The City of Phoenix faces an enormous $250 million dollar deficit yet Mayor Phil Gordon is spending more money to appeal his CityNorth loss to the Arizona State Supreme Court. The Phoenix City Council is intent on increasing the budget deficit by ignoring the economic difficulties faced by financially strapped taxpayers.
by Jim Iannuzo
Why are Mayor Phil Gordon and the Phoenix City Council committed on giving away $97.4 million dollars to a private developer? The Goldwater Institute representing local business owners asked this very question in their successful lawsuit filed against Mayor Gordon and the city council. This lawsuit saved Phoenix taxpayers almost $100,000,000 dollars. In a surprising move, Thelda Williams, Michael Nowakowski, and Maria Baier voted to appeal the decision thereby putting their support behind corporate welfare they strongly opposed at election time. Only Council member Tom Simplot, who opposed the original deal, voted against an appeal.
The city's budget deficit has had a serious impact on employees. Program cuts and layoffs are the norm not the exception at city hall. The mayor has asked city workers making $15 per hour to "give back" one day pay per month by taking unpaid vacation. This makes no sense in light of the fact that the city council voted with Mayor Gordon to appeal their CityNorth court loss. The best action would be to let the case die, avoiding another round of layoffs or tax increases.
The Goldwater Institute effectively cited the Arizona Constitution's prohibition on tax giveaways know as the "Gift Clause" in front of the three judge panel. In essence no business can get a special payout exclusive of all other businesses. Favoring one business over another causes a disruption in the marketplace leading to business failure and job destruction.
Cities have used special incentives in the gift war battle as a way to lure in private developers. Gift wars arise between local jurisdictions in an attempt to "one up" each other. Gift wars not only drain budget priorities, they have been ruled unconstitutional by the courts. When Phoenix agreed to give a private developer a subsidy of $97.4 million dollars to build a luxury shopping mall, it violated the Gift Clause of the Arizona Constitution. The Appeals Court found this subsidy served no public interest and that the private developer was simply masquerading as a quasi-public enterprise to obtain taxpayer money. It has long been held that private malls are not free speech zones thus they are in fact private not public (Lloyd Corp v. Tanner. 407 U.S. 551 1972).
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