Disney to lose special tax status in Florida
“If Disney wants to pick a fight, they chose the wrong guy. I will not allow a woke corporation based in California to run our state. Disney has gotten away with special deals from the state of Florida for way too long.”
Disney employs 38 lobbyists in Florida’s capital. Each election cycle, the company gives generous campaign contributions to Florida candidates on both sides of the political aisle. Its theme park mega-resort near Orlando attracts around 50 million visitors a year, powering a Central Florida tourism economy that annually generates more than $5 billion in local and state tax revenue.
The upshot: Disney usually gets whatever it wants in Florida.
That era ended Thursday, when the
— RON DESANTIS, FLORIDA GOVERNOR
Florida House voted to revoke Disney World’s designation as a special tax district — a privilege that Disney has held for 55 years, effectively allowing the company to self-govern its 25,000acre theme park complex. The Florida Senate on Wednesday voted to eliminate the special zone, which is called the Reedy Creek Improvement District. Having cleared the way to this outcome with a formal proclamation, Gov. Ron DeSantis will almost certainly make the measure official by adding his signature. It would take effect in June of next year.
The swift effort to dissolve Reedy Creek by Florida Republicans has been widely seen as brazen retaliation after Disney, Florida’s largest private employer, paused political donations in the state and condemned a new education law that opponents call “Don’t Say Gay.” Among many things, the law prohibits discussion about sexual orientation and gender identity through the third grade in Florida classrooms and limits it for older students.
“If Disney wants to pick a fight, they chose the wrong guy,” DeSantis, a potential Republican presidential candidate in 2024, wrote in a fundraising email to supporters Wednesday. “I will not allow a woke corporation based in California to run our state,” he continued. “Disney has gotten away with special deals from the state of Florida for way too long.”
DeSantis added, “Disney thought they ruled Florida. They even tried to attack me to advance their woke agenda.”
Disney declined to comment.
The Reedy Creek Improvement District, enacted in 1967 to entice Disney to build a theme park 20 miles south of Orlando, saves the company millions of dollars annually in fees and taxes, experts estimate.
Reedy Creek can also provide Disney with financing options. A few years ago, for instance, when Disney wanted to build a road interchange near its Hollywood Studios park at Disney World, it had Reedy Creek issue bonds to cover the cost. (In contrast, in the 1990s, when Disney needed municipal infrastructure in Anaheim, California, to develop its California Adventure theme park, the company had to convince Anaheim to issue the bonds.)
But the special district’s primary value to Disney is not financial; it is about control.
Reedy Creek gives Disney considerable sway over the planning and permitting process for construction on its vast property, including road building. Reedy Creek also levies taxes on Disney to pay for the resort’s own fire and medical response battalions, among other services. Disney World even generates some of its own electricity through Reedy Creek.
“The impact on Disney is more symbolic than real money,” Steven Cahall, a Wells Fargo analyst, said in an email, “though political theater is never great for stock sentiment.”
Florida has hundreds of similar special tax districts that would be left in place. One covers The Villages, a massive senior-living community northwest of Orlando. Another covers the Daytona International Speedway and surrounding area.
The designation has been a critical tool for Disney in developing the resort, which includes six theme parks; a sprawling outdoor shopping mall; a 220-acre basketball, soccer, volleyball, lacrosse, baseball and competitive cheer complex; and 18 Disney-owned hotels with 24,000 rooms. Disney World has a bus fleet that rivals that of St. Louis.
In 2021, Disney World paid more than $780 million in state and local taxes, according to a Disney disclosure.
Disney World straddles two counties, Orange and Osceola, that would be required under state law to step in and provide a version of the services currently handled by Reedy Creek, almost certainly leading to increased taxes for those counties’ residents. Orange County’s tax collector, Scott Randolph, has estimated that residents would see property taxes climb by as much as 20%. Reedy Creek has an annual budget of $355 million, according to public records. It carries $977 million in debt, which would also be transferred to the counties.
Disney could apply to reestablish the district if it is eliminated. The company could instead reduce its future investment in the resort’s expansion.
Disney had already been at odds with DeSantis on pandemic issues, including its attempted vaccine mandate for employees. In 2020, however, Disney benefited from his aggressive effort to reopen Florida for business, even as coronavirus infections spiked. Disney World closed in March 2020 and reopened in July of that year.
The company’s clash with Florida is the latest example of how speaking out on social and political issues can put corporations in conflict with some lawmakers. Last year, Georgia politicians threatened to raise taxes on Delta Air Lines after the company spoke out against the state’s restrictive voting laws. More recently, Texas lawmakers have said they would bar Citigroup from underwriting municipal bonds in the state unless the bank revoked its policy to pay for employees to travel out of state for abortions, which are severely restricted there.
The clash between DeSantis and Disney started March 9, when the company — under acute pressure from its employees — spoke out against the Parents Rights in Education legislation, or what opponents called the “Don’t Say Gay” bill.
More than 150 companies, including Marriott and American Airlines, had already signed a Human Rights Campaign letter opposing the legislation. Disney, however, had avoided taking a public stand, with its CEO, Bob Chapek, explaining to employees in an email March 7 that he did not want the company to become “a political football.”
Two days later, with pressure building for Disney to condemn the legislation, Chapek did so. He also announced that he had called DeSantis “to express our disappointment and concern that if the legislation becomes law, it could be used to unfairly target gay lesbian, nonbinary and transgender kids and families.”
“The governor heard our concerns and agreed to meet with me and LGBTQ+ members of our senior team in Florida to discuss the ways to address them,” Chapek said.
That seemed to rile up DeSantis, leading to a tit for tat between his press secretary and a Disney spokesperson. When DeSantis signed the bill into law March 28, Disney renewed its criticism. “Our goal as a company is for this law to be repealed by the Legislature or struck down in the courts,” Disney said in a statement at the time, “and we remain committed to supporting the national and state organizations working to achieve that.”
Florida lawmakers then began threatening to revoke Disney World’s special tax district.