The Florida state legislature this week voted to end the Walt Disney Co.’s special tax district, which has permitted the Orlando amusement park to govern its land and save millions each year in taxes.
The decision follows a clash between Disney executives and Florida Gov. Ron DeSantis over recent legislation that prohibits instruction on sexual orientation or gender identity for children in kindergarten through Grade 3.
Disney criticized the bill – dubbed “Don’t Say Gay” by opponents — last month, saying the law should be repealed or overturned. And company leadership stated that Disney is dedicated to the rights and safety of members of the LGBTQ+ community in Florida and across the country.
The special tax district, created in 1967, has given Disney considerable autonomy over its 25,000-acre Orlando theme park property, including providing police and fire services, defining environmental protections, operating and maintaining roads, and more. It also allows the company to build new structures without approval of a local planning commission.
DeSantis is expected to sign the legislation, which would end the arrangement in June 2023. Although the dissolution of the tax district arrangement impacts six Florida properties, Disney is the only high-profile company involved.
UConn Today spoke with business law Professor Robert Bird, the Eversource Energy Chair in Business Ethics and past president of the Academy of Legal Studies in Business, about the vote.
There are so many layers to this story, from taxation to self-governance, political power to human rights. What strikes you as most significant?
From one perspective, this is a debate over the role of LGBTQ+ education in schools. From another perspective, this raises the broader issue of the implications of private companies speaking and acting on matters of public policy.
Corporations can no longer remain neutral or silent on major issues facing American society. Consumers, employees, shareholders, and the public are increasingly expecting companies to take a stand on controversies that matter to them. Just as some companies are being punished for not severing their relationships with Russia, because of Russia’s invasion of Ukraine, so are companies like Disney expected to speak out against public policies that contradict the values of its stakeholders.
Q: Why does Disney play an important role in this issue?
Disney is an important participant in the underlying “Don’t Say Gay” dispute. Disney has a powerful public brand and takes care to cultivate a family-friendly image worldwide. Disney has also been a long-standing leader in supporting LGBTQ+ rights. Disney has provided health benefits to same-sex partners since 1995, and allowed “Gay Days” at Walt Disney World since 1991. Public opinion was more hostile toward LGBTQ+ rights then, and Disney stood by its values even with the ensuing controversy. For Disney to “stand down” when so many people were advocating for Disney’s support in opposition to the bill, would have eroded its long-standing support of gay rights generally.
Q: What message does this send to other CEOs who might be caught in a moral, ethical, or environmental debate with government leaders?
The message sent to other companies is that politicians will not remain idle if a company opposes favored legislation or enters the sphere of public debate. Firms need to walk a fine line between standing up for their values and eroding relationships with political leaders.
Q: Some companies might move their whole operation out of a state that is deemed unfriendly. Obviously, Disney can’t relocate its theme park. Could it backfire for the governor?
The Florida legislature has broad discretion in what laws it passes. Disney’s strength is in its economic power, rather than seeking a remedy in the courts. Disney cannot simply pick up and move Walt Disney World, and the legislature knows it. In that sense, the legislature has some leeway in how much it can sanction Disney. However, Disney can choose to make further investments outside of the state, and Florida could lose out on those investments if Disney chooses to do so.
Furthermore, Disney has its own financial clout. The CEO of Disney announced that Disney would stop donating to Florida political campaigns. The CEO has said it is building a new platform to ensure its advocacy better reflects its values. If legislation contradicts those values, certain public figures may experience less public support from Disney.
I doubt this will backfire for the governor. He is strengthening his conservative credentials by passing this law, which is easy to understand and for the right voter has a visceral appeal. I suspect that only one vote truly matters to Gov. DeSantis, and that is the one taken on Nov. 5, 2024, to elect the next President of the United States.
Q: As large companies face increased pressure to take a stand on issues beyond their immediate realm, will we see more examples of this? Or is this an extreme?
Yes, as companies speak out on matters of public opinion, we will increasingly see responses by the state legislatures who disagree. Although the tax legislation impacts six districts in Florida, it appears primarily targeted at Disney. The majority of the Florida legislature is sending a message: if a company speaks out loudly enough against our values, we will respond. This can be quite effective against small- and medium-sized companies who rely on favorable legislation to thrive. Disney, however, is a large global conglomerate and can withstand the costs of this legislation.
Q: If you were advising a business client right now who was facing a conflict with a government agency—whether large or small—what advice would you offer?
I would ask that client to look deep inside herself and the culture of the company. What does the company truly stand for? What do the firm’s stakeholders expect of the organization? Then that client must make a decision about whether its own values are sufficiently important that it will risk conflict with public officials in order to act on those values. Such a decision cannot be made hastily, and must consider both the short-term and long-term consequences of the firm’s public stance on the issue.