While in Congress, JD Hayworth sent out a press release bragging about his ability to bring home the bacon!  And boy did he…to the tune of over $445,000,000. Yep, that is millions.  This must have been before “the scales were removed from his eyes” allowing him to see the true effects of wasteful Washington spending and to become a consistent conservative.

July 29, 2005

Hayworth District’s Transportation Priorities Big Winners In Latest

Authorization Bill

Congressman Steers ‘Earmarked’ Funds Back Home To AZ 

• $3.2 million project from 40th Street to Baseline in Maricopa County; for the design, right-of-way acquisition, and construction of an I-10 widening 
• $2.4 million for the design and construction of the Rio Salado Pedestrian Bridge in Tempe;
• $2.09 million the new ASU Scottsdale Center for New Technology and Innovation at the intersection of Scottsdale and McDowell roads; to plan design and construct a transit passenger center in Scottsdale to serve
• $5.4 million over four years to construct the East Valley Metro Bus facility in Tempe; and
• $434.4 million through 2009 for the Central Phoenix/East Valley Light Rail Transit Project

Among the pork” projects…a bridge to go over the now dry Tempe Town Lake:

 The Town Lake Pedestrian Bridge will connect existing bike and pedestrian paths on the north and south sides of Tempe Town Lake, allowing those who continue on the north bank to access the Indian Bend Wash without having to interface with motor vehicles. Those who cross from north to south will be able to link with the Mill Avenue District. This bridge will create a much safer transportation route for runners, walkers, bicyclists and those who use wheelchairs.” (City of Tempe Website, www.tempe.gov, Accessed 5/6/10)

After funds for the bridge were approved in the 2005 Transportation Reauthorization Bill, “The Bridge” was derided as wasteful pork barrel spending, and even compared to the infamous “Bridge To Nowhere”.  It got plenty of attention, not so good attention.

The Arizona Republic’s Robert Robb Asked, “Why, Pray Tell, Is It A Federal Responsibility To Build … A Footbridge To Connect Trails Across The Western Bank Of Tempe Town Lake?” “There’s a tradition of pointing to the earmarks in other states as pork. But the real issue isn’t pork. It’s the federal government doing something that should be a state or local responsibility. And you don’t have to look beyond the borders of Arizona for a multitude of examples. Why, pray tell, is it a federal responsibility to build a bicycle-pedestrian bridge at McDowell Road and 35th Avenue in Phoenix, or a footbridge to connect trails across the western bank of Tempe Town Lake?” (Robert Robb, “Republicans Snap Open Taxpayer Wallets Again,” The Arizona Republic, 8/5/05)

In 2008, The East Valley Tribune Editorialized That …Tempe Should Reject Federal Funding For The Bridge, Comparing It To The Infamous “Bridge To Nowhere” In Alaska. “Alaska Gov. Sarah Palin is now well-known for having once supported what has been called the ‘bridge to nowhere,’ a $400 million proposal for a structure that, if Congress had funded it, would have given about 50 Alaskans on one island road access to a more populated one that is currently reached by a short ferry ride. In the face of this, Tempe city officials might be persuaded to do, regarding a bridge of their own, a similar about-face to the one the Republican vice-presidential nominee did.” (Editorial, “Tempe Should Take A Pass On Bridge Funds,” East Valley Tribune, 9/14/08

The East Valley Tribune’s Le Templar Pointed Out That While The “Bridge To Nowhere” Was Costlier Than The Tempe Bridge, “The Principle Is The Same.” “The Tribune Editorial Board noted today an interesting parallel between the Alaskan issue and a proposed pedestrian bridge over Tempe Town Lake that will be funded mostly from federal dollars set aside in highway funding bills. The scale of the two projects certainly were different ($400 million for the Ketchikan bridge vs. $5.7 million for the Tempe bridge). But the principle is the same, isn’t it?” (Le Templar, “Will Hallman Say ‘No Thanks’ To Tempe Bridge?,” East Valley Tribune (Blog), 9/15/08)

