Disney’s Special District Targeted by Florida Republicans

Florida’s Senate passed a bill this week that would effectively punish Disney for its opposition to the state’s new “Don’t Say Gay” law. This measure would strip Disney of all protections in a taxing district within Orlando that allowed it to manage its theme park independently for almost six decades.

Republican Governor Ron DeSantis introduced the bill in what was widely seen as retaliation against Disney’s opposition to what critics are calling a discriminatory legislative measure, as it bans LGBTQ teaching in primary schools.

Since Disney’s resort and theme parks were able to enjoy a reduced red tape, exemptions from taxes and a limited taxing district for 55 years, the new legislative proposal could be devastating. It could also hurt local taxpayers, who could lose out from the district’s dissolution.

What is Gov. DeSantis targeting Disney?

Disney angered Republican lawmakers when the company’s chief executive, Bob Chapek, said in a shareholder meeting March 9 that he had called DeSantis to “express our disappointment and concern that if legislation becomes law, it could be used to unfairly target gay lesbian, nonbinary and transgender kids and families.” Chapek also announced that Disney would review the political donations it makes to Republican lawmakers who supported the bill.

Continue reading: Florida Just Passed the “Don’t Say Gay” Bill. Here’s What It Means for Kids

This proposed law highlights two trends that are becoming increasingly common in national politics: Companies’ deeper participation in social-political discourse, and lawmakers’ growing desire to take on corporations through legislative action. In order to satisfy the needs of a younger generation more concerned about social responsibility, companies like Disney must balance these demands with conservative Republican views. Citigroup was willing to pay for travel costs of staff who were traveling outside of the state of Texas last year in response to Texas’s ban on abortions within six weeks. The state’s lawmaker threatened to pass legislation to prevent Citigroup from issuing municipal bonds.

Here’s what to know about the bill and what it means for Disney:

What legislation would Disney need?

The bill, passed by the Florida Senate 23 votes to 16, would dissolve Disney’s special taxing district in June 2023. The 40-square mile zone, also known as the Reedy Creek Improvement District allows Disney to operate its resort like a municipality.

This status permits Disney to bypass certain state and county regulations while building, expanding or improving its parks. It also allows the company to operate its own emergency service in the area. It’s also exempt from many taxes and fees, which saves the company tens of millions of dollars a year.

Stripping Reedy Creek of its special status would remove the Disney resort’s autonomy and likely introduce legislative complications that the company has been able to avoid for 55 years. The bulk of $153 million in taxes and fees in the district in the past fiscal year was contributed by Disney.

It’s unclear exactly how much the proposed legislation could cost the company if passed, but it would also have an impact on local taxpayers. Reedy Creek’s governance would become the responsibility of Orange County and Osceola County. Taxpayers could end up with millions in bonds that Reedy Creek has taken on in the recent years. Democratic state legislators claim the interest paid on these bonds amounts to an extra tax burden equaling $580 per head for Orange and Osceola County residents (1.7 million).

What has Disney done to respond?

Disney’s revenue growth is at stake with the possible loss of special tax district status, as the company would not only lose autonomy but its expenses would undoubtedly increase. Following a pandemic-induced dent in sales, Disney’s theme parks are enjoying a boom. As lockdown restrictions eased, attendance at the company’s parks grew throughout 2021. Revenue for the last quarter of 2018 rose to $7.2billion due to an increase in ticket prices, which was $3.6billion in 2020. The increase helped the parks attendance generate a third of Disney’s $22 billion in quarterly revenue.

It is possible for the company to apply for the reestablishment of Reedy Creek if the new bill becomes law. Disney is yet to publicly address this issue at time of writing.

Disney did not respond to TIME’s request for comment.

Is there anything that could go wrong?

Florida’s Republican-led House is expected to vote on the measure on April 21. Governor DeSantis would win a major victory with the legislation. DeSantis is a culture war advocate in preparation for a possible 2024 presidential bid.

“If Disney wants to pick a fight, they chose the wrong guy,” DeSantis wrote in a recent campaign fundraising email.

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