Forced to borrow money to balance their budget, Anaheim city council members are facing increasing pressure from residents to address quality of life issues and community needs.
But where would the money come from?
This week, one proposal suggested allowing voters to decide if they wanted to impose a 2% ticket tax on visitors of the city’s large entertainment venues like Disneyland, the Honda Center and Angel Stadium.
Supporters argue voters should consider the option this November, as it could generate up to $82 million tax revenue if approved.
Anaheim city council members this week turned down the proposal – refusing to vote on it themselves or allow voters to decide the matter in November.
The debate comes at a time when city hall is borrowing on Wall Street to meet annual budget deficits – while still being criticized for failing to keep up with city services like libraries and public pools as well as infrastructure.
In recent years, some residents and resort influence critics have increasingly called for and supported a ticket tax in Anaheim arguing that the private entertainment industry has reaped massive profits over the years while City Hall has patched budget deficits by borrowing money on the taxpayer dime.
This week, City Councilmember Jose Moreno led an effort to let voters decide on a 2% ticket tax on large entertainment venues including the Honda Center. But the proposal died quickly that evening, without the needed support from city council members to even take a vote on putting the measure on the November ballot.
Debating the Gate Tax
Most of Moreno’s colleagues who spoke on Tuesday questioned the approach of a ticket tax.
Councilman Trevor O’Neil argued that the city has one of the highest hotel tax rates in the state.
“Here in Anaheim – we already have a 15% (Transient Occupancy Tax). It is among the highest in – if not the highest in California,” he said.
While O’Neil acknowledged that the city had “budget challenges” he stressed that current revenue projections are promising.
“When policymakers add costs, add regulations, add burdens on businesses and economic stakeholders, we make it harder for them to grow,” he said.
“The key is growing the size of the pie so that everybody wins and everybody gets a piece, not taking a bigger bite out of the pie. That’s the Anaheim way. That’s how we fund new programs, enhance public safety, and invest in neighborhoods.”
Yet some residents and officials like Moreno on Tuesday night publicly questioned whether the city is really meeting its responsibility to residents when it comes to community services.
“When the people of Anaheim come to me and ask me and ask you in your district meetings, if you have them, why don’t we have these particular services? Why can’t I get more community services for our neighborhood?” Moreno told his colleagues.
“I expect that you will say because we have plenty of money, and we’ve chosen to spend it somewhere else, because clearly it’s not a lack of resources,” he continued.
“When our residents come and demand and expect that their city should provide a higher quality of life standard than surrounding Orange County cities, given our three jewels, I hope you’ll point to tonight’s vote.”
Council member Avelino Valencia argued the gate tax proposal was unvetted and questioned who would pay the tax.
“A neighbor attending an Angel game,” Valencia said at the meeting. “They would be paying for that tax, correct? Not the Angels themselves and not the Honda Center.”
He specifically questioned how the tax would impact the Angels.
The Los Angeles Angels of Anaheim are granted credits against any future admission tax in their city stadium lease payments because of the way the 1996 city stadium lease was reinstated in 2019 by the city council majority, according to a city staff report.
Yet the city’s attorney on Tuesday night questioned that premise.
“There’s some question about whether that applies to this tax,” City Attorney Rob Fabela said at Tuesday’s meeting. “The Angels would either have to agree that it doesn’t apply, or they agree to amend the lease in a way that it does or we go to court.”
Valencia also questioned if charitable events would be exempted from the tax.
Moreno, in response to opposing colleagues’ arguments about unintended consequences for charity events at such venues, offered to amend his proposal accordingly and, on top of that, craft language exempting Anaheim residents from the tax, an idea the City Attorney deemed feasible.
Moreno also offered to continue the gate tax ballot proposal to a future meeting for further study and vetting, responding to Valencia’s remarks.
Yet Valencia, along with council members O’Neil, Stephen Faessel, Gloria Ma’ae, and Jose Diaz, refused to vote on any of these ideas, and effectively denied voters the chance to decide on their ballots.
