined that the city would see millions of dollars annually in new revenue.

“Tonight we hope you will continue to choose a future that’s built upon growth and opportunity,” Disneyland President Michael Colglazier told the council.

But Disneyland refused to release its economic study on the deal, saying it contained proprietary information and making it impossible to independently verify its claims.

Meanwhile, an economics professor who specializes in tourism economies told Voice of OC that city officials in their budget forecast are grossly underestimating costs associated with Disneyland and the resort district, eating up the tax revenue surplus that officials claim fund services for neighborhoods.

Also, Disneyland would almost certainly expand regardless of any entertainment tax protection because of overwhelming capacity needs to expand and competition with Universal Studios Hollywood – which recently invested $1.5 billion in a makeover without any ticket tax protection — experts who study the industry say.

Differing Views of Disneyland’s Impact

Advocates for the deal and residents who opposed it painted vastly different pictures of Disneyland’s presence in Anaheim. While supporters touted the jobs and tax revenue — one common refrain was “the numbers speak for itself” – others, especially Latinos, said such platitudes ignore the more complicated truth.

Ana Lepe, a worker at one of the Disneyland hotels and Anaheim resident, said the cost of living is high in Anaheim because of the resort. To make things tougher, Lepe said her job with Disneyland doesn’t pay much.

“With my income I barely make enough to get by,” Lepe said, speaking in Spanish. “I don’t see why Disneyland should have so much money left over.”

Jose Moreno — president of the group Los Amigos of Orange County and considered by many to be the most high-profile supporter of an entertainment tax – said even though Disneyland’s employment has doubled and tax revenue has increased, poverty rates for children in Anaheim have only risen, and that the economic prosperity brought by Disneyland only applies to some.

According to Moreno, who is also a former Anaheim City School District board member, 91 percent of school children are being subsidized on free or reduced lunch prices. Some 15 percent of children are homeless, he said.

Moreno also said that he had a conversation with his 15-year-old daughter about the fact that, even if 90 percent of Anaheim residents vote to tax Disneyland, this deal means “Mija (daughter), your vote won’t matter.”

The experiences of Lepe and Moreno’s testimony reflect what tourism industry experts interviewed by Voice of OC said about a tourism-focused economy — it generally produces low-wage jobs and has other impacts that lower the quality of life for the residents who live nearby.

However, not all the jobs are low-wage and seemingly dead-end. Another woman said that Disneyland offered her a good paying career that will allow her to “retire in dignity.”

Norma Bleecker Trujillo said she started out as a claims administrator for workers’ compensation and moved into management after a few years. Calling herself a Disneyland “cast member,” she urged the council to vote for the deal.

“The quality of my life and family and friends is at stake,” Trujillo said.

Other supporters of the deal said that its people and residents visiting the parks, not Disneyland, that would be paying any admissions tax, so the burden is still on regular folks.

“I can’t believe so many people are under the impression Disney doesn’t pay taxes,” said Craig Farrow, a resident of Anaheim for over 50 years and member of a pro-Disney group called SOAR.

Still, Moreno and others said Disneyland and the council are disenfranchising the Latino community for the next 45 years, and just as Latinos, who makeup 54 percent of the city, are about to gain representation on the currently all-white council due to the transition next year to a new by-district election system.

And some said that, despite the new investments in neighborhoods trumpeted by council members, parks in poor Latino neighborhoods remain in poor condition, with children playing in the dirt instead of grass fields.

One elderly woman mocked the complaint, saying “People were talking about playing soccer in the dirt. What’s wrong with that? We’re in a drought,” which set off a roar of laughter from the council chambers.

Council members who supported the deal also cited the jobs and economic benefits of the deal.

“The list just goes on and on as far jobs and value,” Murray said.

However, the city hired consultant when asked about 3,000 full time equivalent positions the investment would create couldn’t say whether those would be good paying jobs or low paying jobs, or even part time or full time.

Tait pointed out that the city has a huge unfunded pension and retiree medical liability – to the tune of hundreds of millions of dollars – and that, while he doesn’t support a tax on Disneyland, the deal unfairly prevents residents from deciding whether to levy a tax on Disneyland for over a generation.

The mayor said at some point during an economic downturn the residents will have to choose whether to cut services or tax residents, because taxing tourists will be off the table.

Looking out at the crowd of tourism business owners, Tait said, “There are some things more important than money. And we all know it.

“I think down the road people will rue the day this happened.”

Correction: A previous version of this article stated that Jose Moreno is an Anaheim School Board member. He is a former board member. We regret the error.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: @adamelmahrek