Disney World Losing Its Special District Status Could Be ‘Catastrophic’ For Local Taxpayers - Forbes

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Topline

Local officials in Central Florida are grappling with the state legislature’s decision to dissolve the Reedy Creek Improvement District that oversees Walt Disney World, which one local mayor said could put a “catastrophic” strain on local taxpayers if they’re forced to absorb the district’s services.

Key Facts

Orange County Mayor Jerry Demings, whose county is one of two that covers Walt Disney World, told reporters Thursday that Reedy Creek being dissolved would be a “net sum loss” for taxpayers, as the county will likely now have to pay for emergency and law enforcement services that Disney previously reimbursed it for.

Right now, Disney pays taxes to Orange and Osceola counties, but all of the government-related services on Walt Disney World property—like fixing roads, fire department services and more—are paid for by Disney and Reedy Creek and not by county taxpayers.

Getting rid of Reedy Creek would “put an undue burden” on taxpayers “to fill that gap” if Disney can no longer fund its own emergency services and the county does not get any extra revenue to fund it themselves, Demings said.

Orange and Osceola counties will also likely be forced to assume Reedy Creek’s debts—which total nearly $1 billion, per credit analysis firm Fitch Ratings—and Reedy Creek currently generates $105 million in tax revenue for itself every year that won’t get transferred to the counties if it dissolves.

Orange County tax collector Scott Randolph tweeted the county will take on an extra $163 million in costs per year, between Reedy Creek’s missing tax revenue and its debts, and Randolph told WFTV the county will likely have to raise property taxes by 20% to 25% to make up for it.

While the counties and taxpayers would have to shoulder more costs, getting rid of Reedy Creek will effectively give Disney a $163 million yearly tax break, WFTV notes, as they’ll no longer have to tax themselves and pay for Reedy Creek’s services or shoulder their own debts.

Crucial Quote

“We’re trying to understand what the legislature is truly trying to do in this case, but I don't believe they have not adequately contemplated the ramifications of what they have proposed at this point,” Demings said Thursday, calling the move dissolve Reedy Creek “political retribution.”

What We Don’t Know

Exactly what the effects will be. Once Florida Gov. Ron DeSantis (R) signs the bill dissolving Reedy Creek into law, it will remain in place until June 1, 2023, and Demings said the county will use that time to figure out the details of how the new arrangement would work. “The devil’s in the details and we quite simply today do not have the details,” he said. Officials in Osceola County also told the Orlando Sentinel they were unclear on what the fiscal impact would be and are starting an analysis to determine the ramifications.

What To Watch For

Reedy Creek also employs hundreds of workers who could now lose their jobs, and Disney will have to go through additional government red tape for things like construction approval that they could previously just greenlight themselves.

Surprising Fact

The counties absorbing Walt Disney World’s services is a particular challenge given the resort’s size: Disney employed 77,000 workers before the Covid-19 pandemic and its property can hold 250,000 guests each day, the Sentinel reports, which is even more than the population of Florida’s state capitol Tallahassee (196,000). Walt Disney World’s property covers more than 40 square miles, which is approximately twice the size of Manhattan.

Key Background

The Reedy Creek Improvement District is a special taxing district covering Walt Disney World’s property in Central Florida, which was first established as the resort was being constructed in 1967. It essentially allows Walt Disney World to function as its own city and govern itself, handling the same municipal functions that the county governments would. Florida lawmakers voted during a special session this week to abolish the special district—as well as five others that were established before 1968—after Disney paused its political donations to lawmakers and publicly opposed HB 1557, known to critics as Florida’s “Don’t Say Gay” law. The bill, which restricts classroom instruction on sexual orientation and gender identity, “should never” have been passed or enacted, Disney said in a statement after the bill was signed into law, adding its “goal as a company is for this law to be repealed by the legislature or struck down in the courts.” That statement set off conservatives and led Florida Republicans to seek revenge.