• Templar Noted That While Republican J.D. Hayworth “Was The Bridge’s Primary Champion,” The Bridge Represented The Kind Of “Pork-Barrel Spending” That Another Republican, John McCain, Railed Against. “Still, Arizona Sen. John McCain has built his campaign for president, in part, on his absolute refusal to seek pork-barrel spending that the Tempe bridge seems to represent. (Former Rep. J.D. Hayworth, R-Ariz., was the bridge’s primary champion.)” (Le Templar, “Will Hallman Say ‘No Thanks’ To Tempe Bridge?,” East Valley Tribune (Blog), 9/15/08)

Gov. Jan Brewer and Sen. John McCain announce the F-35 to LAFB

On Thursday officials announced the long-awaited and much hoped for decision that Luke Air Force Base was the preferred site for the F-35 Joint Srike Fighter  as a replacement for the F-16 fighter.  Sen. John McCain and Governor Jan Brewer held a press conference today in response to that announcement.  Both the Governor and the Senator have worked to keep Luke open and understand the vital economic role it plays, not only in the west valley but the state as a whole. 

Gov. Brewer and Sen. McCain singled out State Senator John Nelson, LD-12, as being particularly instrumental in keeping Luke open and bringing the F-35 to our state.  West valley mayors Cavanaugh of Goodyear, Schoaf of Litchfield Park, and Scruggs of Glendale along with County Supervisor Max Wilson were in attendance and also were  commended for their efforts. 

The F-35 was met with some resistance due to the noise issues it may bring in comparison to older models of the F-16.   However, in answer to a reporter’s question to that effect, Sen. McCain made the point that the F-35 is not any louder than the newer, upgraded engines of the currently flown F-16.

The economic impact of Luke is over $2.7 billion annually and 8,000 jobs statewide as a direct result of the operations at LAFB. The new F-35 is expected to bring in another $2 million-plus dollars in jobs for construction and development. 

An environmental impact study will be completed with final award to be announced in 2011.

A review of Nancy Young Wright’s website is very revealing. She lists ten issues and here is the gist of what she says:

 Budget:  “. . . She will push to protect funding for education . . .Businesses want a strong educational system . . .We must plan and provide for schools, parks and other infrastructure . . “

 From FY 2000 to FY 2009 (est), total Federal, state, County and local spending on K-12 has increased 88%, or an average of 8.8% per year, about twice the rate of inflation. The data source is the Joint Legislative Budget Committee. Per pupil funding has increased 49% or about 4.9% annually, or about 1.5 times the rate of inflation. It appears that, contrary to Nancy Wright Young’s position, the schools are adequately funded. The problem is the school administrators are not using the funds properly.

 Economic Development:  “Nancy believes that the key to improving Arizona’s economy lies in investing in our public schools and universities . . .”

 As stated above, the Legislature is adequately funding the schools. School administration is the problem. In 2009, only 56.9% of the school dollar reached the classroom. The Office of the Auditor general found that declining classroom dollar percentages indicated supplanting, which means that schools administrators are shifting Classroom Site Fund (CSF) monies from the classroom to non-classroom purposes: a violation of State statute. 

 Education:  “. . . Nancy will fight to restore our public schools . . .She will push for higher salaries . . . Once we have rebuilt our schools to an adequate level of funding . . .”

Instead of voting for higher taxes and more money for schools, Nancy Young Wright should be actively looking at where the problem lies: school district administrators. Shifting CSF funds to transportation and other non-classroom categories directly harms the students. The Auditor General has found a clear association between classroom dollars and student achievement. Districts with higher classroom dollar percentages appear to have higher percentages of students who met or exceeded AIMS Math, Reading and Writing Assessments. This association holds true even after controlling for the effects of poverty.

 Energy:  “. . . She supports incentives for solar energy and research for clean alternatives. She supports Green construction . . .”

 Nancy Young Wright’s counterpart, Cheryl Cage, who is running against Al Melvin for State Senate, supports solar.  Ms. Cage stated in an Op-Ed that, “Studies have shown for every $1 million dollars [sic] invested in solar will provide 13.5 jobs to the nuclear industries 4.5 jobs.” What Ms. Cage did not say is the solar jobs will be low paying while the nuclear jobs will be high paying. Also, for every solar 13.5 jobs created other industries will lose 30 jobs.  It’s obvious that neither lady has really thought about solar energy and its impact on our economy.

 Environment:  “. . . She will advocate for clean air and water for our state. . .” 

