Florida’s anti-Disney law is poised to hurt surrounding communities

Traffic moves along Interstate 4 near Walt Disney World in Orlando, Florida

Last month, Florida’s governor and state legislature rescinded Disney’s self-governing authority after the company criticized a law widely seen as anti-LGBTQ. This action clearly demonstrates the power of states to affect economic, social, environmental, and civic conditions in places—and also shows just how vulnerable the fastest-growing form of government in the United States is to the political winds blowing through state capitals.

In fewer than 200 operative words, the law will dissolve the Disney-owned Reedy Creek Improvement District, along with five other special districts, on June 1, 2023. And while proponents may claim that its intended consequences are narrow, it actually has a broader effect than has been reported.

Each of the affected districts has been in continuous operation for over half a century, and the five districts beyond Reedy Creek currently provide economic development, water and sewer, stormwater management, and library services in counties across the state. The law does include a stipulation that each of the dissolved districts may be re-established, and one may avoid dissolution based on the outcome of a charter amendment referendum this November. But the counties in which they have been operating for decades and the residents who rely on their services are now facing a deeply uncertain future.

There will certainly be challenges to the law, including one that asserts that a separate Florida law requires the approval of a majority of the special district’s property owners before the dissolution can take effect. But one thing is clear: Florida’s action represents a significant escalation in the simmering conflict between states and local governments over differences in policy. It is a dramatic policy change in a rapidly growing state that, like many such states, has come to rely on special districts.

What is a special district?

A “special district” like Reedy Creek is a category of local government that combines some of the attributes of a general-purpose local government (like a municipality) and a specialized set of rules for a clearly defined place. The Census Bureau classifies local governments into five categories: county, municipal, township, special district, and school district. The first three categories are general-purpose local governments, while special districts and school districts are special purpose local governments.

In Florida, as in other states, special districts are distinct and separate from counties, municipalities, and townships. They are authorized for limited purposes, sometimes for a limited period of time, and exercise substantial administrative and fiscal independence. Among the most common purposes of a special district are providing services related to fire protection, infrastructure, redevelopment, housing, utilities, water management, conservation, or parks and recreation.

Why are special districts important?

Special districts are the fastest-growing form of government in the United States, and according to most recent Census of Governments, the number of special district governments already exceeds the number of municipalities and townships.Number of local governments in the United States 2017The number of special districts is growing so quickly because they represent a critical tool for states, regions, and localities to address growth. Special districts are a mechanism to provide services and physical infrastructure where they are most needed, while also providing a taxation and bonding authority structure to finance these improvements in a way that focuses their costs on the users and beneficiaries. They also provide a governance structure for the benefits they provide; special districts are often created to provide enhanced services to residents living in areas within existing municipalities or townships, but they are also frequently created by states to provide services in areas of new development.

Not surprisingly, the growth of special district governments has been fastest in the states experiencing the most rapid growth, including Florida, Texas, and Colorado. Florida currently has 1,845 special district governments but only 66 counties and 412 municipalities. Because of its reliance on special districts to address growth, Florida enacted a number of reforms in 2018 to improve the way they function. These included new rules requiring more public accountability and transparency—a move that brought Florida’s requirements into closer alignment with those of other leading states, such as California.

What are the consequences of the Florida law for financing services and infrastructure?

Absent a successful legal challenge or additional state action before June of next year, the residents of these six special districts affected by the Florida law will face difficult choices regarding loss of services or new burdens for paying for them.

In the case of Reedy Creek, when the major landowners of the district (Disney and its subsidiaries) lose local control, the residents of the surrounding Orange and Osceola counties will become responsible for the special district’s commitments. These include providing fire protection, road maintenance, and other services for Disney properties, as well as shouldering Reedy Creek’s debt—currently reported to be more than $1 billion. Orange County officials say that these new burdens could require an 20% to 25% increase in property taxes.

Just as troubling for the broader pattern of local governance across the nation could be the chilling effect of Florida’s action. It is now clear that the local governance structures every state relies on to provide necessary—some may even say mundane—services like water and sewer or fire protection are no longer insulated from charged political battles. The politicization of special districts could diminish their use, as states become more hesitant to authorize them and counties, cities, and towns become more hesitant to create them.

That would be a bitter pill for the residents who rely on the services special districts provide. Special districts remain an indispensable tool for providing necessary services and infrastructure to specific neighborhoods, service territories, and regions. Just as importantly, they focus the burdens of cost and benefits of governance on the residents who are their users and beneficiaries rather than on the general public.

For more on state policies regarding special districts and the role of states in transformative placemaking, see our 2021 report: State resilience and recovery: Strategies to reduce inequality and promote prosperity by creating better places.