Central Florida taxpayers are on the verge of becoming responsible for Disney's debt
By: April Carson
The Florida Senate voted 23 to 16 on Wednesday to disband the Reedy Creek Improvement District, dealing a major setback to Disney and, by extension, Central Florida taxpayers.
The move would put an end to the special taxing district that has been in place since 1967, when Disney was first given the authority to levy its own taxes in exchange for building the Magic Kingdom.
The district has about $1 billion in outstanding bonds that must be dealt with. States legislators have acknowledged that this responsibility will be shouldered by local individuals.
"This is a tough vote," said Senate President Andy Gardiner, R-Orlando. "I think we all recognize the impact this has not just on Central Florida but also the state."
The Reedy Creek Improvement District was created by the Florida Legislature in 1967 to oversee development of the land purchased by Walt Disney Productions for the construction of the Magic Kingdom. The district, which covers about 27 square miles, has the legal authority to levy its own taxes and issue bonds without voter approval.
“The methods that we employ will move the debt to general-purpose local governments,” said Sen. Jennifer Bradley (R-Clay County), the bill's sponsor in the Florida Senate.
The billion dollars in bonds held by Reedy Creek will come due as late as 2036. Revenue bonds, which will be paid for with utility payments, account for approximately 20% of the debt. The remaining 80% are general obligation bonds, backed by trust and faith in the district's ability to pay.
“Those are given to creditors on the condition that the district will continue to exist and be able to honor its debts, of course, state law states that those bonds will be assumed by the counties.” Joe Bishop-Henchman, vice president of policy at the National Taxpayers Union, said. “You have no idea what's in the small print of all of these contracts.”
In 2008, when the federal government stepped in to bail out AIG and seize control, its bonds had to be repaid right away. The bonds acquired by Reedy Creek could very well be the same, and if that's the case, those funds would have to come from somewhere.
During the bill's lone committee hearing in Tallahassee, state legislators acknowledged that they didn't know who would take on the debt or when.
“It may not be a lot of money when spread across the population of the county, but it's real money,” Bishop-Henchman pointed out. “And it's an unknown.”
For now, the bill awaits a vote from the full legislature. If it passes, and assuming Disney agrees to the terms, Central Florida taxpayers will be on the hook for the company's debt, with no clear way out.
There wouldn't be that much more cash for the county if Orange County were to acquire Disney's property and debt.
“If Reedy Creek goes away, the $105 million it collects to operate services would also vanish,” Orange County Tax Collector Scott Randolph wrote. “This does not just transfer to Orange County since it is an independent taxing district. However, after this happens, Orange County will be responsible for all debt and obligations without having extra cash.”
Under California law, Orange County is not permitted to tax Disney above and beyond the normal rate unless it establishes a new special district for Disney. The county, on the other hand, would need property owners within Disney (the corporation) to agree to accept back their debts in order to do so.
Residents of Orange County may anticipate to acquire anywhere from $2,200 to $2,800 in extra debt for a family of four if the bond obligation comes due. This is in addition to the $600 that they are already paying on average for the district’s operations.
The Central Florida taxpayers are therefore on the verge of becoming responsible for Disney’s debt, should it fail to make payments. This would be a significant financial burden for many families in the area.
The Florida House is expected to pass the bill on Thursday, which would dissolve Reedy Creek and five other districts in the state on June 1, 2023 if it is approved. This would eliminate the districts’ power to collect taxes, and leave taxpayers on the hook.
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About the Blogger:
April Carson is the daughter of Billy Carson. She received her bachelor's degree in Social Sciences from Jacksonville University, where she was also on the Women's Basketball team. She now has a successful clothing company that specializes in organic baby clothes and other items. Take a look at their most popular fall fashions on bossbabymav.com
To read more of April's blogs, check out her website! She publishes new blogs on a daily basis, including the most helpful mommy advice and baby care tips! Follow on IG @bossbabymav
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