 Well, that’s nice. I bet everyone reading this article will advocate for clean air and water. The question is how do we meet the challenge? How will it be funded? It will have to be executed on a State and Regional basis. How to get there? Nancy Wright Young did not say.

 Health care:  “Nancy supports programs to attract and retain the health care professionals we desperately need.”

 Well, this is nice too. When the Obama health bill passed, 46 million uninsured were added to Medicaid and other government programs. At that moment, the United States suddenly had a physician shortage (“Physician Shortages: How’s That for Hope and Change,” 10/09) of over 54,000 primary care physicians. Training physician takes time and money. So does training Nurse Practitioners and Physician assistants in the numbers now required.

She also failed to discuss health care rationing taking place since ObamaCare was signed into law. Arizona’s AHCCCS is slashing benefits to enrollees over age 21.  Physicians are already refusing new Medicare patients and dropping existing patients due to low reimbursement rates. Medicare Advantage patients will lose their Medicare Advantage benefits due to reduction in Medicare funding by Nancy Wright Young’s Democratic Party. Nancy Wright Young failed to comment on the depth of the problem or propose any solutions. 

 Open Government:  “”Nancy is a strong advocate for citizen participation and will fight to preserve our right to the initiative and referendum process . . .”

 This is a daring stand. Unless I missed something, no one has advocated taking the initiative and referendum away from the people.

 Taxes:  “Nancy believes that Arizona’s entire tax structure must be examined for fairness and stability. Our current budget crises in Arizona can be traced to too much dependency on sales tax and on a lack of diversification in our economy . . . She supports impact fees for the costs of new infrastructure such as roads, sewers, parks and schools to lessen the tax bill to existing residents.”

 Arizona got into trouble with increased spending under Governor Janet Napolitano. I agree with Ms. Wright’s statement that our entire tax structure must be examined for fairness and stability.  States like Texas, Nevada and Florida prosper without an income tax. Why can’t Arizona?

 I also disagree with implementing new impact fees (increased taxes) for costs of new infrastructure. The fees will be passed on to the consumer in the price of the product or commodity. Taxes are too high now.

 Transportation:  “. . . Nancy supports statewide cooperation on a transportation plan that includes alternative transportation, impact  fees for roads, and local control . . . She strongly supports the rail system connecting Tucson and Phoenix and the provision of bio-diesel and alternative fuel stations for the general public.”

 Again, a nice sentiment but clearly not thought out. The increase in ethanol production has caused the price of corn to sky rocket. Tortillas in Mexico almost doubled in price. Bio-diesel and alternative fuels are exotic subjects for which there is no mass of customers. What is needed is serious discussion on what our communities need versus what they can afford. Nancy Young Wright offers no serious discussion.

 Veterans:  “Our veterans deserve our support and adequate resources for medical care, education and continued care . . .”

 Thank God she got this one right.

 Of the ten issues she listed on her web site, Nancy Young Wright had one answer for Budgets, Economic Development and Education: pour more money into public schools.  This is after the Auditor General has found school districts are mismanaging the money they already have. To provide additional money to school districts to mismanage is insane.

 Nancy Young Wright supports solar energy, which will destroy more jobs than it creates. Clearly, she has not seriously thought about the long term effects of alternative energy impacts on our economy.

 She took a breath-taking stand for clean air and water without providing any policy details.

She repeated the problem of physician shortages without stating how many physicians we’re going to need, how we’re going to find them, how we’re going to fund them . . . obviously she has no clue. That’s why she could only state the obvious problem.

 Nancy Young Wright’s position on open government was vacuous. Her response on taxes was higher taxes in the form of impact fees. Her comments on transportation were superficial.

 We want our representatives in Phoenix to think. Where are Nancy Young Wright’s ideas? Where is her ability to think outside the proverbial box and create new solutions?  Higher taxes and pouring more money into education as school administrators mismanage their spending is outrageous.

 Serious issues demand serious thinking by our elected representatives. Nancy Young Wright has demonstrated she is not serious. She is a blinded shallow thinker, narrowly focused on pouring money into public education without accountability, without checks and balances but with sheer abandon.

 Nancy Young Wright is not a serious thinker. The Democratic Party can do better than Nancy Young Wright.

