View of the entrance to the Walt Disney World theme park on July 11, 2020 in Buena Vista, Florida.
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A bill that would repeal Disney’s Florida self-government status could leave local taxpayers with more than $ 1 billion in bond debt, according to tax officials and lawmakers.
The Florida House of Representatives on Thursday passed a bill that would repeal the Disney Special Enhancement Area, effective June 2023, escalating Gov. Ron DeSantis’ attack on the company over its opposition to the Florida Parental Rights Bill in education, called by critics “Don’t tay Gay” bill.
Disney’s Reedy Creek Improvement Area was established in 1967 and gives Walt Disney Company full regulatory control over Disney World, as well as government services such as fire protection, emergency services, water, utilities, sanitation and infrastructure.
Tax experts and lawmakers say removing the area could have unintended consequences for county taxpayers.
Reedy Creek covers 25,000 acres in Orange and Osceola counties and includes four Disney theme parks, two water parks and a sports complex. It also includes the two small towns of Bay Lake and Lake Buena Vista, which had a combined population of 53 in 2020, all either representatives or employees of Disney.
Disney is effectively taxed to fund Reedy Creek’s government services. While Reedy Creek’s exact tax flows are unclear, Scott Randolph, a tax collector for Orange County, said the Reedy Creek area collects approximately $ 105 million a year in total revenue.
In addition to $ 105 million, Disney also pays local property taxes. Public records show that Disney is the largest taxpayer in central Florida, paying more than $ 280 million in property taxes between 2015 and 2020 to counties.
If the special area is disbanded, Orange and Osceola counties will have to provide the local services currently provided by Reedy Creek. And $ 105 million in revenue will disappear, which means county and local taxpayers will be on the hook for some or all of the added spending.
“If you disband Reedy Creek, that $ 105 million in revenue is literally gone, it’s not being transferred,” Randolph said.
The reason: Reedy Creek is what is known as an “independent tax district,” meaning that the tax revenue it generates is in addition to its local tax liabilities, not a substitute. If the county is eliminated, tax payments to Orange and Osceola counties will not increase, Randolph said.
Florida State Representative Randy Fine, who helped defend the bill, told CNBC on Thursday that local taxpayers would not pay more – and could actually benefit from eliminating Reedy Creek. Finn said the revenue from the taxes Disney pays will be transferred to the local government and could be more than paying for the added services.
“These taxes will continue to be paid,” he said. “They will simply be paid to Orange and Osceola counties instead of in this special area for improvement. Taxpayers could save money because you have duplicate services that are provided by this special area, which is already provided, but these municipalities. “
But lawmakers and tax experts warn that the bill poses an even bigger potential problem for taxpayers in the form of bonds worth more than $ 1 billion.
Reedy Creek has debt bonds totaling between $ 1 billion and $ 1.7 billion, according to county financial records. Under Florida’s statute, if Reedy Creek is disbanded, those responsibilities will be transferred to local authorities – either Bay Lake, or Lake Buena Vista, or more likely, Orange and Osceola counties.
Senate Minority Leader Gary Farmer, D-Fort Lauderdale, tried to amend the bill to include further investigation into bond debt, but the amendment failed by a vote.
Farmer said the debt on the bonds could amount to more than $ 2 billion and that the tax authorities are increasing their estimates as they learn more about Reedy Creek’s outstanding debts.
“This is a very real impact, the extent of which we still do not fully understand,” Farmer said.
If $ 1.7 billion or more is transferred to Orange and Oceola counties, he said, the debt could be as high as $ 1,000 per taxpayer.
“If the counties stay in the bag, the state may have to come to their aid,” Farmer said. “So it’s not even just a tax issue for these two counties. It affects every taxpayer in Florida.”
The US representative Fine claims that if the bonds are transferred to the counties, the tax revenues that currently finance the bond payments will also be transferred.
“The Reedy Creek improvement area is local government right now,” he said. “So the taxpayers in this area already owe that money. Yes, the bonds will go to other municipal governments in the same place. But the revenue goes with them. Disney is taxed in this area for improvement. These taxes are used to pay this debt. “
Tax experts say that in order for the counties to raise additional revenue from Disney to pay off the debt on the bonds, the counties will have to create a new special tax area. Even if they create a new Disney Special Tax District, the tax rate will be limited below that of the current county, leaving Orange and Osceola counties with Reedy Creek’s debt service, but with less revenue to pay.
“We should not move at a distorted speed on something that could have such far-reaching economic consequences,” Farmer said.
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