PATTOO WEEK! OJB’s Discussion of Kris Murray’s ‘Council Minority Veto Over Any Disney Gate Tax’

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PATTOO WEEK #1

(1) PATTOO YOU

“PATTOO” is what we here at Orange Juice call the “Protecting Anaheim Taxpayers from Their Own Opinions” Act, on which the Anaheim City Council will vote on April 7, a week from today.  Disney Corporation owned-and-operated Anaheim City Councilwoman Kris Murray calls it as the “Anaheim Taxpayer Protection Act,” but as you’ll see shortly that is not its true purpose.  It is a cynical trick, even by the high standards set by the ruling Anaheim City Council Majority.

murray small wonderATPA (or, rather, PATTOO) is a Charter Amendment that the Anaheim Council will send to the citizenry to be voted on in November 2016.  It would require a 2/3 vote of the Anaheim City Council to place any proposed new, increased, or extended tax on the ballot.

That may sound nice!  After all, if it works for the hundreds of General Law cities in California, why wouldn’t it work for the tenth-largest city in the state?  Anaheim is the state’s leader in devising ways to circumvent the voting public to find out ways to spend a hundred million, two hundred million, three hundred million, even five hundred million — those figures being doubled or tripled when they involve financing through municipal bonds that make both New York investment bankers and private industries that benefit from them very rich.  Oh wait — that IS the reason that what works for Villa Park may not work for Anaheim: Anaheim is ripe for the plundering!  And — plunder happens.

PATTOO/ATPA won’t protect taxpayers because getting a 2/3 vote of the public to raise taxes is not what is sending Anaheim into a future financial meltdown.  It’s not the taxes, it’s the bonds.  brandman goofyAnaheim is part-way through the process of moving from taking out back-loaded multi-hundred million dollar “balloon payment” bonds to newly refinanced multi-multi-hundred million-dollar “balloon payment” bonds to pay off those bonds before the (even higher) balloon payments come due, to the inevitable choice between paying off those bonds and eventually either declaring bankruptcy, selling off the city’s biggest real estate assets at fire-sale prices to Orange County’s waiting vultures — or both.

The current City Council Majority — Murray, Jordan Brandman, and Lucille Kring — hired and protected the staff that put together a legal team that incredibly declared in court that a bare majority of the Council, having “negotiated” with themselves wearing another hat, can set up a new Joint Powers Authority controlled by themselves — and obligate the City to repay any amount of money they wish for construction bonds.  And they can even throw in ten million dollars or two to make voters 15 to 30 years from now pay for road repairs and parks that they benefit politically from today.

kring fuck 2As Cynthia Ward argued in a post from three weeks ago that you really have to read this week to see what’s going on, if you don’t fix these crazy and abusive bond approval procedures — which the City Charter was supposed to do, but which Anaheim argued successfully in court was overridden by state law — then you are not “protecting the taxpayers.”  You are stealing from future taxpayers to help your own political interests now.  (And you’re a liar.)

If Kris Murray, supported uncritically by her two colleagues, were doing this simply to portray herself as a “tax fighter” while being able to pilfer from future generations of Anaheimers, that would be awful — but not all that unusual.  What she’s doing though, is arguably worse.  Anaheim has one plausible way of avoiding future bankruptcy or fire sales — and what PATTOO/ATPA is intended to do is to block off that means of escape.

(2) DEFEATING DEMOCRACY

Before we get into why Murray wants to do this, we should be clear on how.

The usual way that California makes it had to raise taxes, since we passed Prop 13 in June 1978, is to require a 2/3 public vote of the affected citizenry to raise them.  That, it turns out, is a real good way to prevent tax increases.  It’s really hard to pass anything by 2/3 of the electorate — and since any reasonably wealthy group has a good chance of putting together a campaign to get 33.33334% or more of the voting public to oppose a tax increase, with the head start of the sizable chunk who will oppose ANY tax increase at all EVER, it means that they can bargain with the City if it wants a tax increase to get concessions on whatever they want.

That’s sort of a perverse effect of anti-tax-increase legislation — as well as being a potential budget buster and road to the perdition of bankruptcy (and potentially cancelling out all sorts of even modest employee pensions).  But that’s the law, and the law works to ensure that taxes will generally only be raised when they are really, really needed — like, say, when the City is trying to avoid selling off Angels Stadium, City Hall, the Convention Center, the municipal golf course, and whatever else can be liquidated to pay for things like, oh, massive balloon payments on bonds taken out in 2014.

A situation in which 2/3 or more of the voters (probably reluctantly) want to raise taxes is the only situation in which PATTOO/ATPA can protect taxpayers — and, it follows, in that case the charter amendment would protect taxpayers from themselves.  That’s why we call it “PATTOO” — “Protecting Anaheim Taxpayers from THEIR OWN OPINIONS.”

All that PATTOO does is to set up an additional hurdle that would apply even in a situation where a supermajority of taxpayers want a tax increase (because the alternative would be worse): it would require that 2/3 of the Council, rather than a majority of the Council, vote to place such a measure on the ballot.  It gives the Council Minority a veto over even a popular proposal.  Starting in 2017, 77% of the population and 57% (4 out of 7) of the Council wouldn’t be enough to put a tax proposal on the ballot.  If there isn’t the support of 5/7 of the Council (or 4/6 if someone in the minority is absent), it would require an expensive and difficult ballot initiative drive to take it to a vote.

(And again, remember: it still wouldn’t actually protect taxpayers from a 2014 Council Majority taking an action that may give Anaheim the option of either raising taxes or losing the stadium or the Convention Center in 2028.)

“Protecting Anaheim Taxpayers from Their Own Opinions” — but not from an out-of-control Council majority!

Memorializing the deep and abiding relationship between Councilwoman Murray and Disney government relations . Carrie Nocella.

