Disney Florida fallout: Taxpayers sue DeSantis for axing company’s special tax status
A handful of Florida residents are suing the state and its Republican governor, Ron DeSantis, over the decision to dissolve Walt Disney Co.’s special self-governing district near Orlando, saying the move will saddle them with the company’s $1-billion debt burden.
The taxpayer lawsuit, filed Tuesday in U.S. District Court in Miami, is the latest fallout from Disney’s battle with Florida over the Parental Rights in Education law, which opponents have derisively nicknamed “Don’t Say Gay” legislation.
DeSantis last month signed a law that would eliminate Disney’s special tax and self-ruling status in central Florida by axing the Reedy Creek Improvement District, which was created by the state Legislature in 1967 to allow Disney to act as its own municipal government.
Current conflict is the latest to reveal underlying tensions that have existed between Disney and religious conservatives for decades as it has embraced the LGBTQ community.
State lawmakers voted to ax the district during a special legislative session after Disney said it wanted to see the Parental Rights bill, which LGBTQ activists see as an attack on queer and trans youth, repealed or blocked by the courts.
The decision to kill the Reedy Creek district, covering a 25,000-acre area that is home to Walt Disney World Resort, was widely seen as retaliation against Disney for its stance.
Florida’s Senate on Wednesday voted to dissolve the Reedy Creek Improvement District, which allows Disney to function as its own government.
The taxpayer lawsuit asked the court to find the law dismantling Reedy Creek as unconstitutional. The 11-page complaint alleges that the state violated legal obligations forbidding it from dissolving the district without resolving its outstanding debt. The complaint is filed on behalf of four Florida residents — three in Osceola County and one in Orange County.
“The stated and undisputed reason behind the bill is to punish Disney World and subsequently Florida taxpayers,” the complaint said. “Even though the governor and certain Republican lawmakers welcome a fight with Disney on this matter, they appear to not want to follow constitutional guidelines and previous legally enforceable agreements involving over $1 billion in bond issuances.”
Spokespeople for Disney and the Reedy Creek Improvement District did not immediately respond to requests for comment.
A representative for DeSantis, Christina Pushaw, denied that the elimination of the district would increase taxes for Floridians and said that Disney will pay its fair share of taxes, describing suggestions otherwise as “wishful forecasting.”
“The details on the Reedy Creek plan have yet to be released,” she said in an email. “They will be soon. The local residents of Orange and Osceola counties will not have to bear the burden of Disney’s debt, as the governor has stated. And, there is no scenario where the state would inherit Disney’s debt — this is misinformation.”
She declined to comment on the specifics of the lawsuit.
Pushaw’s email continued, “the suggestions from those who are quarterbacking the possibilities here, are their own wishful forecasting. In other words, they are hoping — with no basis in reality — that this will end in some sort of taxpayer or state burden that partisan critics can use against the governor. In reality, this opportunity can, and should be utilized to generate more taxes from Disney, as the governor has said.”
However, Orange County tax collector Scott Randolph, previously a Democratic state lawmaker, has said that getting rid of Reedy Creek could raise taxes for households by as much as several thousand dollars a year. He estimated that the county would be stuck with $164 million in costs with no additional revenue.
The Reedy Creek Improvement District recently made the case that the state can’t shut it down without resolving its debt. Credit rating agency Fitch placed the district’s debt on “rating watch negative,” a move that it said “reflects the lack of clarity regarding the allocation of the RCID’s assets and liabilities.”
Florida Republicans aiming to punish Disney have hit their own voters instead.
Burbank-based Disney has not commented on the Florida debacle since legislators proposed killing off the special district. Reedy Creek, governed by a five-member board of supervisors elected by landowners (primarily meaning Disney), has its own fire department and utilities services paid for by Disney. The district also has the ability to collect taxes and issue municipal bonds.
The district spans roughly 40 square miles in both Orange and Osceola counties. Its boundaries include four theme parks, two water parks, the Disney-owned ESPN Wide World of Sports complex, 175 miles of roadway and the cities of Bay Lake and Lake Buena Vista. The 1967 law allowed the company to transform a sprawling area of undeveloped swampland into Florida’s biggest private employer and a massive driver of tourism.
Under the law signed by DeSantis, the district would be eliminated on June 1, 2023, but could be reinstated after that date, meaning that Disney and the state have about a year to come up with a new agreement if the law stands.
The dispute over Florida’s Parental Rights legislation and Disney’s response to it has now stretched on for about two months, and has given DeSantis, a possible 2024 president contender, an easy political punching bag in Hollywood.
Disney Chief Executive Bob Chapek initially resisted speaking out on the bill but came out against it amid pressure from employees. The law bans classroom instruction on sexual orientation and gender identity in kindergarten through grade 3 and leaves the door open for restrictions in other age groups. The law allows parents to sue school districts over violations.
After Chapek voiced his concerns, DeSantis accused Disney of being a “woke” corporation trying to impose liberal values on Florida. Fox News and other conservative media fanned the flames of the burgeoning culture war, with commentators accusing Disney of pushing a “sexual agenda” on kids.
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