Often times, good intentions have dire consequences. On Monday, the Senate is expected to vote on legislation that will have an impact on our nation that could far out way the impact of the healthcare reform package. Originally seen as financial reform, this bill (Sponsored by Senator Chris Dodd) lays out the foundation for a complete reform of the nation’s financial regulatory system. The goal is clear and admirable – to minimize the chances of another financial meltdown. The consequences within the numerous provisions of the 1,400 page bill will in fact have catastrophic affects on consumers and the overall economy.

The Consumer Financial Protection Act of 2009 creates a new layer of federal bureaucracy known as the Consumer Financial Protection Bureau. On the surface it sounds like a great idea, however, as one digs deeper, they will see that the truth is that this will create a public option in financial reform, much like health care reform. It would result in a government managed financial system to oversee credit and banking. This legislation would limit choices and, in many cases, restrict access to credit for those that need it the most – current and future small businesses owners.

Under the proposed legislation, access to the credit that 26.7 million businesses need would be limited because of the bill’s one-size-fits-all approach to reform. The intended purpose is to protect consumers from unfair practices, but the true effect will be that it will reduce the amount of choices and credit available. The one-size-fits-all philosophy completely negates the fact that many of these small business owners rely on consumer credit to meet payroll, improve and/or expand their businesses, and innovate. Ultimately, it will lead to an increase in business closings, a reduction in job growth and a lack of the entrepreneurial opportunity our country provides.

The last thing we need is another government takeover of an industry. The Democrats will say that we need this type of protection to prevent another financial meltdown. No one argues that, or that changes need to be made, but as in most cases the devil is in the details and the dire consequences of this legislation far out way the good intentions.

If you’re ready to get rid of this congressional clown, give your time, talent and treasure to Ruth McClung, the conservative candidate running in Arizona’s seventh congressional district.

Vote Ruth McClung

For Immediate Release: February 22, 2010

Nuclear Energy Could Generate 7,743 Construction and 3,000 Nuclear Engineering Jobs in Arizona

ASU Study Predicts Non-Carbon Energy Impacts

PHOENIX – According to a study by Arizona State University, Arizona could gain 7,743 highly paid construction jobs and 3,000 atomic engineering jobs if the plan proposed by Arizona House Leadership gets passed. ASU’s Steidman Institute prepared an economic impact report for industry leadership last week showing significant benefits to the high paying jobs that would be created by such a massive multi-billion dollar atomic energy construction project. If another atomic energy plant is constructed in Arizona, the 414 jobs could be created within 24 months and up to 7,743 jobs within the 7 year construction period.

Last Monday President Obama awarded a $9.3 billion loan guarantee to the Southern Cos., the main power provider in Georgia to simulate high tech jobs in the atomic energy sector. A request for Arizona’s share of atomic energy planning and development money was passed in the Arizona House Energy and Water committee last week on a straight party line vote in HCM 2014.

Governor Brewer came out in support of solar, atomic and other non-carbon sources of energy last month in speeches to industry groups.

House Bill 2767, which is an Energy Parks concept plan, includes tax incentives, tax exempt loans for solar, atomic, wind, geothermal, and other non carbon energy sources, as well as a 50 year strategic energy plan. This bill goes to Government committee and if passes, advances to the full House next week for consideration. “This Energy Park incentive bill closely matches the incentives Utah passed last June, with the addition of a 50 year statewide energy strategy plan. We can’t let Utah beat us in the non-carbon energy race, like they beat us in basketball,” Representative Warde Nichols said, the bill’s co-sponsor.

The construction and development of a new atomic energy facility in the State would provide Arizona families with $2.46 billion in new disposable income, and provide the state $457 million in new revenues according to the ASU study. “These are private sector jobs, private sector projects, and public sector benefits,” said Representative Tobin. “It only makes sense that we should grow private sector high energy physics projects in atomic energy just like we grew the high tech bio medical sector years ago.”

