Clint Bolick

Tough economic times do not deter subsidies

Posted on October 15, 2009 | Author: Clint Bolick
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Amidst budget cuts and worker furloughs, some cities still are finding cash to subsidize developers.

Tempe recently authorized a taxpayer subsidy potentially worth more than $150,000 for a new Sea Life Aquarium that will be built at Arizona Mills shopping center by the owner of Legoland and the Madame Tussaud's wax museums.

The agreement provides rebates of all construction sales taxes related to the project, along with up to $78,000 in sales tax proceeds and waiver of all city development fees up to $70,000. The city gets nothing in return except the developer's promise to construct an enterprise for its own profit.

The only explanation for the deal is that the project would not be "economically feasible" without tax rebates. Where have we heard that before? Oh, yes: the CityNorth subsidy, ruled illegal by the Court of Appeals and currently before the Arizona Supreme Court.
 
One need only compare the CityNorth developer's grandiose promises with the actual project's grim reality to appreciate the wisdom of our Constitution's framers in forbidding gifts to private businesses.
 
As one well-informed commentator put it, "When government gives taxpayer money to a favored business, it must tax the rest of the public with that missing share. Small businesses, or those less connected to government leaders, or those who cannot hire lawyers and lobbyists to fight for their own subsidies, are left holding the bag."

The author of those eloquent words? Tempe Mayor Hugh Hallman, who co-published an article with Scottsdale Mayor Jim Lane and Paradise Valley Mayor Vernon Parker opposing subsidies. Yet Hallman inexplicably voted for this one.
 
It's clear that cities will not overcome their addiction to corporate welfare until either the Arizona Supreme Court enforces the Gift Clause or the Legislature acts to curb the abuses.

Clint Bolick is director of the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.
 
Learn More:
 
Goldwater Institute: Turken v. Gordon (CityNorth subsidy case)
 
Arizona Republic: Legoland owner plans aquarium inside AZ Mills
 
Arizona Republic: Subsidy money to retailers is absurd

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