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Fact-check: Will Floridian Taxes Rise Over Disney-DeSantis Debacle?

Florida Gov. Ron DeSantis in a diptych with a Disney palace.

Some say that tax payers could now be responsible for a $1 billion bill after the dissolution of Reedy Creek.

Florida Gov. Ron DeSantis (R) signed a bill into law Friday that disallows special district designations, including the Reedy Creek Improvement District that governs the Walt Disney Company. The move is out of retaliation for Disney's opposition to Florida's HB 1557, known to many as the "don't say gay" law.

The news has brought attention to a relationship between Disney and the Florida government that many weren't previously aware of. Some have said that the change could saddle taxpayers with a bill of about $1 billion.

Here's what we know.

What happened?

After backlash for not speaking about the then-pending "don't say gay bill," Disney, Florida's largest private employer, condemned the legislation. After it was signed into law, the company pledged to help fight for its repeal.

Officially titled the "Parents Rights in Education" law, the legislation makes discussion about sexual orientation and gender identity through the third grade illegal and limits the ability of teachers to engage in conversations around those topics generally.

After news of Disney's opposition broke, according to the New York Times, DeSantis wrote in a fundraising email to supporters, "If Disney wants to pick a fight, they chose the wrong guy. I will not allow a woke corporation based in California to run our state. Disney has gotten away with special deals from the state of Florida for way too long."

The Republican-dominated Florida legislature then introduced, passed, and sent a measure eliminating special districts in Florida - including Disney's Reedy Creek Improvement District designation - to the governor's desk for signing without debate. DeSantis signed the law within hours.

What's the Reedy Creek Improvement District?

When Disney wanted to build "The Most Magical Place On Earth'' in a remote part of Orange County and Osceola County during the 1960s, lawmakers created a way for the company to be able to govern (and tax) itself.

The Reedy Creek Improvement District was created in 1967 to attract Disney to build a theme park near Orlando through many incentives. This made it possible to finance and install infrastructure necessary for the theme parks, with little impact on local taxes.

In practice, this meant that Disney was able to submit permits to itself to take care of various issues that might typically be prolonged with bureaucratic red tape. Disney also held a special tax district designation. Experts estimate that the arrangement saved the company millions of dollars every year. This will end in June 2023 according to the new bill.

What's the impact of revoking the Reedy Creek Improvement District on Floridians?

The financial impact on local taxpayers is unclear, but experts warn that Disney's tax and bond debt burden could become the responsibility of residents.

The New York Timesreported that according to a disclosure in 2021, Disney World paid more than $780 million in state and local taxes. As part of the Reedy Creek district Disney took care of roads and other maintenance projects typically overseen by government. With that gone, residents would most likely see a tax increase, WFTV reported.

Scott Randolph, a Democrat who is the Orange County tax collector, is critical of the new law.

"If Reedy Creek goes away, the $105 million it collects to operate services goes away," Randolph wrote on Twitter. "That doesn't just transfer to Orange County because it's an independent taxing district. However, Orange County then inherits all debt and obligations with no extra funds."

Randolph said that Disney also had taxed itself around $53 million annually to service its debt.

NPR reports that the new law has prompted warnings that county property taxes will rise sharply.

According to public records, Reedy Creek has an estimated annual budget of $355 million. However, according to the Times, it carries $977 million in debt, which would also transfer to the counties.

According to Reedy Creek's financial documents, CNBC reports, the district historically operates at a loss of around $5 million to $10 million each year. But since Disney can subsidize itself through revenue from its parks, this debt is eaten by the company, CNBC notes.

According to lawmakers, there's around $1 billion in debt on the balance sheet that taxpayers would become responsible for should the special district get absorbed, leading to higher taxes.

It won't be easy to make up any potential budget shortfalls because of laws on the books in Florida. According to CNBC, state law prohibits counties from raising sales taxes or impact fees to cover costs, and they must tax all areas of the county equally.

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