The Goldwater Institute’s outstanding investigative reporter Mark Flatten has produced one of the most important pieces of Arizona journalism in many years called Shifting The Burden: Cities Waive Property Taxes for Favored Businesses.  In it he methodically and devastatingly deconstructs the complicated “government property lease excise tax” or GPLET scheme that insiders close to Gov. Jan Brewer and other top Arizona politicians use to shift hundreds of millions of dollars from small businesses and homeowners to their special interest friends.  The topic is a bit dense but any taxpayer who has asked why their property tax liability keeps going up should work through it so they can understand how the powerful and their lobbyists like Brewer’s man Chuck Coughlin game the system to the misfortune of average guy and gal.

Shifting The Burden: Cities Waive Property Taxes for Favored Businesses

By Mark Flatten
Goldwater Institute Special Investigation
February 18, 2010

Special deals between cities and hand-picked developers have exempted more than $2 billion in development projects from property taxes in Arizona, shifting the tax burden to surrounding property owners and creating a competitive disadvantage for other businesses, an investigation by the Goldwater Institute has found.

Those high-rise office buildings and sprawling retail centers would generate more than $30 million annually in property taxes if they were not exempted through lease agreements with the cities. As a result of those deals, the owner of a $200,000 home near Sky Harbor International Airport in Phoenix pays about $183 in additional property taxes every year. A similar home in downtown Phoenix is charged an extra $90 annually, according to state legislative studies.

The unpaid property taxes are supposed to be replaced by the Government Property Lease Excise Tax or GPLET. However, the Institute’s investigation found GPLET payments amount to a fraction of what would be paid in property taxes.

Virtually every high-rise office tower that has been built in downtown Phoenix in the last decade is covered under a GPLET lease. The tax exemption also has been granted to a now-shuttered dog racing track in Phoenix, a tattoo studio in Clifton and regional shopping malls in the East Valley. In coming years, additional projects worth billions of dollars will be covered under GPLET leases.

Last year efforts by state lawmakers to curb the lucrative breaks in the law were blocked by Mesa officials and the developer planning to use the exemption for a $1 billion resort on the eastern outskirts of the city. But, State Representative Rick Murphy has introduced a bill again this year to curb these agreements.

A recent Arizona Supreme Court decision also puts the property tax exemption in jeopardy. The court ruled that sales tax rebates for a shopping center in Phoenix amounted to an unconstitutional gift of taxpayer money to the developer. Promises of future job growth or other tax revenues are not enough to justify special sales tax breaks, the court ruled. Those are the same arguments that are used to justify GPLET agreements.

Read Shifting the Burden here

Sidebar: Scottsdale’s SkySong Avoids Property Taxes Without GPLET lease

Investigation Analysis by Clint Bolick

Goldwater Institute
News Release

PHOENIX–Some Arizona cities that recruit major shopping malls and high-rise buildings have used a special tax incentive that waives most of the development’s property taxes, often for 50 years or longer. A Goldwater Institute investigative report found development projects valued at more than $2 billion pay only a small fraction of what they otherwise would in property taxes. As a result, local governments raise property tax rates for nearby businesses and homes that don’t qualify for this special tax break.

To qualify for the property tax exemption, building developers transfer ownership of the property to the city and then lease it back to operate. State law requires that the developer pay a Government Property Lease Excise Tax, or GPLET, that is supposed to replace a significant portion of the waived property taxes. Mark Flatten, a Goldwater Institute investigative reporter, shows that GPLET projects throughout Arizona pay at least $31 million less in property taxes each year.

“Arizona’s high property taxes deter businesses from moving here. It’s no surprise that companies look for ways to lighten the tax burden using the GPLET system. However, any time you offer a tax break to one business, it should be available to all,” said Darcy Olsen, president and CEO of the Goldwater Institute. “GPLET programs that single out select businesses for deals essentially leave neighboring businesses and homeowners with the tab.”

Most GPLET projects are located in Tempe and Phoenix, where most downtown high-rises built since 1996 benefit from a property tax exemption. Other communities have started to approve GPLET projects as well. For example, Mesa has agreed to waive an estimated $776 million in property taxes over 50 years for a future convention center and luxury resort near Phoenix-Mesa Gateway Airport. Mr. Flatten reports cities generally don’t worry about lower property tax revenue because property taxes are a relatively small portion of their budgets.

