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Oro Valley Subsidy Recipients Under-Perform By Millions
Clint Bolick
Goldwater Institute Daily Email
October 24, 2007
I'm Shocked, Shocked!
Oro Valley's recent decision to yield its status as Arizona's subsidy capital didn't come a moment too soon. The first report for two sales-tax rebate subsidies awarded for Oracle Crossings Center and Steam Pump Village are in, and the results are predictable.
The first project forecast sales of $106 million over the last two fiscal years, which would have generated $2.12 million in sales tax revenues; but instead produced $35.5 million in sales and only $441,000 in sales tax revenue. The second projected sales of over $26 million and tax revenue of $525,000, and instead produced sales of $2.1 million and tax revenues of $46,000. In both cases, nearly half of the sales tax revenue will revert to the developers.
Explanations for the revenue paucity include delayed construction and insufficient demand for retail space. Could it be that the market is telling the town something?
The Oro Valley experience is only the latest evidence that politicians are lousy investors. A few years back, Tucson gave Slim-Fast a big subsidy to build a plant; within a few years the plant went bust and the promised jobs disappeared-along with the taxpayers' money.
Arizona's founders had their own epiphany 100 years ago: subsidies lavished upon railroad companies that never managed to lay track. Determined never to repeat that error, they wrote into the Constitution the anti-gift clause, which absolutely prohibits gifts to individuals or corporations in the form of subsidies or otherwise.
Cities have ignored the constitutional constraint, engaging in a frenzied competition over who can bestow the most corporate welfare.
Clint Bolick is the director of the Goldwater Institute's Scharf-Norton Center for Constitutional Litigation
1 comment:
Anybody surprised??
Is it too early to say told you so?
Apparently some on our council still don't get the concept of the very strong and real possibility of EDA's being against the Arizona state constitution.
Regardless of how difficult a lot is to built on, it is really not the issue. It may be against the constitution here in Arizona.
Guess they are above all that!!
Hello, might be time to wake up and smell the law!!
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