DeSantis threatens Disney’s special tax status in Florida

Florida Governor Ron DeSantis escalated a dispute with Walt Disney Co. by asking the state’s legislature to consider the termination of special privileges the company currently enjoys in the Sunshine State.

The legislature, which is meeting in a special session to debate congressional redistricting maps, “will be considering termination of all special districts that were enacted in Florida prior to 1968, and that includes the Reedy Creek Improvement District,” DeSantis said Tuesday. Reedy Creek was created in 1967 by a special act of the legislature to allow Disney to carry out certain municipal functions on its own.

The announcement is the first indication that a dispute over school instruction about gender identity and sexual orientation could have consequences for the entertainment giant. The dissolution of the district could have repercussions for Disney’s ability to borrow in the $4 trillion state and local debt market. The Reedy Creek Improvement District has about $1 billion of municipal bonds currently outstanding, according to data compiled by Bloomberg.

Bloomberg News

It would eliminate the company’s access to cheaper tax-exempt financing through the special district, “potentially costing Disney and other landowners within the district more to finance various projects,” said Michael Rinaldi, head of U.S. local government ratings at Fitch Ratings in an emailed statement.

Rinaldi said it’s unclear what would happen to those bonds if the district were eliminated and that it’s “difficult to estimate” what a dissolution would cost Disney over time. Disney didn’t immediately respond to a request for comment.

DeSantis has criticized the company for opposing a bill that he signed last month, which limits instruction about gender identity and sexual orientation in kindergarten through third grade. Disney, one of Florida’s biggest employers, said that the bill “should never have passed and should never have been signed into law” and that it would work to have it repealed by the legislature or struck down in the courts.

Disney’s shares climbed, rising 3.6% to $132.33 at 1:26 p.m. in New York.

DeSantis said in a proclamation he signed Tuesday that it was necessary to review independent special districts to ensure that “they are appropriately serving the public interest.” The governor also said legislators could revisit exemptions for theme-park operators from a law passed last year that prohibits social-media companies from banning political candidates from their networks.

State Representative Carlos Guillermo Smith, a Democrat, said that he toured the Reedy Creek district last week and that officials there had not received any communication from DeSantis or Republican lawmakers.

“This is 100% political retribution and punishment,” he wrote on Twitter. “We don’t know how this will impact local taxpayers, workers and small businesses. Republicans do not care.”

State Representative Allison Tant, a Democrat, said Disney was “under attack.”

State Representative Randy Fine, a Republican, said he filed a bill that would eliminate the Reedy Creek Improvement District. A draft of legislation says that any special district established by a special act prior to the ratification of Florida’s constitution in 1968 that has not been “reestablished, re-ratified, or otherwise reconstituted” would be dissolved effective June 1, 2023.

“Disney is a guest in the State of Florida,” Fine wrote in a post on Facebook. “Today, we remind them of that fact.”