Anaheim’s proposed entertainment tax might be a costly mistake

Anaheim Councilmember Natalie Rubalcava has proposed a new entertainment tax targeting tickets and parking at major venues like Disneyland, Angel Stadium, and the Honda Center, aiming to address a $60 million city budget deficit.

Rubalcava’s proposal would amount to a 2–3% tax on tickets and up to 5% tax on parking. This would apply to entertainment venues such as theme parks, stadiums, and arenas. It would not affect public parking or public spaces.

We spoke to Jeff Ball, OCBC President & CEO of the Orange County Business Council (OCBC) about the Rubalcava proposal which would generate revenue from tourists, not residents and fund affordable housing, parks, senior services, first responders, and other community programs.

Ball noted that the OCBC opposes new taxes in general because they discourage investment and hurt our working families. They look at each such proposal on an individual basis. They feel that Anaheim should focus on growing the economy for long term fiscal health. Ball said that is not the direction that Anaheim should go as Rubalcava’s proposal is not well thought out.

Rubalcava’s proposal is notable because her 2022 campaign was backed by Disney, which has historically opposed such taxes. She has now seemingly turned on Disney with what amounts to a populist measure.

The idea of a “gate tax” has been floated before but was rejected by a Disney-backed council majority in 2022.

If the Rubalcava proposal is approved by five of seven councilmembers, it could appear on the November 2026 ballot. Alternatively, outside groups (e.g., labor unions) could gather signatures to qualify it for the ballot.

The Rubalcava proposal could have some issues with a few resort facilities should it pass. Angel Stadium, for example, has a decades-old agreement that could entitle it to rebates if a ticket tax is enacted. The OC Vibe development may bundle parking costs into ticket prices, complicating tax implementation.

Will the Rubalcava proposal backfire by reducing tourism? Ball said that it obviously would make Anaheim less competitive compared to other destinations and end up hurting local businesses such as restaurants. He noted that no economic studies have been done yet to address this.

Another important component that bears consideration is that Disneyland had their Disneylandforward project approved by the Anaheim City Council and within it Disney is committing to spending $30 million for affordable housing, $8 million for city parks and $45 million for street and sewer improvements, om Anaheim. Other regions would reward such a project with tax breaks, but Rubalcava has reacted by trying to hit Disney with a gate tax.

Anaheim is also almost done paying off the bonds that financed development at Disney. That will free up $120M a year. That seems to make the Rubalcava plan unnecessary!

Ball pondered what is the long term fiscal stability of Anaheim and he said that the key is economic growth. He added that we should be thinking about how to deploy current resources more wisely and encourage more development.

The Rubalcava proposal could also discourage Disney from additional investments in the resort, which is the largest employer in the County with over 25K cast members.

Ball reiterated that the OCBC’s approach is economic growth. Any policy that will inhibit growth is a challenge and something they would want to understand as to how these resources would be deployed.

Bad ideas tend to spread quickly in local politics. Let’s hope other cities in Orange County don’t start ramping up taxes and fees too.