Disney – “the place where dreams come true” – was recently stripped of its special tax status, potentially negatively impacting the theme park juggernaut and the citizens of Florida. This news comes not long after Disney spoke out in opposition to a piece of Florida legislation called the Parental Rights in Education Bill, which its detractors refer to as the “Don’t Say Gay” bill.
In speaking out against the legislation, Disney could serve as a warning sign for other businesses wishing to enter the political conversation and how that could impact their bottom line.
Losing the Reedy Creek Improvement District
Governor Ron DeSantis and the state legislature revoked Disney’s special tax status, a 55-year-old piece of legislation that created the Reedy Creek Improvement District. This special status allowed Disney the freedom to operate as its own mini-government.
On the plus side, Disney made its own decisions on planning and construction. The multi-billion dollar company would also be responsible for its own maintenance, fire, and medical response services, and most impressive of all, the company would have to generate some of its own electricity.
This special arrangement allowed Disney to save millions of dollars annually.
“If Disney wants to pick a fight, they chose the wrong guy,” proclaimed DeSantis.
Disney is already the biggest taxpayer in Central Florida. Between 2015 and 2020, the theme park paid over $280 million in property taxes.
Ending the special status, which Disney has enjoyed since beginning construction in 1967, could be seen as retaliation for the theme park weighing in on a heated political debate that the whole country is talking about.
Whispers of the Parental Rights in Education Bill sent an uproar through the LGBT community, and businesses quickly spoke out in opposition to the bill. Disney’s involvement represents a dangerous reality with businesses in America today: taking sides in political matters could appease your customers but still put you at financial risk.
No longer operating under its own special zone, Disney will have to negotiate with the local governments in Orange and Osceola counties. Unfortunately, this spells bad news for the residents, who could face up to a twenty percent hike in taxes.
Business Insiders Speak Out
“This is a big deal,” says Edith Reads, a professional investment writer and personal finance coach, “ because it means that the company will have to start paying property taxes on all of their holdings in the city.”
However, Ms. Reads doesn’t believe this will lead to an increase in ticket prices or altered park hours. Instead, she’s excited for what’s to come. “I think it could be good for the company because it will force them to be more innovative and competitive,” she says.
“Disney losing its protected tax status is a warning shot for political activists at other companies and also for land developers that wade into politics to be careful,” David Reischer told Wealth of Geeks.
Mr. Reischer is a lawyer and the CEO of LegalAdvice.com. He believes, “Unbridled political activism may affect the bottom line” of these companies weighing in on political affairs.
Additionally, he warns companies to “think twice before allowing stakeholders within the company to encourage top leadership to be outspoken on unrelated political subjects that have nothing to do with their business model.”
Leonard Ang, the CEO of iPropertyManagement, an online real estate resource, is more optimistic about Disney’s future. “This is going to drive a slew of new development-friendly deals for Disney,” he says.
In fact, Colorado Governor Jared Polis has already invited Disney to relocate to his state.
When You Wish Upon a Tax Credit
The 25,000-acre district of Reedy Creek includes Disney’s four theme parks, two water parks, and two small cities: Bay Lake and Lake Buena Vista, where Disney employees and representatives make up the combined population of 53.
The changes go into effect in June 2023 and could have serious implications for the residents of Florida, particularly those not directly affiliated with Disney in Orange and Osceola Counties.
Their financial filings indicate bond liabilities between $1 and $1.7 billion.
“A repeal of Disney’s self-government status in Florida could leave local taxpayers with more than $1 billion in bond debt,” reports CNBC, an amount that could mean $1,000 per taxpayer.
While fears abound for the future of Disney World developments and the tax burden on Florida residents, this controversy could change the way corporations engage in politics.
Disney saw a slight decline in its stock value. Still, it is too soon to tell what long-term effects this new legislation will have on Disney and Florida residents. Time will tell if the happiest place on earth can make peace with the Florida government, turning the simple mission of “It’s A Small World After All” into reality.
Originally published at Wealth of Geeks.
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