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Week in Review: An End to Sweetheart Deals

February 13, 2021

This week, the Goldwater Institute won a major victory for Arizona taxpayers: the Arizona Supreme Court ruled unanimously that the city of Peoria violated the state Constitution’s Gift Clause when it gave away nearly $2.6 million to two private businesses who promised nothing in return to the public, but only to run their own businesses for their own private profit.

In 2016, the city gave this money to Huntington University and its landlord Arrowhead Properties LLC, both private businesses, in hopes that these private companies’ operations would improve the local economy. But neither business promised to provide anything to the public in exchange for the millions of taxpayer dollars they received. Instead, to get the subsidy, Huntington University—a private, Christian college based in Indiana that offers only a Digital Media Arts program in Peoria—simply agreed to run its business: get accredited, offer classes, and enroll students, all things it would do anyway. Locals didn’t get any guarantee of admission, jobs at the college, reduced tuition, or even access to the college’s facilities. And Huntington’s landlord, Arrowhead, agreed to renovate its own building to house Huntington, all for private profit and private use. That doesn’t benefit taxpayers; it benefits these two private firms—and that’s why the Goldwater Institute sued the city of behalf of Peoria taxpayers.

The Goldwater Institute has long been the state’s—indeed, the country’s—leading enforcer of the Gift Clause—over a decade ago, we won a landmark victory in Turken v. Gordon, where the Arizona Supreme Court held that whenever officials spend taxpayer money, it must benefit the taxpayers directly. Hopes of future prosperity resulting from corporate welfare are simply not enough.

At In Defense of Liberty, Goldwater Institute Executive Vice President Christina Sandefur writes, “This unanimous ruling sends a powerful reminder to government officials across the state that they can’t spend taxpayers’ hard-earned money on sweetheart deals for select private businesses, but can only purchase goods and services that truly benefit the public.” You can read more about the case and the ruling here.

Goldwater Fights for Arizona’s Small Business Owners

Arizona business owner Matt Boyle had big plans to grow his business in Arizona. But because of Proposition 208’s massive income tax increase, he is moving the headquarters of his company, Landmark Recovery, out of Arizona to Tennessee—a state that has no state income tax.

Matt is one of many small business owners negatively affected by the passage of Proposition 208—according to a report from the Goldwater Institute, more than half of the estimated 90,000 tax filers directly affected by Proposition 208 own small businesses. The proposition was put on the November ballot through an initiative campaign led and financed largely by teachers unions and their supporters.

You can read more about Matt’s story at In Defense of Liberty. The Goldwater Institute is fighting to put a stop to Prop 208 so that more Arizonans don’t follow in his footsteps: In November, we filed a lawsuit challenging Prop 208, arguing the ballot initiative violates state constitutional requirements that a tax can only be imposed through a two-thirds vote of the legislature.

Philly’s Public School Heartbreak

There’s a crisis going on in Philadelphia schools—chronic absenteeism among students made worse by COVID-19, and a decision driven by teachers unions not to resume in-person instruction.

In the Philadelphia Inquirer, Goldwater Institute Senior Fellow Jonathan Butcher writes that even before the pandemic began, more than one in three district school students were found to be chronically absent. And since the district considers technological challenges an example of “extenuating circumstances”—and therefore not grounds for counting a student “absent”—we truly have no idea how much absenteeism has climbed in Philadelphia schools during COVID-19.

Yet Philadelphia families and district officials remain in a standoff with the teachers’ union, and in-person learning remains on hold, a true tragedy for students. Meanwhile, Butcher writes, private and Catholic schools in Philadelphia and beyond opened with in-person and hybrid plans for 2020-21. Unsurprisingly, “a nationally representative survey finds that the share of parents who are ‘very satisfied’ with private schools during the pandemic (55%) is more than double the rate for public schools.”

You can read Butcher’s full op-ed here.



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