According to tax authorities and legislators, the abolition of Disney’s autonomy in Florida could leave local taxpayers with more than $ 1 billion in debt.
Thursday Florida House of Representatives Passed a bill to dissolve Disney’s special improvement districtEscalates Governor Ron DeSantis’ attack on the company over opposition to the custody bill in Florida’s education, dubbed the “Don’t Say Gay” bill by critics.
The legislature passed the bill on Wednesday after it was first introduced on Tuesday. It now goes to the governor for his signature.
Disney’s Reedy Creek Improvement District was created in 1967 and Walt Disney Company Full regulatory control of Disney World and government services such as fire protection, emergency services, water, utilities, sewerage, and infrastructure.
Tax experts and legislators have stated that the abolition of the district, which will come into effect in June 2023, may have unintended consequences for county taxpayers.
The entrance to the Walt Disney World Theme Park on July 11, 2020 on Lake Buena Vista, Florida.
Octavio Jones | Getty Images
Reedy Creek spans 25,000 acres in Orange County and Osceola County and is home to Disney’s four theme parks, two water parks and a sports complex. It also includes two smaller cities, Bay Lake and Lake Buena Vista, with a total population of 53 in 2020, all representatives or employees of Disney.
To fund Reedy Creek’s government services, Disney effectively taxes itself. The exact tax flow for Reedy Creek is unknown, but Orange County tax collector Scottish Ruff said the Reedy Creek area raises about $ 105 million in general revenue annually.
In addition to $ 105 million, Disney also pays local property taxes. According to official records, Disney is the largest taxpayer in central Florida, paying more than $ 280 million in property taxes to the county between 2015 and 2020.
If the special district is dissolved, Orange County and Osceola County will need to provide the local services currently provided by Reedy Creek. Also, with the $ 105 million revenue loss, county and local taxpayers will incur some or all of the additional costs.
“If we dissolve Reedy Creek, that $ 105 million in revenue will literally disappear, but it won’t be transferred,” Randolph said.
Reason: Reedy Creek is known as an “independent tax zone”, which means that the tax revenue generated by Reedy Creek does not replace the local tax obligation, but is added to the local tax obligation. Randolph said tax payments to Orange County and Osceola County would not increase if the district was eliminated.
Florida Rep. Randy Fine, Randy Fine, who helped defend the bill, told CNBC Thursday that local taxpayers wouldn’t pay any more and could actually benefit from the elimination of Leady Creek. rice field. Mr Fine said Disney’s tax revenues could be sent to local governments and more than paid for additional services.
“These taxes will continue to be paid,” he said. “It’s only paid to Orange County and Osceola County, not this special improvement district. Taxpayers can save money because the overlapping services provided by this special district are already provided by these municipalities. I can do it.”
However, legislators and tax experts have warned that the bill poses even greater potential problems for taxpayers in the form of bonds totaling more than $ 1 billion.
Reedy Creek’s fixed income liabilities range from $ 1 billion to $ 1.7 billion, according to the district’s financial statements. Under Florida law, if Reedy Creek breaks up, these responsibilities will be transferred to the local government (Bay Lake or Lake Buena Vista, or more likely Orange County and Osceola County).
Gary Farmer, D-Fort Lauderdale, a minority leader in the State Senate, tried to amend the bill to include further investigation of debt debt, but the amendment failed to vote.
Bond debt can total more than $ 2 billion, Farmer said, and tax authorities are increasing estimates as they learn more about Reedy Creek’s outstanding debt.
“This is a very real impact, and the extent is not yet fully understood,” Farmer said.
If more than $ 1.7 billion of debt is transferred to Orange and Osceola counties, the debt could be $ 1,000 per taxpayer, he said.
“If the county is left with bags, the state may have to come to their aid,” Farmer said. “Therefore, this is not just a tax issue in these two counties. It affects all Florida taxpayers.”
The fine argued that if the bonds were transferred to the county, the tax revenues currently funding the payment of the bonds would also be transferred.
“Currently, the Reedy Creek Improvement District is a local government,” he said. “Therefore, taxpayers in the area have already borrowed the money. Yes, the bonds will be sent to other local governments in the same place, but the income will accompany it. Disney will be taxed by this improved area. . These taxes are used to pay it debt. “
Tax experts say the county needs to create its own new special tax zone in order for the county to collect additional income from Disney and pay its debt debt. Even if they create a new special “Disney” tax zone, the tax rate will be restricted below the current rate and Orange County and Osceola County will be forced to repay Reedy Creek’s debt, but to pay it off. Your income will be low.
“We shouldn’t move things that can have such a wide range of economic impacts at warp speed,” Farmer said.