Florida, Disney, and Taxes
On April 21 2022, several news organizations reported that Florida revoked Disney’s tax status in retaliation for the company’s position on the “Don’t Say Gay” (formally called the Parental Rights in Education) bill — and a local journalist weighed in on the possible consequences of the hasty decision.
On that date, The Guardian reported on a surprise move by Florida lawmakers to sanction Disney for not supporting the highly controversial legislation:
Florida legislators passed a bill on [April 21 2022] that would revoke Walt Disney Co’s special tax status in a move widely seen as tit-for-tat for the company’s opposition to a new “don’t say gay” state law limiting discussion of LGBTQ+ issues in schools.
The bill now heads to the desk of Governor Ron DeSantis, who is all but guaranteed to sign it.
The Republican-led state house in Florida voted 70-38 to do away with a special tax district created by a 1967 law that allows Disney to self-govern the roughly 25,000-acre Orlando area where its Walt Disney World theme park complex is located. The state Senate passed the measure on [April 20 2022].
DeSantis, in a surprise move, had asked lawmakers to consider the legislation during a special session he called [that] week. He did not immediately comment on the bill’s passage on [April 21 2022].
A quote attributed to DeSantis from an April 20 2022 email to supporters appeared in the piece:
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.
An April 21 2022 New York Times article began by describing Disney’s deep ties to the state of Florida and how lawmakers moved to sanction the company:
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 megaresort 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 on [April 21 2022], when the 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 25,000-acre theme park complex. The Florida Senate voted on [April 20 2022] 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 .
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.
Orlando-based journalist Nick Papantonis published a Facebook post positing that the sudden decision carried unintended consequences for Florida. Papantonis’ post was long and detailed, and it read in part:
Here’s what I know, after talking to lobbyists, lawyers and tax officials:
For those of you who haven’t heard, Reedy Creek is the special tax district of Walt Disney World. It’s essentially its own city. Disney pays taxes to Reedy Creek, which operates a fire department, planning department, sewer treatment plant and public works department. Disney controls Reedy Creek, which means if they want to build a new hotel or highway, they just have to ask themselves for permission.
The biggest loss for Disney is the end of that control. It’s a lot easier to ask yourself for permission than to go to the county. While they already follow all laws and building codes and they’ll still get everything they want, it’s going to slow the process down. Potholes might develop on roads that they no longer pave themselves. They can’t just call a meeting or alter their comprehensive plan on a random Friday. They also can’t quickly finance new public projects like a fire station.
The bigger issue for everyone else is the tax revenue. Disney already pays the same local property taxes as every other landowner. Reedy Creek added its own tax on top of that to pay for its projects. That tax – $163 million per year – is illegal outside of the district. When Reedy Creek goes away, that tax goes away, and Orange and Osceola Counties can’t do anything to get it back.
However, the counties will now be responsible for all of the services Reedy Creek provides and all of the debt it has accumulated. They can’t raise sales taxes or impact fees. So, the counties will have to raise property taxes to make up the difference. They must tax every property equally – not just Disney – and therefore it’s expected that property taxes in Orange County will rise as much as 25% next June . Osceola, much smaller and less wealthy, is still working on its figures.
Papantonis described those outcomes as the result of “72 hours of orchestrated revenge,” adding:
Essentially, Disney will lose some control of its property, and get a $163 million per year tax break and ~$1 billion of debt passed onto taxpayers. Some things will be negotiated – Disney still controls Bay Lake and Lake Buena Vista, two actual towns within RCID. Lawmakers might backtrack from this plan during the next session now that they’re realizing what they’ve done. However, aside from maybe taking away the company’s ability to build a nuclear plant, we have yet to hear how this benefits Florida and especially the local residents in any way.
Papantonis linked to a WFTV article he wrote on April 21 2022, which examined the tax burden created by Florida’s decision to sanction Disney, “End of Reedy Creek: Disney won’t pay more taxes, but you will.” It covered several of the same points, and included comments from a tax collector in Florida — who predicted huge property tax spikes in Orange and Osceola counties:
What Reedy Creek isn’t is a replacement for the counties it exists in. Disney still pays the same property taxes levied by the government and the school district that every other landowner pays. Orange County, for example, collected $40 million from the House of Mouse in 2021, Tax Collector Scott Randolph (D) said … When the district is dismantled on June 1, 2023, Orange County will begin paying for those services and paying off the debt, without that special status in place.
