Florida can't actually dissolve Disney World's self-governance district, Disney and tax lawyers agree

Florida Gov. Ron DeSantis (R) on Friday signed a bill that aims to strip Disney of its self-governing authority in and around Walt Disney World, but in their rush to punish Disney for opposing the new "Don't Say Gay" law, Florida Republicans "failed to notice an obscure provision in state law that says the state could not do what legislators were doing — unless the district's bond debt was paid off," the Miami Herald reported Tuesday. But Disney noticed and quietly assured investors the new law won't stand up in court.

The Reedy Creek Improvement District allows Disney to act like a municipal government, setting its own rules, taxing itself to pay for services, and raising funds by issuing bonds. When Florida approved the district in 1967, it pledged not to "limit or alter the rights of the district" until "all such bonds together with interest thereon" are "fully met and discharged."

Obviously, "dissolving Reedy Creek 'limited' and 'altered' its ability to improve and maintain its project and collect its various charges and taxes, and thus Florida would be violating its pledge to bondholders," Florida attorney Jacob Schumer explains at Bloomberg Tax. "However, even without that explicit language, the bill dissolving Reedy Creek would have problems under contracts clauses of the Florida and U.S. constitutions."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

If Florida gets around its pledge — and "states usually aren't in the business of arguing that their own promises are bad," Schumer writes — Disney's bond obligations would fall to Orange and Osceola counties, raising taxes on residents.

DeSantis claimed Monday that "under no circumstances will Disney not pay its fair share of taxes," and "under no circumstances will Disney not pay its debts." But in fact, "Disney has more power now to determine its tax bill than it did a week ago," Orange County tax collector Scott Randolph tells the Herald. "That's what's crazy to me. They want to punish Disney, but this is the furthest thing from that."