The Taxpayers Win One
by Clint Bolick
Two years ago, Gov. Jan Brewer
abolished the Arizona Department of Commerce. It wasn’t an act of
getting rid of government waste or excess, but rather making way for a
new entity: the “quasi-public” Arizona Commerce Authority.
The
Authority was designed to be a “deal-closing” entity, wherein
government and private officials possessing greater wisdom than market
forces, can deploy resources to lure businesses to Arizona and create
new ones. A nice concept, perhaps, but in most states such entities
merely dole out subsidies to favored businesses.
That isn’t supposed to happen in Arizona. Our Constitution prohibits gifts to private entities “by subsidy or otherwise.” In Turken v. Gordon,
litigated by the Goldwater Institute, the Arizona Supreme Court held
that government can assist specific businesses only if they receive
direct, tangible, commensurate, and enforceable benefits in return.
That leaves the Authority plenty
of latitude — but not for what it tried to do a few weeks ago. At a
ceremony honoring businesses competing in the Authority’s “innovative
challenge” program, the Authority’s CEO Don Cardon decided to dole out
$5,000 “stipends” to 15 unsuccessful applicants. Given that the stipends
were after-the-fact, it would be impossible for the state to demand
anything in return.
That’s exactly what the Institute
said in a letter to Cardon, declaring that the payments looked more
like a “slush fund” than the limited quid pro quo agreements the Authority is permitted to make. On May 11, the Authority relented and decided the stipends will not be paid.
It is a small victory for
taxpayers, but an important one, for it calls the Authority’s attention
to the constitutional limits on its powers — and to the fact that its
actions will be watched closely.
Clint Bolick is director of the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.
Learn More:
Arizona Supreme Court: Turken v. Gordon (PDF)
Goldwater Institute: The Path to Jobs is Not Through the Red Ribbon
Goldwater Institute: Research Shows States Don’t Stimulate Job Growth With Taxpayer Handouts
Arizona Commerce Authority: Public Meeting Agenda and Minutes
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Contact:

Clint Bolick
(602) 462-5000
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