Tax officials and lawmakers say that a bill to repeal Disney’s Florida-based self-government could lead to more than $1B in debt for local taxpayers.

The Florida House of Representatives on Thursday cleared a bill that would repeal Disney’s special improvement district, effective June 2023, escalating Gov. Ron DeSantis’s attack on the company for its opposition to Florida’s Parental Rights in Education Bill, nicknamed by critics “Don’t Say Gay”, was a result of Ron DeSantis’s criticism.

In 1967, Disney’s Reedy Creek Improvement District (also known as the Disney Reedy Creek Improvement District) was established. It provides the opportunity to improve on Disney’s Reedy Creek Improvement District. Walt Disney CompanyFull regulatory control of Disney World and all government services such as water, utilities, fire protection, emergency service, sewage, and infrastructure.

Legislators and tax experts agree that the elimination of this district could lead to unintended consequences.

Reedy Creek is located in Orange and Osceola Counties and covers approximately 25,000 acres. It includes Disney’s four main attractions, water parks, sports complex and two water parks. Also included are the small towns of Bay Lake or Lake Buena Vista. These two communities had a total population of 53 in 2020. The residents were all employees and representatives of Disney.

Disney taxes its own income to fund Reedy Creek’s government services. Although the exact tax flow of Reedy Creek is not known, Scott Randolph (the tax collector in Orange County) stated that Reedy Creek collects approximately $105 million per year in general revenue.

Disney is responsible for local property taxes, in addition to $105 million. The public record shows that Disney is the biggest taxpayer in central Florida. It paid over $280million in property taxes to the counties between 2015-2020, according to records.

Orange and Osceola would need to continue providing local services that Reedy Creek provides if the special districts were to be dissolved. The $105 million revenue loss would mean that county taxpayers and the local government would have to pay for the additional costs.

Randolph explained that Reedy Creek’s $105 million revenue is gone if Reedy Creek was dissolved.

Reedy Creek is an independent tax district, meaning that the tax revenues it generates go beyond its local tax obligations. Randolph stated that if the district were to be eliminated, Osceola and Orange counties’ tax payments would not rise.

Florida state Rep. Randy Fine, R-Palm Bay, who has helped champion the bill, told CNBC Thursday that local taxpayers would not pay more — and could actually benefit from Reedy Creek’s elimination. Fine stated that the Disney tax revenues would be paid to the local government and used for additional services.

“Those taxes will still be paid,” said he. He said that the taxes would be transferred to Orange and Osceola County instead of this special improvement area. You’re getting duplicative services from this special district, which are not being offered by those municipalities. This could help taxpayers save money.

However, tax professionals and legislators warn that the bill could create a bigger problem for taxpayers with bonds of more than $1B.

According to financial reports, Reedy Creek’s bond liabilities range from $1 billion to $1.7 million. Under Florida statute, if Reedy Creek is dissolved, those liabilities are transferred to the local governments — either Bay Lake or Lake Buena Vista, or more likely, Orange and Osceola counties.

Gary Farmer (D-Fort Lauderdale), State Senate Minority leader, attempted to amend the bill in order to add further study on the bond debt. However, the voice vote failed to pass the amendment.

Farmer claimed that bond debts could exceed $2Billion and tax authorities will increase their estimates to account for Reedy Creek’s remaining liabilities.

Farmer stated, “This has a very real effect, and the extent of which are still not fully understood yet.”

He said that if the $1.7 billion in liabilities is transferred to Orange or Osceola, it could lead to a debt of $1,000 per taxpayer.

Farmer explained that “if the counties remain in the dark, it might be necessary for the state to assist them.” This is not just a tax matter for these two counties. Every taxpayer in Florida is affected by it.”

Fine, a state representative, argued that if bonds were transferred to counties the tax revenue currently funding the bond payments could also be transferred.

“The Reedy Creek Improvement District” is now a local government, he stated. So the district’s tax payers already owe this money. The bonds could be used to finance other municipalities in the same area. However, the revenue goes along with it. This improvement district taxes Disney. These taxes go towards paying that debt.

Experts in tax say that counties must create their own special tax districts to allow them to get additional revenue from Disney, so they can pay off the bond debt. The tax rate for the new “Disney” tax district would not be lower than the district rate. This would leave Orange and Osceola with Reedy Creek’s service but less revenue.

Farmer explained that it was wrong to move at such a high speed about something with so many economic consequences.