Governor Ron DeSantis’ efforts to revoke Disney’s special tax status have garnered mixed responses as the two entities’ feud grows (CitizenGO, Wikimedia Commons)
On April 26, 2023, Florida Governor Ron DeSantis’ selected board voted to nullify two agreements that gave Disney vast control over the company’s expansion. In response, Disney sued DeSantis for allegedly orchestrating a plan to punish the company for their highly public opposition to the Parental Rights in Education Act, a move they claimed violated their First Amendment rights to free speech.
In 2022, DeSantis signed the Parental Rights in Education Act, which banned the discussion of gender identity and sexual orientation in kindergarten to third-grade classrooms. Teachers and LGBTQ+ activists scorned the law, referring to it as the “Don’t Say Gay” bill. Although Disney was initially silent, after employees protested, the company publicly opposed the act. In return, DeSantis labeled the company the “Magic Kingdom of woke corporatism” and moved to have their special privileges revoked.
The Reedy Creek Improvement District
In 1967, Disney executives negotiated with the local government to create the Reedy Creek Improvement District, now known as the Central Florida Tourism Oversight District. The creation of this special district for Disney allowed the company to function like a quasi-county government in charge of its own roads, construction services, building permits, fire department, and waste collection services. According to experts, this has allowed the company to save millions of dollars annually in fees and taxes.
However, not everyone is happy about Disney’s special privileges. “They got powers that were excessive and that weren’t granted to competitors that arrived later, like the Universal Orlando theme park,” said historian and political scientist Richard Foglesong. “That strikes me as unfair.”
At the beginning of 2022, the Florida legislature expressed a willingness to take away these special privileges. However, they realized that Orange and Osceola Counties would have to pick up services like fire protection, policing, and road maintenance. In addition, the $1 billion of Disney’s bond debt would be transferred to the counties. In the end, lawmakers allowed Disney to keep the Reedy Creek Improvement District agreements but gave DeSantis the power to appoint the board members that govern the area.
The Oversight Board
Before DeSantis’ appointees replaced them, the former governing board secretly signed a deal to retain significant development rights on the 40-square mile district. The agreement also allowed Disney to sue if the tax district used Disney’s character names without the company’s approval. However, the new board, selected by DeSantis, almost immediately voted to invalidate the benefits that Disney negotiated through the Reedy Creek Improvement District, stating that the agreements were “improper and illegal” and the company had failed to notify the public before taking action.
Immediately after the board voted to invalidate the agreements, Disney filed a 77-page lawsuit charging DeSantis and other state officials of violating the Contract Clause, the Takings Clause, the Due Process Clause, and the First Amendment right to protected speech. Disney argued that DeSantis was punishing them for retaliating against the Parental Rights in Education by attempting to strip their special tax status. They called it “a targeted campaign of government retaliation” and seeks to regain control over the design and construction at Disney.
“Disney’s powers need to be addressed, but [DeSantis is] attacking the company for all the wrong reasons,” Floglesong said. “When you look at DeSantis’s statements, it’s pretty clear that he is punishing Disney for talking back to him and challenging him on what can be taught in public schools. [Disney’s] lawsuit is right on with respect to what it is alleging about the governor’s violation of Disney’s first amendment rights.”
The Future
Disney pays more than $1 billion in state taxes yearly and employs about 65,000 people. The company also has plans to invest $17 billion over the next decade to create an estimated 13,000 jobs. However, after the vote by the oversight board, Disney expressed a willingness to nullify these plans and stop the construction of an office complex in Florida that would have created more than 2,000 jobs with a $120,000 average salary. “Does the state want us to invest more, employ more people, and pay more taxes, or not?” Robert A. Iger, Disney’s chief executive officer, said on a conference call with various business analysts.
Several independent business owners with restaurants and shops on Disney property are further concerned that the new regulations and taxes could raise costs and make their businesses unprofitable. In addition to talks about raising taxes and putting toll roads in the district, DeSantis has discussed using formerly Disney-owned land for other developments, such as a new prison. Debra Mcdonald, a resident of Celebration, a community built by Disney adjacent to the theme park, told the board that because of the ongoing feud, “many in our community are afraid.”
Still, DeSantis’ administration has stood firm. Communications Director Taryn Fenske said, “We are unaware of any legal right that a company has to operate its own government or maintain special privileges not held by other businesses in the state. This lawsuit is yet another unfortunate example of their hope to undermine the will of the Florida voters and operate outside the bounds of the law.”
The legal action surrounding DeSantis has also affected his bid for the 2024 presidential elections. Some feel that DeSantis has overstepped his boundaries and are skeptical of his strict tactics to remove what he calls an unfair advantage. The lawsuits have drawn mockery from his rivals and criticism from veterans of his party. To some, DeSantis’ targeting of Disney is viewed as a violation of conservatives’ cardinal rule: be nice to corporations. Still, many others see DeSantis’s actions as a step in the right direction.