"Illinois invested $10.2 million in 1837 for internal improvements, including 1,341 miles of railroad. Only 26 miles of the railroad were completed, making the interest on the debt exceed the state's revenue, which forced the state into default."
Arizona, having made improvident investments of public money in private corporations, adopted the gift clause at its 1910 constitutional convention. But the clause has been hollowed out by judicial decisions allowing entanglements of government and corporations when the entanglements satisfy the elastic criteria of having a "public purpose" or providing a "public benefit."
Arizona's Supreme Court has held that whether a government transaction with a private corporation violates the gift clause depends on "the motivating and animating cause of the transaction." Got that?
This is how courts weakened the U.S. Constitution's Fifth Amendment restrictions on how government could take private property "for public use." In the original narrow understanding, "public use" meant public works such as roads, bridges, courthouses. Then taking property to cure "blight" (another elastic term) became a public use. Now property is taken and given to developers just because they will pay higher taxes than the original owners.
Similar judicial malpractice has enabled John McCain and other campaign "reformers" to eviscerate the First Amendment. "Congress shall make no law ... abridging the freedom of speech" -- unless Congress claims that the law's rationale is to prevent "corruption" or the "appearance" thereof.
Courts have misconstrued the gift clause into a nullity, so legislators now use any asserted public benefit, however remote, to justify using subsidies to compete with rival jurisdictions for businesses and their tax revenues -- or to rationalize conferring benefits on powerful interests. For example, suburban Scottsdale's City Council has given $1.5 million for 19 automobile dealerships -- some of them owned by companies with revenues in the billions -- to spend on marketing.
Today, Phoenix taxpayers are paying the cost of a pricey law firm's defense of the constitutionality of their subsidy of CityNorth. Perhaps courts, which unleashed the subsidies competition by making mush of the gift clause, can make amends by reinvigorating that clause, as the Goldwater Institute requests. Failing that, Arizonans can stop booster socialism and enforce general disarmament among their cities by amending the clause with language that stipulates the original intent. The most effective cure for foolish politics is still sensible politics.
CLARIFICATION -- In my column for Feb. 28, I said that Trevor Potter is president of the Campaign Legal Center. Actually, he is currently on leave from that position.
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