Constitutional Amendment Unnecessary, Dangerous: Proposal Would Erase Important Taxpayer Protection

Posted on October 12, 2004 | Type: Press Release
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PHOENIX-A proposed amendment to the Arizona Constitution that would allow public universities to take ownership stakes in private businesses is not only unnecessary, but would undo an important constitutional protection, according to a Goldwater Institute report released today. 

The amendment, which would let public universities trade research discoveries for ownership interests or stock in private companies, would seriously undermine Article IX, section 7 of the state constitution, which prohibits government ownership in private companies. The prohibition was enacted to end a history of corruption in local governments and the wasting of public funds in speculative ventures.

Mark Brnovich, director of the Goldwater Institute Center for Constitutional Government, notes, "The proposal creates an incentive for government to subsidize businesses in which it has an ownership stake, risking public funds and giving those companies an unfair advantage over other private companies.  The proposal also opens the door to scandal as university officials may steer technology to companies with close financial or personal ties, or those that provide non-public incentives, including kickbacks or bribes."

The Goldwater Institute report recommends leveraging the universities' ability to license technologies. Arizona universities enjoy some of the nation's most permissive licensing options, and in 2003 produced 220 patent applications and signed 124 licensing agreements. In 2002, Arizona State University received $1.77 million in licensing revenue, ranking in the top half of universities reporting licensing income.
The report, How the Arizona Constitution Protects Taxpayers: The Importance of Safeguarding Article IX, is available online here
Contacts:  Mark Brnovich, Director, Goldwater Institute Center for Constitutional Government, (602) 462-5000 x 227,

Andrea Woodmansee, Director of Communications, Goldwater Institute, (602) 462-5000 x 226,

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