“I don’t feel comfortable moving that agenda item or even that conversation just because there’s no guarantee that we can even get to something that will cover some of these holes,” Valencia said from the dais.
Valencia, O’Neil, Faessel and Diaz, have been heavily backed by the Support Our Anaheim Resort (SOAR), a political action committee which Disney has given at least $1 million. Ma’ae sat on SOAR’s advisory board before her appointment to the city council.
The decision comes amid an ongoing FBI corruption probe, a mayoral resignation, and criminal charges against a prominent business leader that has intensified public scrutiny of city hall.
In recent months, some local officials’ push for campaign finance reform flopped on numerous occasions despite pressure from some residents wanting to limit special interest groups’ influence on local elections.
Moreno said his colleagues, through the non-vote, sent a clear message to the residents:
“They knew what’s best for you.”
“I hope again, that the people of Anaheim will exercise their right to vote in a different way, and perhaps elect a council that will balance the needs and the interests of our city in a much more substantive and profound way,” Moreno added.
Voters in town will not get to decide whether the city should rake in another $55 to $82 million in city funding, per city staff estimates, from Honda Center and Disneyland tickets.
Anaheim’s Finances & Community Needs
What could money like that mean for a city like Anaheim?
Moreno, in a slideshow presentation before the vote, took colleagues and members of the public in the audience through rounds of troubling statistics on the welfare of city residents.
For instance, one slide featuring county data, showed that 54% of children in Anaheim are on CalFresh food stamps.
At the meeting, Moreno argued such extra tax revenue could go toward additional public pools in town, a senior center, rent forgiveness programs, funding for understaffed city departments, or lighting improvements at parks.
He also said the city has over $1.5 billion in unfunded liabilities.
“The need is great in Anaheim,” Moreno said. “Borrowing was needed last year to balance our budgets and when we look at our projected budgets, if we didn’t borrow, we would not be able to balance our budget and our reserves would certainly be hurt very quickly.”
Last year, the city took out $130 million in bonds to help cover its deficits over the next few years.
The city uses 20% of the hotel tax revenue it collects annually towards $510 million in bond debt for resort area projects, which were floated by the city in 1997.
[Read: Forced to Borrow to Meet Budget Deficits, City of Anaheim Mulls Disneyland Ticket Tax]
Former state Sen. John Moorlach, a prominent local Republican budget hawk who predicted the 1994 Orange County bankruptcy, also voiced support for a ticket tax in a June 5 opinion article he wrote in the OC Register.
Moorlach warned the city could lose money in the future because Anaheim’s latest financial statements show “an unrestricted net deficit of $715 million, among the worst of California’s 482 cities.”
O’Neil said Moorlach was wrong in his own June 13 opinion article in the Register.
He said at Tuesday’s meeting the city is lucky to have a robust tourism economy that he argued still helps pay for city services and alleviates tax burdens on residents.
“We should be doing everything we can to encourage growth in this sector, not making it more difficult,” O’Neil said. “Increasing the already high tax burden on visitors runs the real risk of negatively impacting tourism and the resulting economic impact for our city.”
But O’Neil could barely get through his arguments that evening. To many of his points, audience members in the council chambers started shouting, laughing, and even kicked off a chant.
“Let the people vote.”
O’Neil, visibly frustrated over the public jeering, at one point called for a five minute recess.
And while the public disdain was directed at Moreno’s opponents, the minority council member found himself calling for civility on multiple occasions throughout the meeting, even admonishing the crowd in certain cases.
Tuesday night’s gate tax debate often times got loud in the audience – as the issue put the two sides of activism in Anaheim right up against each other in public, something that hasn’t happened since the FBI Affidavits were filed in court back in May.
For example, when Ross McCune came up to the public comment podium and identified himself as the board chair for the Anaheim Chamber of Commerce, his opponents jeered him.
“And I’m very proud of that,” McCune said, responding immediately to the jeering by adding, “Yeah, you heard me.”
[Read: What Made Anaheim’s Chamber Tick?]
Residents Speak Out
Roughly two dozen speakers showed up Tuesday in support of the gate tax ballot measure.
