Time for some traffic problems at Disney World.
In 2013, when then-Gov. Chris Christie’s underlings purposely created a traffic jam near the George Washington Bridge as political revenge against a New Jersey Democrat who had failed to support his re-election, Christie was ashamed enough of the scheme that he denied responsibility. The naked, and entirely pointless, retribution harmed his chances in the 2016 presidential election.
It’s a measure of how far down American politics has descended since then that today, Florida Gov. Ron DeSantis is carrying out his equally naked and pointless retribution against the Walt Disney Company in plain sight. DeSantis’s revenge on Disney is scorched-earth, end-justifies-any-means politics: brazenly creating anxiety and uncertainty among taxpayers, investors, and company employees for at least the next year, in a breathtaking abuse of just-because-we-can power. It looks an awful lot like the sort of government abuse that the right much more often accuses the left of doing (and often with good reason).
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Disney caught DeSantis’s wrath by coming out against the “Parental Rights In Education” bill, which opponents renamed the “Don’t Say Gay” bill, in March. The company said after the PRE law passed that it would work to repeal it. Whether one agrees with the law or not, or whether Disney was wise to speak out or not, is irrelevant. In a healthy political economy, corporate managers are comfortable in speaking out about matters of concern to some of their employees, and in working through the political process, including through public speech, to change, enact, or repeal laws as their interests lie. Elected officials, customers, and other employees may agree or disagree with this corporate speech.
DeSantis would be well within political norms to say that he disagrees with Disney, and to say that he’ll work just as hard within the political process to keep the law in place. Voters freely elected the governor and the legislators who created the PRE law, and may freely re-elect them or not.
But that’s not what the governor and lawmakers are doing. In late April, they directly targeted Disney for permanent revenge by enacting a law to dissolve Reedy Creek, Disney’s 55-year-old self-governing district, by next summer. The sponsor of the bill, Randy Fine, said that “Disney is a guest in the state of Florida and today we remind them of that.” DeSantis did not pretend that there was any other reason for the action, saying on Fox News that “I am not comfortable having one company with their own government and special privileges, when that company has pledged itself to attacking the parents in my state. … Walt Disney would not want that.”
Actually, Walt Disney did want that, or, at least, the executives who succeeded him immediately after his 1966 death did.
In 1967, Disney, as a company investing enormous amounts of money on behalf of its shareholders in unmovable fixed assets in central Florida, had the foresight to protect itself should Florida ever descend into banana-republic politics in which it wasn’t possible to oppose a brand-new law on a complex topic without being demagogued as an attacker of parents.
In 1967, Florida’s legislature created the Reedy Creek Improvement District, where Disney would build its theme parks, hotels, and other properties across 25,000 acres. Reedy Creek is a local political entity controlled but not owned by Disney (nobody owns it, as it’s a government). The district could issue its own municipal bonds to investors to build the infrastructure for what became a dense mid-rise private-city-within-a-county from scratch (even featuring public transportation). By paying taxes to Reedy Creek, Disney effectively agreed to tax itself extra, on top of regular county property taxes, to repay those bonds, now totaling $1 billion, and to pay for fire protection, emergency medical services, sanitation (and now recycling), and security on its properties, including in and around its theme parks and hotels.
In creating Reedy Creek more than half a century ago, Florida lawmakers agreed that they would never abridge the contractual rights between the new district and its bondholders, protected by the contracts clause of the U.S. constitution. “The State of Florida has pledged to the holders of any bonds issued by the District” that “it will not in any way impair the rights or remedies of the [bond]holders,” including their right to rely on Reedy Creek’s taxes, collected by the district from Disney, for repayment, Reedy Creek reminded its investors, just after the law dissolving it had passed.
Reedy Creek was not an instance of corrupt crony capitalism, as DeSantis, lawmakers, and some pundits have repeatedly implied. Reedy Creek is a special district because it is, well, a special district. If it didn’t exist, someone would have to invent it. One of Disney World’s biggest selling points is its cleanliness and public order, something that Walt Disney was fanatical about.
