The Gift Clause: Big Government Kryptonite

by Trey Kovacs on June 22, 2012

in Features, Labor

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Gov. Scott Walker’s recall election victory and California ballot measures garnered the bulk of headlines this month. The results indicate voters are fed up with runaway government spending and lavish government union contracts. While collective bargaining and pension reform are steps in the right direction in Arizona, an institutional tool is resurfacing that will allow Americans to directly challenge wasteful spending.

Today in a Deseret News op-ed,“States should use gift clauses to control government spending,” I explain that tool:

“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 rediscover and make full use of these clauses to restrain the growth of government.”

The Goldwater Institute took full advantage of the Gift Clause and challenged a provision in the Phoenix police union’s collective bargaining agreement granting the union “release time”:

“The Goldwater Institute, a pro-free market public policy organization, sued the city of Phoenix over its compensating the Phoenix Law Enforcement Association (PLEA) for time spent negotiating union contracts, lobbying 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.”

The Goldwater Institute’s legal efforts revitalized Arizona’s Gift Clause, recovering a much needed taxpayer protection. Now other states need to call for enforcement of their own Gift Clause protections to defend the public’s interest against subsidies, tax incentives and all other ways government manages to give away tax funds to private interests. To recap: “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.”

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