“We know corporate money has influenced the city council for many years and that the community no longer trusts that you have the best interest at heart,” said Marisol Ramirez, the Director of Programs for the nonprofit Orange County Communities for Responsible Development (OCCORD), from the speaker podium.
“We know what is best for Anaheim: place it on the November ballot and let the people decide on taxing corporations like Disney, Angel Stadium and the Honda Center.”
O’Neil said he understands the issue of letting the people vote.
“The people did vote. They voted for us to represent them,” he said. “The voters can hold us accountable at the next election as to whether or not we’ve adequately represented them.”
OCCORD started an online petition in support of the idea ahead of the meeting. The petition webpage logged 134 signatures as of Wednesday morning. Ramirez said over 100 signatures came in the span of less than 24 hours.
Residents said the city needs the money and that it could go toward addressing affordable housing needs, homelessness, and various quality of life issues.
Many of those who spoke have been familiar faces over the last few weeks and months and have shown their support for reforms like campaign finance restrictions in light of the FBI investigation.
[Read: No Campaign Finance Reform for Anaheim]
The city currently levys a 15% tax on guests who stay at Anaheim hotels, on top of a 2% tax to the tourism improvement district.
A two night stay at the Disneyland Hotel for two adults, including a 3-day ticket with admission to one of the parks as far out as November this year, would cost $2,080, according to price totalings by the Disneyland booking website.
In an email, city spokesperson Mike Lyster said the hotel tax would not apply to the theme park portion of the package, but to the hotel room, resort fees and internet fees.
Currently, Lyster said, about 75% of the revenue collected from the existing tourism improvement district tax goes to Visit Anaheim, while the other 25% goes to streets, signs, landscaping and other resort improvements.
“The hotels started taxing themselves to fund Visit Anaheim in 2014, relieving the city of what it used to pay to fund Visit Anaheim,” Lyster wrote.
“Before 2014, Anaheim used to pay about $10 million a year funding Visit Anaheim. The city no longer does that as the hotels tax themselves to pay for tourism marketing and hotel bookings.”
At the start of the pandemic, in March 2020, Anaheim city council members dipped into city reserves, allocating $6.5 million to Visit Anaheim to advertise the Disneyland-area resort in the midst of pandemic stay-at-home orders.
Not everyone spoke in support of the ticket tax on Tuesday.
Naysayers included Jill Kanzler, SOAR’s executive director, McCune, and Tony Bruno, who’s the Managing Director of the Anaheim/Orange County Hotel and Lodging Association.
“It’s unfair to target yet another tax on our tourism and entertainment industry that is already the largest source of revenue for our city,” Kanzler said at the meeting.
She argued that the city’s resort area makes up 5% of Anaheim’s land but brings in almost half of the city’s revenue.
“On the heels of the pandemic and the economic crisis that ensued, Anaheim cannot afford the damage to the economic engine that the entertainment tax would cause,” Kanzler said. “It will deter conventions and visitors to the Anaheim Resort district at a time when we need them most.”
At the same time, Disneyland is continuing to pour over a million dollars into SOAR ahead of the November local election despite pressure from residents to stop.
[Read: Disney Revs Up Campaign Spending in Anaheim Amid Calls to Curb Their Influence After FBI Allegations]
Moreno argued at Tuesday’s meeting that ticket prices have already been climbing at Disneyland, Angel Stadium and the Honda Center.
“The reality is colleagues that Disneyland, the Ducks, the Angels are raising prices regardless, but none compared to how Disneyland is raising their prices,” Moreno said. “But the moment we propose the idea of $2 a ticket – $2.40 – ‘They’re not going to come to Anaheim anymore.’ It seems to be a hollow argument at this point.”
He said the city needs the revenue.
“When we hear the industry talk about an economic engine, this is the combustion. This is the poverty that gets constructed often because of the wages that folks earn because of the struggles that they have,” Moreno said.
“While there is a lot of revenue that comes it is not enough to help us and assist us to provide the services necessary of a tourist city.”
Brandon Pho contributed to the reporting in this article.
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.