Memorializing the deep and abiding relationship between Councilwoman Murray and Disney government relations director Carrie Nocella.

[3] IT’S ALL ABOUT THE GATES, ‘BOUT THE GATES!

Here’s how Murray explained why she wanted to do this, beyond an absurd argument that it suddenly became necessary to treat Anaheim exactly the same way as Villa Park, Los Alamitos, and Aliso Viejo when it comes to citizen consent to spending.

A number of the tax proposals that we’ve heard addressed over the last couple of years are regressive in nature: sales taxes, use taxes, utility taxes and even gate taxes.  Those have a cost-of-living impact, and they are a higher proportion of a low-income person’s salary and income than a higher income or more affluent resident.

(That’s from Part 3 of our four-part transcript of the March 3 Council meeting when Murray first formally made this proposal.  I told you that it was going to come in handy soon!)

You may look at that and notice that one of those “regressive” tax proposals is not like the others.  Yes, sales taxes are regressive, at least unless you exempt the “basics” like food and fuel.  So are “use taxes” — like sales taxes, but applying on goods purchased out of state but consumed inside the state.  Utility taxes — such as last years Measure N that went to the ballot on a 3/5 vote of Council (with the support of both Brandman and Kring, more on that later in PATTOO week) — also use up more of a poor person’s income than a wealthy one’s.  But … what’s a “gate tax”?

Simple: a “gate tax” is either a flat-fee surcharge (e.g., $1 per ticket) or a percentage surcharge (e.g., 1% of the ticket price) that you pay to go through a gate for, usually, some sort of amusement.  Where would you find a gate tax?  Well, for example, when you buy a ticket to enter any of the four parks (or “gates”) at Disney World in Orlando, Florida (in the second-largest Orange County) you pay a 6½% “sales tax” — which is actually a “gate tax.”

A state and city can decide to exempt entrance to amusement parks, sports games, theaters, concerts, and so on from a “sales tax” on its service if it wishes too.  Orlando, Florida does not exempt amusement gates from sales taxes.  Anaheim, California does.  And, of course, Disney Corporation loves that — and just dumped a gigantic wad of money on elections in part to ensure that it stays that way.

disneyland gatesI’ll say something before anyone starts screaming: a city that depends on tourism has to be careful with gate taxes!  It’s true that you don’t want to “kill the goose that lays the golden eggs”!  But that you don’t want to tax too much doesn’t mean that you don’t want to tax at all — especially given how great of a pull Disney has on Anaheim’s resources.

Now here’s another piece of the puzzle.  In 1996, when Anaheim agreed to finance bonds — what else, am I right? — to pay for the humongous “Mickey & Friends” parking garage, then City Councilmember Tom Tait got a condition added.  Disney wanted Anaheim to agree never to implement a gate tax in exchange for implementation of the 2% TID surcharge on Resort District hotels that would finance part of the repayment of those bonds.  Tait thought this a little extreme — after all, the City seemed to be making the larger concession here with its contribution — and the eternal promise was whittled down to one lasting 20 years.  Do the math: 1996+20=2016 — in other words, the ban on implementing a Gate Tax on Disneyland Theme Parks for two decades expires next year.

(Oh!  Now you get it!)

How disastrous would a gate tax on Disney Resort admissions be?  Well — as in Orlando, probably pretty much not at all, because even if not a drop in the bucket it would be an ice cube in a full cooler.  In 2000, the basic Disneyland entrance ticket was $43.  As of last February 22, it rose to $99 — an annual increase of just under $4/year.  It beggars belief that such a tax — which might pay for the balloon payments on bonds that the Council Majority keeps stacking up — would dent Disney’s gate receipts at all.  The idea is that Disney’s annual ticket increases are just fine — but that even a $1 addition to them to fund services in Disneyland’s home city would lead to earth-shattering consequences such as Disney’s pulling up roots and moving to Inglewood — is flat out absurd.  By arguing that, Murray and the rest of the Disney team on Council are Scrooge McDucking us over.  This isn’t about unfairness to Disney — a 6.5% surcharge like Orlando’s might justify that charge, but not $1 or $2 — it’s about fairness to them.disney freaky

And, going back to Councilmember Murray’s statement, there’s one last thing to note: this isn’t a regressive tax at all.  Disneyland is expensive: so expensive that in the cost of a 3-day vacation there for a family of 4 — which would be $918 just for the admission alone, aside from the costs of hotel, travel to here, food, and souvenirs (all of which are taxed) — an addition of $12 is almost nothing.  Disney itself obviously thinks so.  So such a tax is “regressive” only in the sense that taxes on caviar and expensive wines and first-class airline tickets are regressive: yes, if poor people were to buy caviar as much as wealthy people do, then they would be regressive — but poorer people can’t afford it so the tax doesn’t hurt them.

Lumping a $1 gate tax for entertainment tickets over $50 — so that it wouldn’t affect only Disney — in with sales taxes and the like is as intentionally deceptive as most of Murray’s argument.  In this case, though, it’s more than that.  It’s also a cruel joke.

NOW READ PART TWO!


About Greg Diamond

Somewhat verbose attorney, semi-retired due to disability, residing in northwest Brea. Occasionally runs for office against bad people who would otherwise go unopposed. Got 45% of the vote against Bob Huff for State Senate in 2012; Josh Newman then won the seat in 2016. In 2014 became the first attorney to challenge OCDA Tony Rackauckas since 2002; Todd Spitzer then won that seat in 2018. Every time he's run against some rotten incumbent, the *next* person to challenge them wins! He's OK with that. Corrupt party hacks hate him. He's OK with that too. He does advise some local campaigns informally and (so far) without compensation. (If that last bit changes, he will declare the interest.)