Crony capitalism at the “happiest place on earth”

Every year, millions of families flock to the city of Anaheim to make their dreams come true at Disneyland. On the surface, this seems like a slam dunk for Anaheim. The incredible number of tourists should turn the city into an economic wellspring. However, this hasn’t been the case. In the 60 years of Disneyland’s existence, the per capita income of Anaheim residents has decreased substantially, now 10 percent below the state average. That’s because the relationship between the city government and the Walt Disney Company, ultimately, embodies crony capitalism — favoring the company’s interests at the expense of Anaheim’s residents.

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It’s no surprise given Disneyland’s geographical dominance of Anaheim that they are also heavily tied to the city’s political scene. Throughout the years, Disney has continually contributed millions of dollars to local politicians to fight on their behalf. In 2014, Disney poured at least $671,000 into political action committees financing city council candidates.

Last year, Councilwoman Kris Murray, a beneficiary of this political spending, led the campaign for a gate-tax ban for Disneyland. Under this plan, Disneyland is exempt from all ticket taxes so long as they expand by $1 billion dollars over the next 30 years. However, there was nothing to indicate that Disneyland wasn’t already seeking to expand. In order to compete with Universal Hollywood and other surrounding attractions, improvements and expansion were a must. This deal, championed by Murray, was a huge win for Disney.

Other entertainment venues haven’t benefited to the extent that Disneyland has. Movie theaters, concert venues and other private entertainment spaces are not given exemptions on ticket taxes. Thus, the exemption for Disneyland is a clear example of favoritism for a company that helps fund the campaigns of the lawmakers themselves.

In addition to the massive gate-tax ban, Disney has recently requested the largest tax subsidy in Anaheim history. Under the city’s hotel incentive program enacted in 2013, all new “luxury” hotels are eligible to receive a 70 percent rebate on all transient occupancy taxes. Once again, this law seems narrowly tailored to include Disney and a few other wealthy proprietors. Disney has been in the works to build a new luxury hotel and has requested that this new property be eligible for the subsidy, which is worth well over $200 million. Clearly, Disney does not need city money for their projects, as they are more than capable of funding their projects privately. However,  the request has been honored under the current subsidy program.

Finally, Disney has also interfered with a proposed streetcar design in Anaheim by artificially raising its installation cost. Even though the original design was only about 3.2 miles long, its estimated cost sat at around $319 million (or about $100 million per mile). Disney would like the opportunity to expand their resort and attractions, which is only a possibility if cars are taken off the road. Disney wants a streetcar system that doesn’t disturb the park aesthetic and caters to their infrastructure, once again pushing the costs higher.

Not only are these extraneous costs unnecessary, but there isn’t even a market for additional public transportation in Anaheim. ARTIC ridership (the local public transit), has continually fallen well below daily projections. In fact, this proposal brings no notable improvement to the lives of Anaheim residents. Still, Disney continually pushed the streetcar costs astronomically high in order to cater to their needs.

Disney and the city of Anaheim share extremely close ties. The subsequent effect of this relationship has been an increase in subsidies and special privileges for Disneyland at the expense of Anaheim. Crony capitalism abounds in the city of Anaheim, and its residents have suffered as a result.

Matt Smith is a fellow in public policy at the California Policy Center in Tustin, California. He is a graduate of Baylor University, and is currently an M.A. candidate at Princeton Seminary with a specialization in Religion and Society. In addition, he is visiting a student in the Princeton University Politics Department doctoral program.