School districts and community colleges, on the other hand, depend more heavily on property taxes. But school districts haven’t had to worry either, because the state government had filled the gap created by GPLET projects. That will change this year because lawmakers have changed the law that protected school district budgets. Now, GPLET projects likely will prompt school districts to raise property taxes or reduce spending. “It’s a great concern. It shifts the tax onto our property owners, our homeowners, and it’s a huge shift,” Antonio Sanchez, superintendent of the Wilson Elementary School District in Phoenix, told Mr. Flatten.

Some lawmakers have tried in the past to change GPLET laws to limit the length of the new leases and to increase the amount that new projects have to pay in excise taxes so that it is more comparable to what businesses that do not have a special exemption are required to pay. These efforts have been thwarted by lobbyists for cities and developers who expect to benefit in the future, Mr. Flatten reports. State Representative Rick Murphy has introduced a bill this year that will try to curb the practice.

The Goldwater Institute recommends that governments pursue economic development efforts that would benefit a wide range of businesses, instead of giving a handful preferential treatment. The Arizona Supreme Court recently reinforced the Arizona Constitution’s “Gift Clause,” a prohibition that GPLET leases might violate. Examples of more appropriate business incentives would include reducing property tax rates for businesses to match the rates paid by homeowners and the expansion of enterprise zones in which reduced tax rates are offered to all businesses.

“These deals show that Arizona’s tax burden is too high to attract business. That is easy to correct without giving special privileges to the few. Lower property taxes to competitive regional rates for all of our businesses and help Arizona grow its way out of the recession,” said Ms. Olsen.

Read “Shifting the Burden: Cities Waive Property Taxes for Favored Businesses” online here.

The Goldwater Institute is an independent government watchdog supported by people who are committed to expanding free enterprise and liberty.

For Immediate Release: Wednesday, February 10, 2010

“The Legislature must take a two-pronged approach to our economic crisis. We must fix the current budget deficit and create more jobs.

With the State taking on more debt, job creation is critical to generate revenues to offset it. We now have a great opportunity for the Senate to move on one of the most important pieces of legislation before us and move to grow our economy now. HB2250 does exactly that, which is why I offered my amendment to SB1002 to make the education rollover conditional upon the Economic and Job Recovery Bill becoming law.

The amendment received full support from a sizeable majority of all Republicans present on the Floor — clearly highlighting how important House Republicans see HB2250 in growing our economy and bringing revenue back in alignment with debt.”

FOR IMMEDIATE RELEASE: January 31, 2010

Congressional Candidate Rusty Bowers Reacts to Secretary’s Resolution Copper Visit

It was a great honor to have Secretary Vilsack come to Superior, and visit rural Arizona. It is important that he see first hand how badly we need the jobs created by this mine, and the true economic stimulus this will bring to all of Arizona. We the people support this mine, and it was vital the secretary see that.

As for Congresswoman Kirkpatrick, it is too little too late. She has been unenthusiastic at best about this land exchange, and it is demonstrated by her ineffectiveness at getting her land swap bill passed in the House of Representatives. Senators Kyl and McCain who are not even members of the majority party in the Senate have already succeeded in passing a land swap bill in the U.S. Senate.

This is not a Republican or Democrat issue. This is an issue of values. You’ll fight for the values you treasure. Hard work, jobs, and the families that need them. This mine represents the difference between the values that hold human life and prosperity first, instead of politics and radical environmentalism.

I treasure the values of life and earning an honest living. This land swap represents that; that is what I’ll fight for!

Rusty Bowers is a Republican candidate for Congress in district 1. Visit RustyCountry.com to learn more about his campaign, and the rural values it stands for.

by Clint Bolick 
Goldwater Institute
 
The Goldwater Institute’s constitutional challenge to the $97.4 million CityNorth subsidy was the signature test for an untried idea: a litigation center dedicated to vindicating largely unused protections of individual rights and written restraints on government in our state constitution. Monday’s decision by the Arizona Supreme Court in Turken v. Gordon illustrates the potential for such endeavors.

Before we filed the case, cities across Arizona were engaged in subsidy wars to attract businesses that might contribute to their sales-tax coffers. Savvy developers peddled grandiose schemes, playing one city against another. Small businesses, which are the engine of our economy yet never receive special benefits, were forced to help subsidize much bigger competitors.

