Calls for a gate tax on Disneyland are growing as Anaheim grapples with a projected $75 million budget deficit, stemming from a series of business shutdowns from the novel coronavirus.
“I think it’s important that in this moment to make sure that corporations like Disney, which have multibillion dollar profits, are able to pay into the communities that they are heavily subsidized in,” Anaheim community activist Joese Hernandez said.
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Disney made nearly $70 billion last year, boosting its profits by $10 billion over the previous year, according to Forbes.
The multinational corporation first launched from the first iconic resort park in Anaheim has also seen a revenue dip since the pandemic hit, with Disney experiencing a $1.4 billion revenue dip, Reuters reported last month.
Hernandez, who’s also vice president of the Anaheim Democrats, said the tax could go a long way toward softening the blow to the community budget, which is facing a reduction in public works and community services spending.
“For a long time they’ve been able to pay for politicians to get around that responsibility that they have to the taxpayers of Anaheim. It’s not in any way unreasonable to have a gate tax,” Hernandez said. “Especially in this moment, COVID 19, where so many of our communities are cash strapped.”
Resident and City Council candidate Jeanine Robbins, who’s part of the People’s Homeless Task Force said it’s something that should’ve been done long ago to help pay for the infrastructure. The task force advocates for homeless people at City Council and County Supervisor meetings.
“I think it’s a great idea, it’s something that we should’ve implemented a long time ago. The influx of tourists … they all put wear and tear on the streets and all the infrastructure. So $1 a person is not going to make or break if they come here or not,” Robbins said.
She said it’s an idea that’s been floated and killed repeatedly for years.
“It has been talked about for a long time and it’s something residents have always been in support of but Disney has always fought it and as long as Disney controls the City Council, it never goes near it,” Robbins said.
Two Anaheim City Councilmembers support the idea.
Councilmembers Denise Barnes and Jose Moreno are working to ask city voters if they want to patch up a bleak budget with a $1 ticket tax on Disneyland, Angel Stadium and the Honda Center, following the economic gut punch caused by the novel coronavirus shutdowns.
“It is time, I think, for us to think about allowing our voters to decide on a gate fee,” Moreno said during Tuesday’s public budget workshop.
“In our presentation here, our City Manager said we have to look at all potential revenues.”
City Manager Greg Garcia is proposing 20 percent cuts to all departments across the city. Councilmembers will finalize the budget later this month.
The city’s unrestricted general fund is expected to take a roughly $100 million hit due to the Disneyland-area resort industry shutting down from the pandemic, on top of the loss of hotel tax revenues and restaurant closures. And 20 percent of that hotel tax goes to pay off 1997 resort bonds, while all of Disney’s incremental sales, hotel and property tax pays down the bonds.
Moreno, a Democrat, said city officials could sunset the tax when the bonds are paid off later this decade, which will free up millions in hotel tax for the general fund.
“We can sunset it until our bonds are paid off in 2028,” Moreno said. “So that’s something I’d like for us to consider colleagues.”
Using average attendance numbers for all the venues, Moreno estimated the city could get $22 million a year in new revenue once everything is fully running. In a brief phone call, Moreno said he will continue trying to get the ticket tax question on the ballot.
Barnes, a Republican, was the only city councilmember to support Moreno’s request to put the ballot question on a future agenda in an attempt to get it before Anaheim voters in November.
“I wanna give a second,” Barnes said. “Boy, we sure need it — yes I’ll give you a second.”
Councilwoman Lucille Kring, who unsuccessfully tried to get a cannabis tax put before voters in November, said she can’t support the move because some residents will be paying the $1 tax.
“I cannot support your tax,” Kring said. “The visitors are going to Disneyland. But most of the people who go to Angel Stadium and the Ducks are local residents, so they would be the ones paying the tax.”
Anaheim’s not alone in scrambling to patch together a budget ravaged by the Coronavirus.
The County of Orange and cities throughout OC will be struggling to iron out tough annual budgets in the coming weeks.
Meanwhile, the virus continues to spread.
The virus has now killed 198 people, out of 7,737 confirmed cases throughout OC, according to Wednesday’s updated numbers from the County.
There have now been 306 people hospitalized, including 146 in intensive care units.
Just over 3,500 people have recovered and over 168,000 tests have been conducted in the county, which is home to roughly 3.2 million people.
Although bars, gyms and other businesses are slated to reopen Friday, Anaheim’s tourism industry and convention center remain largely shut down and it’s unknown when the industry will reopen.
Leading up to the 2018 general election, Disney cancelled the proposed 700-room luxury hotel near Downtown Disney October 2018, after it asked the city to cancel the hotel tax subsidies when questions about Measure L began to swirl and hotel tax subsidy debates resurfaced.
Some of the other cancelled agreements included a minimum 30-year shield from any potential tax on Disneyland tickets. The 2015 agreement called for Disney to invest at least $1 billion in the resort district for the 30-year protection, with an additional $500 million investment that would’ve extended the tax protection for 15 years. The agreement also said if Anaheim voters decided to tax Disneyland tickets or its parking garages, the city would give the money back to Disney.
Before the budget presentation, Mayor Harry Sidhu took aim at resort industry critics.
“There have been a few in the past, who enjoyed the luxury good times, questioning the value of the tourism sector and resort to our city. I think we can safely put those discussions to rest with a $75 million budget deficit facing us. We could use a fully functioning resort right now,” Sidhu said.
Shortly after the resort industry shut down in early March, Sidhu brought forward a $6.5 million bailout package to the City Council to help Visit Anaheim, the advertising arm of the resort industry.
Visit Anaheim is funded through the resort hotels’ self-imposed two-percent hotel tax.
Former City Manager Chris Zapata raised concerns about giving the full $6.5 million and suggested lowering the amount with a strict performance review measure.
Barnes and Moreno both voted against the bailout and firing Zapata.
While Sidhu didn’t directly address Moreno’s proposal, he said taxes don’t need to be raised when he spoke about the overall budget.
“We do not need to raise taxes on our residents and businesses to get through this. Our residents, our job creators have been hit hard.”
Moreno said voters should decide if they want to shoulder the cuts or offset the deficit with a gate tax.
“So let’s let the people vote if they prefer to have all cuts, or to spread the pain.”
Here’s the latest on the virus numbers across Orange County from county data: