Anaheim Awards Biggest Tax Subsidy in City History to Disney, Unions Silent

There’s evidence of a very California coup in the city of Anaheim, where an unusual alliance of city officials, government union leaders and developers is advancing its own financial interests at the expense of everyone else. Their near-term goal: a July 12 vote by the Anaheim City Council to offer major corporations, including Disneyland, the largest tax subsidies in Anaheim history.

That agenda item came as a surprise to Mayor Tom Tait, the man you might figure should know everything at City Hall. A long-time critic of taxpayer subsidies to business, Tait says city staff, including City Manager Paul Emery, worked to keep the deal under wraps. “I inquired multiple times about a new potential Disney property,” Tait told us. “When asked, he (Emery) denied any knowledge of this proposal.”

In an email, Emery told us he notified Tait and other council members about the Disney subsidies on June 8. But that was one day after the Register reported the Disney deal. And by then, Tait says he’d already heard the news elsewhere. “I had to hear it from the Disney president after it was announced,” Tait says. “At some point, (Emery) should have called me to let me know.”

Anaheim spokesperson Mike Lyster said there was nothing unusual in communications to Tait.

“To brief council members before an application has been filed is premature, as some inquiries may never result in a formal application, or a project may change significantly before an application is submitted,” he said in an email. Even when that pending application is from Disney? Requesting a historic $267 million subsidy? Maybe even especially then: “We don’t want to treat Disney any differently than we treat everybody else,” Lyster said.

Critics might reasonably note that Disney ain’t everybody else. And that payments Disney and two other luxury hoteliers are seeking total about half a billion dollars.

The Magic Kingdom

And here’s where the story of political intrigue gets more interesting: leaders of the Orange County Employee Association originally opposed subsidies to Disney and other luxury hoteliers, fearing that any revenue loss would imperil government worker pay and benefits.

In January 2012, OCEA rallied to oppose subsidies to the proposed GardenWalk hotels – two four-star hotels in the resort district. OCEA attacked council members supporting the subsidies in mailers condemning the “Giveaway Three.” But a year later, union leaders were suddenly pro-subsidy, their fear of future shortfalls apparently eliminated. When the Anaheim city council voted for the same GardenWalk subsidy in 2013, OCEA was silent. In 2015, fire and police union leaders actually endorsed a measure that would stop the city from taxing gate receipts at Disneyland for the next 45 years.

What happened? Multiple sources told us the unions’ conversion came in April 2012 after a meeting between Nick Berardino, head of the OCEA; Carrie Nocella, Disneyland’s government relations and minority business development director; and Todd Ament, Anaheim Chamber of Commerce president. After that meeting, Anaheim was a kind of Tomorrowland of happy relations between corporate, union and City Hall representatives.

In June 2012, just two months after the summit meeting, the Anaheim city council approved a contract with workers covered by OCEA: no outsourcing of government jobs, no layoffs, no furloughs, and $2,200 to each employee who had taken furlough days. Tait was the lone dissenter.

A few months later, in November 2012, the City Council voted 4-1 to keep firefighter pension rates high – even as other California municipal officials were slashing government worker pay and benefits. Again, Tait was the lone dissenter. A few months after that, with Tait again in the minority, the council cut a similar deal with police. In January 2016, the City Council was at it again, voting 4-1 to raise firefighter salaries by 10 percent by mid-2017. Of course, Tait was again the lone no vote.

So now, on July 12, hotel developers including Disney will ask Anaheim taxpayers for subsidies amounting to a half-billion dollars. The city’s top elected official was boxed out of discussions — blindsided, he says, on what will be the largest subsidy in Anaheim history. If precedent means anything, union leaders will support the subsidies despite the likelihood that doing so will undermine the city’s financial health and harm its own workers.

If you live in Anaheim, the story is clear: city officials, public employee unions, and powerful businesses continue to give away hundreds of millions of dollars at the expense of the taxpayer. Of course, Anaheim isn’t alone in taxing its residents on behalf of powerful interest groups – corporations and government unions. But there is something unique in the fact that all this is playing out in the shadow of the Matterhorn.

David Schwartzman is a junior at Hillsdale College, and Matt Smith is a graduate student at Princeton. Ethan Musser (Mississippi State) and Blake Dixon (Yale) also contributed to this report. The four participated in the California Policy Center’s investigative reporting summer internship, in Tustin. This article appeared first in OC (Orange County) Weekly.