Regional Report: Cross Country
Economic Diversity:</br></br>A Tale of Two Cities</br></br>Anaheim, Calif., and Orlando, Fla., seem to have a lot in common: Both are major tourist destinations thanks to amusement parks -- Disneyland and Disney World, respectively -- owned by Walt Disney Co., Burbank, Calif. So, with tourism tanking following the Sept. 11 terrorist attacks, why have Anaheim's bonds been placed on Standard & Poor's CreditWatch, with negative implications, and Orlando's have not?</br></br>The answer, according to S&P managing director Colleen Woodell: "diversity of revenue streams and size of reserves."</br></br>Being placed on CreditWatch is considered a red flag about changing conditions, and doesn't necessarily lead to changes in credit ratings. But the different treatment of the two cities provides a lesson in fiscal policy. Anaheim's vulnerability comes from its heavy reliance on tourist-dependent revenues, specifically hotel-motel and sales taxes, which make up about 54% of total revenues. In contrast, tourist-sensitive taxes, mainly sales taxes, account for only about 13% of revenues in Orlando, which also has strong collections from property taxes, utility taxes and business fees.