No broad county government could provide the level of street cleanliness and medical-assistance coverage that Reedy Creek provides to Disney, at least not without charging all taxpayers an exorbitant tax rate, and providing a competency in public-service provision that few municipal governments anywhere in the country offer. No county government could offer the infrastructure that Disney offers in terms of reliable bus service among properties, well-paved roads, fail-safe electric-power provision, and drainage and sewage.
Moreover, providing services to an almost entirely transient, non-residential population of tourists, day trippers, and employees requires a specific kind of governance. Fire and EMS coverage for people staying in dense mid-rise hotels is different from fire and EMS coverage for people living in sprawled-out single-family homes. These tasks are something that Disney, through Reedy Creek, is good at.
Being conservative, or even just moderately pragmatic, used to mean that you didn’t change a long-standing institution unless you first asked: why are we changing this? What’s broken about it? And how exactly are we going to change it?
Strikingly, other than repeated charges of special favoritism for Disney, something nobody in Florida worried about for more than five decades until now, neither DeSantis nor any Republican lawmaker has specified what wasn’t, or isn’t, working about Reedy Creek.
Nor have lawmakers nor DeSantis proposed how they will replace it, having given themselves a June 2023 deadline before Reedy Creek dissolves. Unless Florida plans to default on its pledge not to impair Reedy Creek bondholders, and thus harm the state’s own standing in the municipal-bond market, some government entity must borrow new money to repay the existing bondholders. Jerry Demings, the mayor of Orange County, where most of Disney’s Reedy Creek property lies, has expressed no interest in doing so. Florida taxpayers could take on the new debt, but it is not clear why they would desire to take on the burden of funding obligations incurred so that a private entity could build and maintain physical infrastructure that’s superior to the state’s own public infrastructure outside of Disney properties.
Nor has the governor said who will provide Reedy Creek’s ongoing public services. Will Reedy Creek’s 400 employees become Orange County employees? Will Disney’s streets remain cleaner and better paved than Orange County’s, with far better mass transportation? If so, why should Orange County’s taxpayers pay for such unequal provision? It is hardly small-government pragmatism or conservatism for a state to attempt to foist debt and new operational responsibilities on county and local government taxpayers who never asked for such responsibility, and who don’t want to expand their own municipal reach to pay for a large private landowner’s public amenities.
DeSantis has batted away some of these questions by saying only that “the bonds will be paid by Disney,” and, through a spokesperson, that Disney “will pay its fair share of taxes.”
The first assertion is a startling proclamation overriding the state’s long-ago pledge to protect existing, complex bond agreements between Reedy Creek and private parties. Disney, the corporation, has no obligation to repay the bonds issued by Reedy Creek, a local government district funded with tax dollars paid by Disney. Most voters aren’t going to understand the distinction, nor should they. But either local-government agreements executed with private investors under a stable state-government framework are worth something, or they’re not.
DeSantis’s second assertion is just puzzling. As Orange County’s largest taxpayer, completely apart from Reedy Creek, Disney pays its “fair share” of taxes, both to the county and to local schools. As county tax collector Scott Randolph has repeatedly said, “there is some misconception out there that Disney doesn’t pay taxes otherwise… that Disney is getting out of paying taxes… and that’s just wrong.”
But though Disney pays its “fair share” of taxes, it could always pay more. The company’s physical assets in central Florida, including a giant castle and a monorail, are not exactly easily movable. In that sense, the company is different from an investment bank or a tech firm in that it’s a sitting duck, and easily bullied by an opportunistic politician in a one-party state.
The new political risk that DeSantis has created by his and the legislature’s arbitrary and capricious actions are a message to any company investing in substantial fixed infrastructure and physical property improvements in Florida at its own expense: never, ever cross us, or else.
