Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 17, 1994 TAG: 9402240011
SECTION: EDITORIAL PAGE: A17 EDITION: METRO
SOURCE: Ray L. Garland
DATELINE: LENGTH: Long
This process, which is inherently discriminatory and gives rise to corruption, started 40 years ago with the bright idea of tax-exempt industrial-development bonds to help poor areas attract factories. In typical American fashion, they were soon expanded to finance everything from skating rinks to housing for affluent seniors. The stench got so bad a few years back that Congress imposed limits.
That brings us to Disney's America, the proposed 3,000-acre theme park in Prince William County, which has emerged as the largest and most interesting issue at the 1994 assembly. As this is written, it appears Gov. George Allen will get most of what he asked for to satisfy Disney, and the deal is likely to go forward. Given the stakes, it could hardly be otherwise.
The governor asked the legislature to approve $142 million in tax-exempt highway bonds - not subject to voter approval - to pay for road improvements to accommodate the thousands of visitors who might be expected on a good day. More than half that amount represents road improvements already deemed necessary to serve traffic growth in western Prince William County, but whose financing was uncertain.
State debt service would average $11.5 million a year over the 20-year life of the bonds. Secretary of Finance Paul Timmreck - a man with a well-earned reputation for fiscal probity - estimates that over 20 years Disney's America will generate $647 million in revenues to the state from sales and income taxes, representing a handsome return on the commonwealth's original investment.
Three studies have been made gauging the likely economic impact of the theme park. Disney's study predicted 9,200 jobs and $19.5 million in state tax revenues in 1998. The state's own study was more optimistic on both counts. Opponents have their own analysis, which is predictably pessimistic, projecting only 5,000 jobs and $5.6 million in state tax collections in 1998.
Disney had asked Prince William County to issue an additional $50 million in tax-exempt bonds to finance water and sewer service, police and fire protection, etc. The Board of Supervisors asked the General Assembly to sanction this and then withdrew the request. For the moment, the local component of site investment is in limbo.
Disney projected local tax receipts from the park at $14 million a year by 1998, against debt service on the locally issued bonds of some $5 million a year. On that score, Disney's estimates seem reasonable.
Once the park is complete, Prince William should collect at least $6 million a year in real-estate taxes. Assuming annual taxable sales of $100 million, the local share of the sales tax would be $2 million. Also to be counted - but difficult to count - would be sales and real-estate taxes generated by establishments in the park's immediate vicinity. The impact on local taxes of increased employment is more difficult to figure because residential development generally costs more to service than it generates in taxes.
Development officials are fond of touting the "multiplier effect" flowing from new businesses, but this type of analysis can be exaggerated. A new Wal-Mart may create 300 jobs. It may also cost 300 jobs at competing stores that lose business. And Disney's America will likely take some sales from Colonial Williamsburg, Kings Dominion, Busch Gardens and other attractions. It's a sore point that most of these were built without taxpayer subsidies.
This deal looks better, however, than many we've seen. Indianapolis recently promised United Airlines $295 million in state and local aid and "won" a new maintenance hub. When Jacksonville set out to capture a football expansion team, it offered an astonishing menu of inducements, including a guaranteed full house at all home games for 10 years. Alabama was so desperate for Mercedes-Benz it promised the German carmaker a large slice of state vehicle purchases.
That is now par for the course and won't change until Congress or the Supreme Court decides this sort of thing imposes an undue burden on interstate commerce. It would be a mercy, but don't hold your breath.
There are those like Prince William Del. Robert Marshall who argue sensibly that the Disney deal sets a bad precedent. Others want a $1 tax on admissions to pay for state improvements, which Allen calls "a possible deal-killer." And some say Disney is wedded to this site and the state can hold out for favorable terms.
That some inducements are now required to launch such a large project is a foregone conclusion. Just how much is required here isn't known, and given our anxiety to land Disney we aren't likely to find out.
On balance, the Disney deal looks good for Virginia because it will more than pay for itself while bringing at least a million new visitors into the state every year. What Disney takes from what's already here should be recouped several times over by what it adds to the pot through its proven strategy of becoming a destination vacation goal that draws whole families for several days at a time.
We have chosen to become a people defined by our habits of consumption and Disney is a company that understands our restless, insatiable need. Like it or not, we are Disney and Disney is us.
\ Ray L. Garland is a columnist for the Roanoke Times & World-News.
by CNB