Anaheim Can Call Disney’s Bluff by Ending Hotel Subsidy, But Keeping Gate Tax Ban

Oh the irony, the Mouse as a unionizing newsie. Photo by Javier Castellanos

Local elections are still months away, but a decisive moment in Anaheim arrives tomorrow evening. At the behest of the Disneyland Resort, Anaheim city council is set to consider reversing course on tax policies benefiting the corporate behemoth. “Good friends will not always agree,” wrote Josh D’Amaro, Disneyland Resort president, to city officials last week. “However, the current level of animus is unprecedented and counterproductive.”

The Mouse and Anaheim found themselves at odds over the summer with regards to a planned luxury hotel at the west end of Downtown Disney. The city argued that $267 million in bed-tax subsidies are site-specific and that the agreement could only be honored at the originally proposed parking lot site. After the impasse became public, D’Amaro asked the city to shred up the 20-year hotel subsidy agreement as well as lift a decades-long moratorium on entertainment taxes. If council members follow through tomorrow evening, will it bring about a new era of improved relations with Disney or is it just another Mouse trap?

By having both policies ended, the Disneyland Resort positions itself to be legally exempt from a living wage measure before Anaheim voters in November. The proposed ordinance pushed by the Coalition of Resort Labor Unions raises wages up to $18 an hour by 2022 for resort-area corporations with taxpayer subsidy agreements, like Disney. As the Weekly revealed last week, previously unpublished polls show the measure preforming extremely well with surveyed voters, all but assuring its passage in November. A business-led coalition opposed to the living wage ordinance has all but laid down its arms. 

With that, is Disney’s retreat from subsidy agreements a shrewd, strategic one? United States Senator Bernie Sanders, who rallied the cause of cast members during a June 2 rally in Anaheim, seems to think so.  “Disney is so nervous that the living wage ballot initiative in Anaheim is going to pass, it would rather end some of the corporate welfare it receives from local taxpayers than pay all 30,000 of its workers decent wages,” Sanders told the Guardian on Thursday. And that was before the Weekly dropped its truth bomb.

But there’s a way out of the mouse trap if council members are bold enough to call Disney’s bluff. They can move to end the luxury hotel subsidy agreement but keep the entertainment tax moratorium intact. 

Hotel subsidies are harmful under the incentive program in 2016 that ushered a trio of them in, including Disney’s eight-story, 700-room project. The Weekly looked at how the Anaheim Westin’s 70 percent bed-tax break over 20 years affected the city’s general fund as a test case study shortly after it broke ground for construction a year ago. When ongoing bond payments for $546 million in resort-area improvements under the city’s 1996 Disneyland expansion deal are accounted for, the Westin leaves Anaheim’s general fund with $2.8 million in losses at the end of its 20-year subsidy term. See, a portion of whatever’s left of the Westin’s bed-taxes after subsidies is going to help pay for the city’s “public-private” trade-off two decades ago that brought Downtown Disney, Disney California Adventure and the Grand Californian Hotel into existence, an incentive agreement that could be replicated by a compliant council in the future while being outside the bounds of the living wage measure’s provisions. 

Part of the ’96 expansion deal also included a gate tax ban on theme park admissions. Before it expired, a previous council extended the moratorium for 30 years in 2015. The Mouse waved a billion dollars in resort investments in front of the city before the vote and announced Star Wars: Galaxy’s Edge shortly after securing it. If any future council or ballot measure passed an entertainment tax on Disney, the city has to refund the levy in full. The moratorium can also be stretched out 15 more years if Disney invests $500 million more.

It’s cutthroat capitalism at its most ruthless, so why keep it? The Guardian claimed ending the moratorium is a risky move for Disney that exposes the corporation to potential taxes it has sought long-term immunity from, especially with Anaheim becoming more liberal and, presumably, critical of the Mouse. But it’s not that easy. In 2016, Anaheimers passed a ballot measure that requires a two-thirds majority council vote for any new taxes to go before voters. Democrats have only a slim chance of establishing a council majority this election and any such “blue wave” wouldn’t exactly be anti-Disney.

Ironically, and prophetically, the Weekly assessed the benefits of a living wage campaign following the gate tax ban vote in 2015, long before the current ballot campaign. Leaving the moratorium in place keeps Disney theme park workers legally in play for pay increases under the ordinance. Even without bed-tax subsidies, Disney hotel workers may still stand to benefit under a “catch all” legal interpretation if the gate tax ban stays. Given the circumstances, raising wages puts money directly into the pockets of workers who help Anaheim’s lucrative resort run. It’s more important and immediate than the uncertain political prospects of passing a gate tax. 

Despite a path forward, how council members react to the Faustian bargain before them tomorrow is a question of great political intrigue. For now, an agenda item binds the fate of both agreements together in a single vote. It will take a brave soul to make a substitute motion to break them apart and gain enough supportive votes. Councilwoman Kris Murray is a staunch opponent of the living wage measure, but voting to end the tax policies for Disney also unravels centerpieces of her political legacy on the eve of being termed out. Up for reelection, councilman Jose F. Moreno is critical of corporate subsidies but sympathetic to workers. If he votes to end both agreements with Disney, it will betray the hopes of thousands of Disney workers. No pressure! 

And then there’s mayor Tom Tait whose second and final term is over this year. The Weekly praised him as OC’s most unlikeliest radical mayor after he turned on his former Resort Elite backers enduring a heaping of political beat downs before establishing a council majority in 2016. By ending the two tax policies he’s long rallied against, Tait stands to claim a huge victory in closing out his political career in Anaheim. But with a living wage measure poised to pass, will it come at the price of doing Disney’s bidding one final time before retiring his gavel?

Gabriel San Román is from Anacrime. He’s a journalist, subversive historian and the tallest Mexican in OC. He also once stood falsely accused of writing articles on Turkish politics in exchange for free food from DönerG’s!

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