Ron's Gone Wrong, Con't

The problem with Florida Gov. Ron DeSantis's new election police force isn't that they are his personal gestapo, although they would be under the Florida Department of Law Enforcement, whose head would be selected by DeSantis. No, the problem is that Florida has added greatly to what constitutes as an "election crime" and has made the penalties into felonies, which would cost those convicted the right to vote.

Well, Secretary of State Laurel Lee can officially hang up the "help wanted" sign.

Does that come with a badge? — Florida Gov. Ron DeSantis on Monday signed a bill into law creating a new election police — officially called the “Office of Election Crimes and Security" — that will be responsible for looking into voter fraud accusations and other violations of election law. DeSantis signed the bill at a sports bar called “Rookies” in Pasco County amid a receptive crowd and lots of fellow Republicans. The budget he will sign (let’s assume sometime in late May) includes enough money ($2.6 million) to pay for 25 positions with the new effort.

Some context — DeSantis proposed this new election crimes unit at a time when he — as well as Lee — were coming under pressure from corners of the Republican Party in the state who wanted the same kind of full-blown “forensic” audit that had occurred in Arizona in response to the false stolen-election claims coming from former President Donald Trump. Lee and DeSantis said such an audit wasn’t needed, but Lee herself became the target of threats. (Her office has declined to go into much detail about this but has acknowledged them.)

Tweaked — The governor did not get exactly what he wanted from the Legislature. In the end, the GOP-controlled Legislature declined to place sworn law enforcement investigators directly under Lee’s control and instead put ten of the new positions in the Florida Department of Law Enforcement. (Which is about to get new management… an ambitious former U.S. attorney???) The governor gets to select the head of FDLE, but the choice also requires approval from two of the three members of the Florida Cabinet.

Not on board — That hasn’t assuaged Democrats who debated in opposition to this year’s election bill and remain skeptical about the need for the new election unit. They're also fearful it will be used to target political opponents of the governor. Parts of the new law are not going to be enforced by the state due to a recent ruling by Chief U.S. District Judge Mark Walker. But it does increase the criminal penalties for some election law violations, including “ballot harvesting” or the collection of more than two mail-in ballots by non-family members. “No Floridian should fear reprisal from an unaccountable agency with a nebulous mission simply because they wanted to register their fellow citizens to vote or help a neighbor turn in their mail ballot,” said Rep. Susan Valdes, a Tampa Democrat.

Background — Florida did not have any reports of widespread fraud in the last election, although there are now investigations in several counties about whether several dozen people with felony convictions were allowed to register and vote in 2020. (Some of this appears connected to the bumpy way that state and local election officials tried to implement Amendment 4, which restored voting rights to some felons, but not all of them.) Supervisors have also reported lots of problems with petitions submitted late last year in connection to a proposed gambling citizen initiative.

 

In other words, DeSantis can use this force to run that "forensic audit" that will not find anything, but they will find all kinds of reasons to harass voting rights activists in the state and keep the "investigation" in the news heading into November. 

Meanwhile, DeSantis's other major punishment project, destroying Disney's Reedy Creek development zone after more than 50 years, is running into the reality of tax law.

Reedy Creek, like other special districts, can borrow money by issuing bonds, which can then be purchased by investors looking for fixed payments. Just like any other debt, the terms of the bond are based on the specific bond contract at issue. Reedy Creek is authorized to issue a few different kinds of bonds, but the most important ones are those that promise to pay from the property taxes collected by the district and those that pay from utility system revenue.

Reedy Creek’s bond offerings very much rely on the district’s unique powers. Its property-tax-based bonds discuss that the district can tax up to 30 mills and promise to tax at a rate high enough to pay the bonds. Its utility revenue bonds discuss the district’s various powers to generate utility revenue and promises to fix fees and charges sufficient to generate sufficient revenue to pay the bonds.

In authorizing Reedy Creek to issue bonds, the Florida legislature included a remarkable statement—included in Reedy Creek’s bond offerings—regarding its own promise to bondholders: “The State of Florida pledges to the holders of any bonds issued under this Act that it will not limit or alter the rights of the District to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects or to levy and collect the taxes, assessments, rentals, rates, fees, tolls, fares and other charges provided for herein … until all such bonds together with interest thereon, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully met and discharged.”

The bill dissolving Reedy Creek doesn’t say what should happen to these debts, but another statute does: By default, the local general-purpose government—the county—assumes the district’s debt, along with all of its assets. This means that theoretically, Orange and Osceola counties will inherit upward of $1 billion in bond debt.

In case it was not obvious, dissolving Reedy Creek “limited” and “altered” its ability to improve and maintain its project and collect its various charges and taxes, and thus Florida would be violating its pledge to bondholders by dissolving Reedy Creek. However, even without that explicit language, the bill dissolving Reedy Creek would have problems under contracts clauses of the Florida and U.S. constitutions.

Stating that the county assumes the debt is simple enough—actually figuring out what that means is a different story. Reedy Creek spans both Orange and Osceola counties, so how will the debt be divided? Would it be by taxable value of property or by the properties themselves? And how would that apply to the utility revenue bonds when there is no easy way to divide which county the utilities rest in?

These difficult questions point to the basic contractual issue. By dissolving Reedy Creek, the legislature essentially rewrote the promises made in the district’s bond offerings. Instead of bonds backed by a special district with the power to levy up to 30 mills in taxes, the property tax bonds will be backed jointly by two governments that can only generate a maximum of 10 mills in taxes. Instead of a unified utility system with special powers to charge various fees, supported by special taxing powers, utility revenue bonds will be jointly managed by two counties subject to additional taxing and spending restrictions.

Both the U.S. and Florida constitutions place strict limitations on the government’s ability to impair its own contracts. Under the U.S. Constitution, a state can only impair an existing contract if the impairment is reasonable and necessary to serve an important government purpose. As early as 1866, the U.S. Supreme Court held that once a local government issues a bond based on an authorized taxing power, the state is contract-bound and cannot eliminate the taxing power supporting the bond. The Florida Constitution provides even greater protection from impairment of contracts.

With this law, the state of Florida has eliminated the government entity that backed the various bonds while violating its own explicit promise not to do so. It is hard to imagine a way that the state could successfully argue that this did not violate its own contractual obligations or unconstitutionally impair the contract between Reedy Creek and the bondholders. Florida could theoretically get rid of some of these contractual issues by writing a giant check to prepay or “redeem” the bonds, but that’s prevented by at least one of the outstanding bonds—2018’s utility revenue bond prohibits redemption until October of 2029.

Florida simply cannot promise to prospective bondholders that it won’t interfere with Reedy Creek, and then dissolve Reedy Creek. If Reedy Creek is ever dissolved, it would be a monumental and complicated enterprise even on a years-long timeline. The district has a nine-figure annual budget for expenditures, and even ignoring its various debts, it has a plethora of other contracts that somehow would have to be assigned to and divided between Orange and Osceola counties. However, the dissolution will have to wait until all of its bonds are paid in full.

 

Which is why you'll want a long-lasting supply of popcorn, because by the time Disney's lawyers get done with DeSantis, he's going to wish he never had this idea.