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Anaheim’s Extension of a Disney Gate-Tax Ban: Good for Residents, Business and Taxpayers

You know that the political landscape in Orange County is changing when there is debate about whether or not taxes should be raised or implemented.  After last Tuesday’s seven-plus hour Anaheim City Council meeting, never has so much time been spent by so many people purporting to protect folks “right to tax themselves” over a tax no one could say they supported! 

Thankfully, the proposal to extend the ban on a so-called “gate-tax”—an entertainment tax proposed to be paid by anyone visiting the Disneyland Resort in Anaheim--turned out to be a no-brainer this week. Add to that the economics of what the Disneyland Resort means to the bottom line for Anaheim coffers, as well as the economy of Southern California, and its approval should not have surprised anyone.

According to City of Anaheim, its 2015-2016 budget projects general fund revenues of $286 million.  46.5% of that, or $133 million, is anticipated to come from visitors using Anaheim hotels paying transient occupancy taxes or TOT.  92% of those taxes are directly attributable to Disneyland Resort properties or rooms that are driven by a visit to the Resort.  TOT is not only the largest revenue source for the city’s general fund, but the Disneyland Resort is the largest revenue generator for the city with a net surplus of over $67 million to its general fund.  The more folks visit the Resort area, the more revenue the city receives, and the more it has to pay for police officers, firefighters, parks, roads, libraries and other services that benefit residents.  Anaheim’s revenue is the envy of every Orange County city.

A recent independent analysis by Arduin, Laffer & Moore Econometrics demonstrates that the Resort is responsible for more than $5.7 billion in economic activity for Southern California.  Spending attributed to the Resort’s visitors represented nearly a third of the $9.6 billion Orange County tourism industry in 2013.  And that spending is not just at Disneyland Resort.  Almost $1.4 billion is spent by visitors at businesses outside of the Resort according to the report. However, any gate tax paid by a resident or visitor to government means one less dollar spent for goods and services provided by local private sector businesses—the real drivers of a thriving economy. Tourism, by the way, is one of the few industry clusters that helped keep Anaheim afloat in the Great Recession. 

Further, over the past two decades, Disneyland Resort’s workforce has grown to 28,000, making it the largest employer in Orange County, with diverse jobs from part-time entry level to full time managerial.

With the extension of the “no gate-tax” agreement, Disneyland Resort committed to a major investment of $1.5 billion to the park, resulting in 16,000 more jobs as well as hundreds of millions of dollars in increased economic output yearly for Orange County.  Anaheim will see an estimated increase of $15 million per year in tax revenues.  And, if Disney hasn’t started its improvements by the end of 2017 as promised, the “no gate-tax” policy expires.

In a state ranked consistently as one of the nation’s highest taxed, worst places to do business, we are amazed—and grateful--that Disney continues to invest in its flagship venue when it could choose instead its numerous other global attractions.  Add in the ever-looming threat of removing Proposition 13 protections proposed annually by California state legislators, and we are further amazed. Creatively incentivizing good businesses to invest and grow--at no risk to taxpayers—is genius indeed. 

Orange County Taxpayers Association asserts that taxes should be fair, understandable, cost-effective and good for the economy, which mission Orange County Business Council strongly supports.  A gate-tax in Anaheim that affects not only the Resort, but visitors to all entertainment venues, doesn’t meet any of the criteria.  Frankly, we challenge Anaheim—and all Orange County cities—to extend creative “no gate-tax” policies to similar entertainment venues.  The previous 20 year track record in Anaheim is clear evidence that the next 30 to 45 years of “no gate-tax” will result in further economic success for the region. 

Thank you Anaheim City Council for doing the right thing for your residents, taxpayers, and businesses.  

Carolyn Cavecche, President and CEO, Orange County Taxpayer Association and

Lucy Dunn, President and CEO, Orange County Business Council, July 08, 2015 – an edited version appeared in the OC Register on July 12

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