Use ‘gift clauses’ to prohibit subsidies

06/22/2012 3:02 PM

06/22/2012 3:02 PM

Wisconsin Gov. Scott Walker seems to understand what his recall victory really means. “It was a triumph more than anything for middle-class taxpayers,” he said after the recent recall election. “Middle-class taxpayers have overwhelmingly paid for the expansion of government.”

Walker is right, but restraining runaway government will need more than political victories. It will need institutional tools that allow Americans to directly challenge wasteful spending.

Fortunately, they already exist in most states in the form of “gift clauses” – constitutional prohibitions on subsidies. Arizona’s constitution, for example, states that no state or local government agency “shall make any donation or grant, by subsidy or otherwise, to any individual, association or corporation.” It’s time for state lawmakers to rediscover and make full use of these clauses to restrain the growth of government.

In fact, on the same day that Wisconsin voters stood up for fiscal responsibility, in Arizona, the Maricopa County Superior Court ruled that contracts paying government union employees for time spent doing union business are unlawful under Arizona’s constitution.

The Goldwater Institute, a pro-free-market public policy organization, sued the city of Phoenix over its compensating the Phoenix Law Enforcement Association for time spent negotiating union contracts, lobbying for legislation and attending union functions. “Such activities promote the private interests of PLEA and, as a result, do not constitute public purposes,” ruled Judge Katherine Cooper. “It is a subsidy and subject to gift clause analysis.” Arizona’s gift clause stopped what amounted to a $1 million subsidy to the union.

Residents in other states can take similar action, and most already have the tool. Gift clauses date back to the 1840s and 1870s, when most lawmakers in most states sought to end the state governments’ ability to lend or incur debt to the state for the benefit of any private individual, corporation or association. The legislation, commonly referred to as the gift clause, is still on the books in 47 states. It only needs resuscitation and enforcement to end runaway government spending and favors to politically connected special interests.

These bans were intended to protect taxpayer interests by erecting a wall of separation between government and private economic interests. It’s time to rebuild that wall – and high. All government expenditures should further public purposes and provide tangible benefits to states or municipalities, not simply hand out favors to special interests.

The Phoenix Police Department’s mission is to protect the safety of the community, not subsidize union activities. As Goldwater Institute vice president Clint Bolick, who helped file the lawsuit against Phoenix, explains, “Release time is especially egregious in this context because it diverts police resources from the core law-enforcement mission.”

However, the favorable court injunction applies only to the PLEA’s current contract, which expires on June 30. Phoenix city officials have approved the union’s new contract, which continues the practice of release time. The Goldwater Institute is looking into taking further legal action to extend the injunction to the next contract.

The Goldwater Institute, by reinvigorating Arizona’s gift clause, has pointed the way for citizens across the nation to end government giveaways of taxpayer money to individuals, corporations, unions and other special interests. Walker’s victory at the polls and Goldwater’s victory in court offer hope for achieving that goal.

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