No one had the resources to take on the powerful combination of government and special interests. Even worse, decades of court precedents had diluted the Gift Clause–which categorically prohibits gifts of taxpayer funds “by subsidy or otherwise”–almost to the point of nonexistence. So when Phoenix gave a massive subsidy to a Chicago developer to build a luxury shopping mall, it seemed like a case tailor-made for litigation.

Things looked bleak when the trial court upheld the subsidy, crediting the developer’s promises of massive tax revenues and other benefits to the City. But the Arizona Court of Appeals, meticulously applying the original intent of the Gift Clause, struck down the deal.

The Supreme Court could have returned matters to business as usual. It did allow the CityNorth deal to proceed, pointing to the confusion the Court felt its prior precedents had sown. And it deferred to the City’s judgment that the CityNorth deal served a legitimate “public purpose.” But the Court held that promises of “indirect” economic benefits–such as jobs that may result from a proposed project–are insufficient consideration for tax-dollar giveaways. From now on, economic development agreements must produce tangible benefits and fair-market value for taxpayers. That ought to curb the worst excesses, and we’ll be on the watch to make sure that government behaves.

In the meantime, score one for the little guy–and for the idea that with the right cases brought to them, courts will hold governments to their constitutional boundaries.

Clint Bolick is director of the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.

By Byron Schlomach, Ph.D.
Goldwater Institute
 
I recently attended a meeting with Maurice McTigue, director of the Mercatus Center at George Mason University, a former member of the New Zealand Parliament, and a man with wide experience in government reform. Attendance at the meeting, arranged by State Senator Sylvia Allen, should have been required for everyone in our state government.

Prior to comprehensive reforms 20 years ago, New Zealand was an economic mess, suffering from debt, continual deficits, and a stagnating economy. Out of desperation, New Zealand’s political leaders reduced government spending and enacted fundamental, wide-ranging reform. Since then, New Zealand’s national government has seen a single deficit; it was this year and due to the worldwide recession.

One instructive example given by Mr. McTigue concerned agriculture subsidies, which, among other things, were artificially inflating land prices. Everybody knew land prices would collapse when those subsidies ended. Some estimated 31 percent of farmers and at least seven major banks would go bankrupt. Yet, with no bailout or any other government involvement, only one-half of 1 percent of farmers went bankrupt. And not a single bank went under.

An outbreak of “spontaneous economic order,” as Mr. McTigue described it, resulted. Banks re-valued loans to avoid defaults. Farmers renegotiated payment schedules. People figured out how to navigate the changing economy without government intervention.

This example may seem most applicable to federal financial policies in response to the U.S. real estate meltdown; but, the lesson is broader. We commonly hear stories that if Arizona cuts spending on parks or education or health care, our economy will collapse. Yet New Zealand’s experience illustrates that fundamental reform, rethinking, and shrinking of government should be welcomed, not feared.

Byron Schlomach, Ph.D., is the director of the Goldwater Institute’s Center for Economic Prosperity.

Goldwater Institute News Release

Phoenix—Today in a unanimous decision the Arizona Supreme Court declared that government subsidies to encourage development violate the Gift Clause of the Arizona Constitution unless the developer offers tangible benefits of equal value in return. The ruling clarifies previous decisions the court believed were confusing and applied the rule prospectively. The Court declined to invalidate the CityNorth subsidy and sent the case back to the Arizona Court of Appeals to consider other legal challenges.

The ruling in Turken v. Gordon is a victory for the Goldwater Institute Scharf-Norton Center for Constitutional Litigation, which filed the lawsuit on behalf of six small-business owners in 2007 in an effort to stop giveaways of taxpayer money. “The Court’s decision vindicates a core protection of taxpayer rights in our state constitution,” said Goldwater Institute litigation director Clint Bolick. “The days of rampant corporate welfare in Arizona are coming to an end.”

A Maricopa County Superior Court judge upheld the $97.4 million subsidy of the CityNorth shopping center by the City of Phoenix, basing his decision on “indirect benefits” such as jobs, sales tax revenues, and the creation of an urban core. But such indirect benefits “are not consideration under contract law,” the Supreme Court concluded in its opinion written by Justice Andrew Hurwitz. In reality, the only tangible benefit received by the City, the Court ruled, was 200 parking spaces, which the Court found unlikely to be worth $97.4 million.

