The Arizona-based Goldwater Institute (GI) announced Thursday that it had achieved victory in the state appellate court against Pima County on behalf of taxpayers over an issue involving World View Enterprises (WVE).
“Arizona’s Constitution is crystal clear: Taxpayers shouldn’t have to shoulder the burden for corporate welfare. Yesterday’s ruling reinforces this edict, letting hardworking Arizonans off the hook for a ‘balloondoggle’ of epic proportions that sought to gamble with their own money,” said GI Vice President for Legal Affairs Timothy Sandefur in a statement emailed to The Arizona Sun Times.
Another victory for Arizona taxpayers!
Pima County officials cooked up a scheme to hand over millions of taxpayer dollars to a company that's supposed to take tourists to space on balloons…
— Goldwater Institute (@GoldwaterInst) October 27, 2022
WVE is a near-space exploration company engaged in manufacturing high-altitude balloons for scientific research and tourism, with its headquarters in Tucson. According to the discussion from judges Pail Tang and Gray Cohen, in 2015 Pima County began discussing expanding WVE operations in Tucson. Through an independent study of the expansion project’s potential economic benefit, Pima County estimated the expansion would benefit $3.5 billion in 20 years and $10.7 million in tax revenues. The county also anticipated the development would, directly and indirectly, create 800 jobs that would generate an annual payroll of $38.7 million in the region.
Therefore, in 2016, the Pima County Board of Supervisors approved a Space Port Operating Agreement (SPOA) and lease-purchase agreement (LPA) to build an administrative and balloon manufacturing facility on a 12-acre, county-owned parcel and lease it to WVC 20 years. Under the LPA, WVE was required to insure, maintain, and pay rent for the facility but could purchase it for $10 at the end of the term. Similarly, the SPOA entailed the county constructing a port next to the leased facility where high-altitude balloons could be launched, and WVE would run the port. In total, the county would borrow $15 million to construct the pad and facilities.
Enter the GI, which filed a lawsuit against Pima County in 2016 on behalf of county taxpayers to halt the project. The GI alleged that this agreement was a “$15 million gift and loan of taxpayer funds to a private entity” that violated the Arizona Constitution.
“Ordinary entrepreneurs starting new ventures have a difficult task ahead of them: they must find investors and convince them to support their projects,” according to the GI. “The picture is very different when the government acts like an investor. When bureaucrats make investment decisions, they don’t put their own money on the line—and they’re paid whether they make wise choices or foolish ones.”
Under the Arizona Constitution’s Gift Clause, a state, county, city, or other subdivision of the state cannot “loan its credits” to any individual, association, or corporation. The GI stated that when the government pays a private entity with taxpayer money, it must receive something of suitable value in return, but general economic benefits do not satisfy this rule.
The judges latched onto the $10 price tag put on the facilities once the lease is up.
“We find it difficult to believe that a facility with an approximate value of $14 million in 2036 [year lease ends] can fairly be exchanged for $10 without violating our constitutional proscription against subsidies or gifts to private entities,” Tang and Cohen said.
Joe Setyon, communications manager for the GI, told The Sun Times that Pima County could still appeal this case to the state supreme court, but it “seems well past time for Pima County officials to admit that this entire deal was both illegal and foolhardy.”
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Neil Jones is a reporter for The Arizona Sun Times and The Star News Network. Follow Neil on Twitter. Email tips to [email protected].
Photo “Pima County Courthouse” by Gillfoto. CC BY-SA 3.0.