“The moment that Reedy Creek doesn’t exist is the moment that that those taxes don’t exist,” Randolph said. “Orange County can’t just slap a new taxing district onto that area and recoup the money that was lost.”
Effectively, Disney’s loss of control also hands it a $163 million per year tax break. If the entire state of Florida was responsible for covering the hole, each taxpayer would have to cough up roughly $7.50.
However, this burden will not be shared equally. Despite zero debate or public comment, and the near-total opposition of Central Florida’s delegation to this maneuver, Orange and Osceola County taxpayers will shoulder the hit alone, leaving both counties staring at financial ruin.
“I don’t see how Orange County doesn’t raise property taxes by 20% to 25%,” Randolph said. “That’s what [the county] would probably have to do to cover this financial situation.”
On April 21 2022, CNN also assessed how the elimination of the Reedy Creek tax district would affect residents of surrounding areas, arriving at similar conclusions:
The [April 2022 Disney tax] bill declares that any special district created before November 1968 will be dissolved on June 1, 2023. The text is just over a page in length and offers few details.
What that means for Disney and for Florida taxpayers is not entirely clear. Republican sponsors were unable to give detailed answers to questions about financial and legal implications of the legislation during floor discussions [on April 21 2022]. They suggested that the legislature could work through logistics of the dissolution over the next year.
The dissolution of the special district would mean that Orange and Osceola counties take on the assets and liabilities of Reedy Creek. That could lead to higher taxes for those residents to pay off Reedy Creek’s debts and take over the care of roads, policing, fire protection, waste management and more.
State Sen. Gary Farmer, a Democrat, was one of a number of Democratic lawmakers who criticized the bill for what he called “shoot first, ask questions later.”
“The debt service alone for Reedy Creek is over a billion dollars,” Farmer said [on April 20 2022]. “This bill makes no provision as to how that debt service is going to be assumed. Local government entities must pick up assets and liabilities of any special district that is dissolved.”
Still, the bill passed the Florida Senate on [April 20 2022] by a 23-16 vote and the House on [April 21 2022] by a 70-38 vote. It now goes to DeSantis’ desk for his signature. [The April 21 2022] vote occurred without any final debate and came as several Black Democratic members were staging a protest over the congressional redistricting map.
Disney expert and historian Richard Foglesong told CNN that “Florida needed Disney more than Disney needed Florida,” and added:
Somebody is still going to have to pay for the bonds that were purchased in order to build that infrastructure. A lot of roadways. Someone is going to have to do those building inspections. It’ll take a lot of those inspectors with a lot of expertise. Someone is going to have to pay for that. If that burden falls on taxpayers, that’s not going to look good for Gov. Desantis. This is going to look like folly.
Florida’s House and Senate voted on April 20 and 21 2022 to sanction Disney over its lack of support for Florida’s “Don’t Say Gay” bill (the Parental Rights in Education bill), by way of eliminating Disney’s tax status and tax district (Reddy Creek); in an email, Gov. DeSantis vowed not to allow “a woke corporation based in California to run” Florida. Orlando journalist Nick Papantonis published a lengthy Facebook post and article asserting that the bills created a huge tax burden for residents of Orange and Osceola counties. CNN also assessed the impact of the bill, reporting that the “debt service alone for Reddy Creek” cost “over a billion dollars.” Although the bill passed both houses and was likely to be signed into law by Republican governor Ron DeSantis, analysts indicated that the “72 hours of orchestrated revenge” harmed Florida’s residents more than Disney.
- Disney Tax Status Revoked | Nick Papantonis/Facebook
- Disney to lose special tax status for opposing Florida’s ‘don’t say gay’ bill
- Disney to Lose Special Tax Status in Florida Amid ‘Don’t Say Gay’ Clash
- Disney tax controversy Facebook post | Nick Papantonis/Facebook
- End of Reedy Creek: Disney won’t pay more taxes, but you will
- Why Disney has its own government in Florida and what happens if that goes away
- Disney tax status revoked bill