DeSantis About To Defuse $1.2 Billion Tax Bomb He Activated A Year Ago To Punish Disney

Florida Gov. Ron DeSantis is one signature away from defusing a $1.2 billion tax bomb he himself activated a year ago when he rammed through legislation aimed at punishing the Walt Disney Co. for criticizing his “Don’t say gay” law a month earlier.

A new bill passed the Florida Legislature on Feb. 10 that renames the taxing district that governs Disney’s expansive Central Florida parcel and gives the Republican governor the power to name its board while largely leaving the district’s financial structure untouched.

More important to local property owners ― and DeSantis’ likely 2024 presidential run ― is that it repeals last year’s hastily passed law that would transfer Reedy Creek Improvement District’s accumulated $1.2 billion in bond debt onto Orange and Osceola counties were it take effect on schedule on June 1. The 700,000 or homeowners and businesses would have seen their property tax bills increase by thousands of dollars each through 2038, when Disney’s bonds would finally be repaid.

“The Disney cock-up … while potentially disastrous for the taxpayers of Central Florida, was not illegal, which is why he had to maintain the special governance structure of the Disney domains, claiming victory even as he retreated at high speed,” said Mac Stipanovich, once the chief of staff to former Republican Gov. Bob Martinez.

The new legislation, meanwhile, targets only Reedy Creek but not other tax districts created for the benefit of specific landowners, such as one for the Villages development near Ocala or the one in Daytona Beach for the NASCAR track there. It also allows Disney to continue operating essentially as it has been by permitting hefty tax assessments on itself to pay for infrastructure improvements at its theme parks. Both elements belie DeSantis’ claims about the legislation.

“Which shows once again it was not about the governance of Reedy Creek. It was about punishing a corporation that spoke out,” said Nikki Fried, a Democrat who served a term as the state’s agriculture commissioner before an unsuccessful run for governor last year.

DeSantis’ staff did not respond to HuffPost queries, including one asking when he intends to sign the new bill.

In public statements, though, both he and his staff have portrayed the bill as a political victory.

“There’s a new sheriff in town,” he boasted at a news conference on Feb. 8. “That’s just the way it’s going to be.”

Disney did not respond to a HuffPost query. In previous statements, the company has said it can work with the new framework.

The episode began within days of the Republican-dominated Florida Legislature’s passage of the Parental Rights in Education Act on March 8, 2022, which prohibited teachers in the early grades from discussing sexuality or gender. Critics dubbed it the “Don’t say gay” bill and argued it would prevent teachers in same-sex marriages, for example, from mentioning their spouses.

Disney had remained silent on the bill as it moved through the legislature, but then-CEO Bob Chapek sent a letter to all Disney employees on March 11 that criticized it and said it would suspend its political donations in Florida, which had heavily favored Republicans for years, reflecting the party’s dominance in the state.

That public defiance enraged DeSantis, and he responded the following month, during a special session called for the purpose of passing a congressional map for the coming elections. On April 19, a DeSantis ally introduced a bill abolishing all special taxing districts created before the approval of the 1968 Constitution and which had not been subsequently reauthorized. The bill affected five obscure districts in various counties plus Reedy Creek, which was established in 1967 when the state was encouraging Disney to build a massive new theme park just south of Orlando.

That legislation gave Disney taxing power over the 25,000 acres it had bought up so it could build roads, power plants, and water and sewage systems, using money it collected from itself through property taxes within the district boundaries. Disney was also given the authority, which it never exercised, to build a nuclear power plant and an airport. The Reedy Creek board would be elected by landowners within the district, with each acre owned allowing one vote.

The bill abolishing Reedy Creek passed just two days later, and DeSantis signed it the day after that, on April 22, 2022.

A separate state law, though, states if an independent district is ever dissolved, its outstanding bond debt would be picked up by counties within the district’s boundaries ― Orange and Osceola, in the case of Disney and Reedy Creek.

It’s unclear whether DeSantis and his aides, in the heat of his verbal battle last spring with Disney, understood the consequences that abolishing Reedy Creek would have on area property taxes. “I can’t imagine he realized,” said Kevin Cate, a Democratic political consultant. “They shoot for Fox News first and aim later.”

Within days of the abolishment bill becoming law, DeSantis was already promising additional legislative action to work out the details ― suggesting that, by that point, at least, he understood that failing to take further action would be politically catastrophic.

That action came earlier this month in yet another special session, in new legislation that dealt only with Reedy Creek, renaming it the Central Florida Tourism Oversight District and revising its board so that the governor chooses its members rather than the landowners within its boundaries.

The name is misleading. It does not deal with Central Florida tourism generally, which would include both other theme parks, such as Universal Studios and Sea World, as well as garish strips like International Drive. It only deals with the 24,969 acres within the Reedy Creek boundaries, a great many of which were purchased to give Disney resorts a significant buffer from the surrounding areas and which now serve as water recharge zones for the aquifer.

Though the new law does eliminate Disney’s ability to build a nuclear power plant and an airport, the few actual tax breaks Disney does enjoy over competing theme parks in the area appear to remain untouched in the new legislation, which continues to grant the renamed district tax-exempt status. When Disney’s taxing district builds a parking garage for Disney guests, for example, it does not have to collect sales tax, but its competitors do.

Disney property will continue to pay some of the highest property taxes in Florida. The company pays all the county and school taxes due on its land and then pays additional “mills” dedicated to building and maintaining roads and public utilities on its property.

“The irony was that Disney wanted to and does pay higher taxes than would be the case if there was no special taxing district, provided they could determine how it was spent to maintain their high maintenance and safety standards,” Stipanovich said. “They had and have a special deal to be sure, but it was not to their financial advantage, which was the central premise in DeSantis’ assault. It was a charade from the outset.”