Florida Governor Ron DeSantis has signed a bill that strips Walt Disney Co of self-governing authority at its Orlando-area parks.
The move comes in retaliation for its opposition to a new law that limits the teaching of LGBTQ issues in schools.
The Republican-controlled legislature yesterday approved the bill, which will eliminate the special governing jurisdiction that allows the company to operate Walt Disney World Resort as its own city.
Within the 25,000-acre tract, it operates four theme parks, two water parks and 280km of roadway.
Disney's special status "was really an aberration," Mr De Santis said at a news conference where he signed the bill into law. "No individual or no company in Florida is treated this way."
Disney did not immediately comment on the bill's signing.
While the financial impact on the company and the state is uncertain, the change could alter how Disney operates its sprawling Central Florida empire and sour the close relationship it has enjoyed with the state for more than 50 years.
The governor yesterday said Disney would pay more taxes as a result of the law but did not elaborate.
Governor DeSantis is a potential 2024 Republican presidential candidate who has courted conservative voters on issues such as immigration, abortion and LGBTQ rights.
Disney initially did not publicly oppose the LGBTQ legislation last month, prompting criticism from that community and some employees.
The company later condemned the law and said it would suspend political donations in Florida pending a review.
The law, dubbed the "don't say gay" bill by critics, bans classroom instruction on sexual orientation or gender identity for children in kindergarten through third grade.
DeSantis backed the measure, saying it would give parents more control over their children's education.
At a fundraiser in Seattle yesterday, President Joe Biden weighed in on the clash between Disney and Florida Republicans.
He said efforts to impose such constraints "have nothing to do with traditional conservative doctrine."
Disney's special status allows the district to issue bonds with tax advantages to pay for improvements and for Disney to avoid the process of obtaining building permits for some projects.
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Disney is historically a major political contributor in the state. In the 2020 election cycle, the company donated $4.8m in total, including campaign funds to more than 100 individual Florida legislative members, some of whom sponsored the legislation, state records show.
The company also gave more than $900,000 to the state Republican party and more than $550,000 to the Republican senatorial campaign committee, along with $300,000 to the state Democratic party and $50,000 to Mr De Santis.
The Walt Disney Resort paid $780.3m in state and local taxes in 2021, according to a fact sheet commemorating the 50th anniversary of the theme park.
Orange County Tax Collector Scott Randolph said that legislation will punish local taxpayers more than Disney.
"Yes, Disney pays a lot in taxes, but when you add up the numbers, it pushes a lot of the tax burden onto local taxpayers," he said of the bill.
Disney already received many of the benefits from the special district in getting the park built and could come out ahead financially by shifting the cost of maintenance and services to the local jurisdictions, said David Ramba, executive director of the Florida Association of Special Districts.
"They get to control the level of service versus leaving it to a county government," Mr Ramba said.