Why Disney will pay off those Reedy Creek bonds
In The Godfather Part II, Senator Geary of Nevada demands that Michael Corleone pay hefty bribes in exchange for approval of his casino’s gaming license. Michael turned the tables and insisted that the senator should pay the $20,000 gaming license fee, and that he will pay nothing. This improbable demand by Mr. Corleone is a lesson for resolving the fiscal obstacles between the State of Florida, Disney, and the Reedy Creek Improvement District.
Critics of Ron DeSantis have been spiking the football in the end zone, claiming that Republicans have shot themselves in the foot by dissolving the Reedy Creek Improvement District (RCID). They quote Scott Randolph, the tax collector of Orange County, and a Democrat, as claiming that property taxes in Orange County, FL could rise as much as 25% to pay off almost $1 billion worth of RCID bonds.
Michael Hiltzik’s April 27 column in the Los Angeles Times is a good example of this. He crows that “Executives of the Walt Disney Co must be laughing themselves silly.” He suggests that the impulsive, vindictive, and stupid Republicans in the Florida Legislature “performed no fiscal analysis of its effects, or even analysis of how it relates to other state laws or legal commitments the state has made.”
You see the big problem, according to Hiltzik and other critics, is that the RCID’s $1 billion of debt would have to be repaid prior to its dissolution.
Democrats normally don’t have any problem imagining a new tax to solve a problem, but now they assume that raising property taxes on Orange and Osceola County residents is the only way to satisfy those pesty legal requirements.
However, the Republicans have a solution for paying off this debt without burdening Florida’s taxpayers. In fact, the solution is so elegant and devastating that the Walt Disney Company will rush at the opportunity to pre-emptively pay off these RCID bonds themselves before this scheme could be implemented.
The State of Florida could set up toll booths at all the roads leading to the Disney World attractions and charge $20 or more per car, $50 per van, and $300 or more per bus. In 2019 over 30 million visitors paid to visit the Magical Kingdom and Epcot Center, and that’s not counting all the other attractions in Disney World. That represents a lot of toll revenue that Florida could collect. With that revenue stream in place, it could issue Revenue Bonds to the market to raise the $1 billion from investors to pay off the RCID bonds when it dissolves the RCID.
With this new revenue stream as the collateral for the bondholders, the State of Florida could easily guarantee paying the new bondholders with interest within ten years, and then continue to collect additional tax revenue after these bondholders are paid off. What’s not to like about a tax increase paid primarily by persons who don’t vote in Florida elections?
Faced with this burden to its visitors, the Disney Company will not want to see this plan enacted, so they will pre-emptively pay off the RCID bondholders so that the State of Florida will have no excuse to implement it.
David Barulich writes on current political events. His work has appeared in the LA Times, The Federalist, Education Week, LA Daily News, and other publications covering politics, fiscal policy, immigration, and education. He resides in Pasadena, CA.