“The ruling should stop schemes that government concocts to subsidize developers based on grandiose promises that often fail to materialize,” added Mr. Bolick. “Although we’re disappointed that the Court allowed the CityNorth deal to stand for now, that development has proved to be such a disaster that it’s doubtful taxpayer money will ever change hands. CityNorth will stand as a monument to government folly.”

The next step for the Goldwater Institute and its clients is to go back to the Court of Appeals, which invalidated the CityNorth agreement in 2008, to have two additional legal questions answered. The Institute will argue the deal constitutes an impermissible “special law” and violates the plaintiffs’ right to equal protection of the laws.

Read more about this and other Goldwater Institute lawsuits to protect individual rights and keep government within its constitutional limits at www.goldwaterinstitute.org/litigation. The Goldwater Institute is an independent government watchdog that develops innovative, principled solutions to issues facing the states and enforces constitutionally limited government through litigation. The Institute’s work is made possible by the generosity of its supporters.

by Clint Bolick 
Goldwater Institute

The Arizona Governor’s office is up for grabs and lots of people seem to want it. As someone who enjoys suing politicians but doesn’t aspire to be one, I offer the following platform for candidates to confront the challenges and opportunities facing our state–namely, the three E’s:
 
Enterprise. Arizona should become the most business-friendly state in the nation, by lowering taxes and curbing unnecessary regulations and red-tape. The state should get out of the corporate welfare business, in which it tries to out-guess the market and compete with other states to see who can give away the most taxpayer money to attract the latest hot industry. Instead, a level playing field hospitable to all businesses will not only attract and retain big corporations but will nurture entrepreneurs and small businesses, which are the economy’s catalysts.
 
Education. As my colleague Matt Ladner has chronicled, Arizona’s public education system is dragging down the state, our children, and our future. We need fundamental stem-to-stern reform that uses technology to provide the best individualized education to every child. Charter schools, distance learning, performance-based pay, expanded parental choice, and transforming school districts and education bureaucrats into service providers are key components of comprehensive reform that can lead the nation.
 
Efficiency. Our state’s budget crisis teaches us that we must reform government to prevent such crises from ever happening again. Privatization of government services, ensuring that future spending will not exceed population growth plus inflation, adopting a balanced budget requirement, and greater fiscal transparency at every level of government are steps we should take now to ensure future fiscal responsibility.
 
The governor that pursues these three E’s will propel our state toward greatness while preserving our freedom.

Clint Bolick is director of the Goldwater Institute Scharf-Norton Center for Constitutional Litigation.

By Byron Schlomach, Ph.D.
Goldwater Institute 
 
On January 11, Chile was officially invited to join the Organization of Economic Cooperation and Development (OECD). Chile will be the OECD’s 31st member and its first from South America. The OECD is largely made up of the world’s richest and most stable economies and Chile’s invitation to join the club wasn’t always a given.

In the early 1970s, Chile’s economy was a basket case not unlike Haiti’s before last week’s earthquake. Abject poverty, rampant inflation, and high unemployment were the norm. There is no denying that Augusto Pinochet was a detestable tyrant, but he did one thing right after he took control of the country: he turned economic policy over to 10 Chilean economists who had been trained at the University of Chicago in the theories of John Locke and Nobel Prize winning economists F.A. Hayek and Milton Friedman.

The government began selling government-owned businesses, deregulating enterprises, and removing wage and price controls. In 1981, Chile’s social security system was privatized under the direction of Jose Pinera, who was given the Goldwater Award for Liberty in 2003 and is the brother of Chile’s just-elected President Sebastian Pinera. These economic policies set the stage for Chile to become South America’s most vibrant and successful economy.

Chile’s economic experience could be instructive to Arizona policymakers. Government-owned enterprises like stadiums and Phoenix’s Sheraton Hotel have become too common. The state still owns huge swaths of land that ought to be sold and put to use creating jobs. The state should also loosen regulations on wages. Arizona has the potential to create the most vibrant economy of any state in the union. We just need to be freed to exercise it.

Byron Schlomach, Ph.D., is the director of the Goldwater Institute’s Center for Economic Prosperity.