A bill that would repeal Disney's self-government status in Florida could leave local taxpayers with more than $1 billion in bond debt, according to tax officials and legislators.
The Florida House of Representatives passed a bill on Thursday that would repeal Disney's special improvement district in June of 2023.
Disney's Reedy Creek Improvement District was created in 1967, giving the company full regulatory control over Disney World, as well as government services like fire protection, emergency services, water, utilities, sewage and infrastructure.
Legislators and tax experts say that eliminating the district could have consequences.
Disney has four theme parks, two water parks and a sports complex in Reedy Creek. It also includes the two small cities of Bay Lake and Lake Buena Vista, which had a combined population of 53 people in 2020, all either representatives or employees of Disney.
Disney taxes itself to fund the government. The tax collector for Orange County said that the Reedy Creek district collects roughly $105 million in general revenue each year.
Disney pays local property taxes. Disney paid over $280 million in property taxes in central Florida between 2015 and 2020 according to public records.
If the special district is dissolved, the local services provided by Reedy Creek would have to be provided by Orange and Osceola counties. County and local taxpayers would be on the hook for part or all of the added costs if the revenue disappears.
If Reedy Creek is dissolved, that $105 million in revenue is gone.
The reason is that Reedy Creek is an independent tax district, meaning the tax revenues it produces are in addition to its local tax obligations. If the district is eliminated, the tax payments to Orange and Osceola counties would not go up.
Randy Fine, who helped champion the bill, told CNBC that local taxpayers would not pay more and that Reedy Creek could actually benefit. Fine said Disney's tax revenue could be used to pay for the added services.
He said that the taxes will be paid to the two counties. The taxpayers could end up saving money because you have duplicative services being provided by this special district that are already being provided by the municipalities.
Legislators and tax experts warn that the bill creates an even larger problem for taxpayers in the form of bonds totaling more than $1 billion.
According to the district's financial filings, Reedy Creek has between $1 billion and $1.7 billion in bonds. If Reedy Creek is dissolved, the local governments of Bay Lake or Lake Buena Vista will take on the liabilities.
Gary Farmer tried to amend the bill to include further study of the bond debt, but the amendment failed on a voice vote.
According to Farmer, tax authorities are increasing their estimates as they learn more about Reedy Creek's outstanding debts.
Farmer said that this is a very real impact and that we don't fully understand it.
He said that the debt could be as high as $1,000 per taxpayer if the liabilities are transferred.
The state might have to come to the aid of the two counties if they are left holding the bag. Every taxpayer in the state of Florida is affected by it.
The tax revenue that currently funds the bond payments would be transferred if the bonds are transferred to the counties.
The taxpayers of the Reedy Creek Improvement District owe money. The bonds would go to other governments. The revenues go along with it. Disney is taxed by the improvement district. The taxes are used to pay the debt.
Tax experts say that in order for the counties to collect additional revenue from Disney to pay the bond debt, they have to create a new special tax district of their own. If they created a new Disney tax district, the tax rate would be capped below the current district rate, leaving Orange and Osceola counties with Reedy Creek's debt service, but with less revenue to pay.
Farmer said that we shouldn't be moving at warp speed on something that can have such far-ranging economic impacts.
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