In January, the Pima County Board of Supervisors voted to spend millions of taxpayer dollars to build a headquarters for a company called World View, which says it will bring jobs to the area by sending tourists on pricey, high-altitude weather balloon rides.
That plan isnβt just risky β itβs also illegal.
World View has never put a tourist in the air, and doesnβt have federal permission to try. More importantly, voters overwhelmingly rejected similar subsidies last November. But that didnβt stop county officials from negotiating a secret deal to give loans and handouts to the company.
Most Pima County taxpayers could never afford a ride in a World View balloon, which will cost $75,000 per ticket, about three times the average income per person in the area. But theyβll have to pay anyway, because it will take at least 15 years to pay off the debt that will build the facilities, and the county has no real recourse if the venture fails.
Space tourism is risky. New Mexicoβs βSpaceport Americaβ has cost taxpayers more than $200 million, yet it remains largely incomplete β and empty. Popular Mechanics recently called it a βghost town,β noting that the prosperity locals were promised is nowhere in sight.
Nevertheless, Pima County has fashioned a complex scheme to essentially mortgage county-owned buildings to fund World Viewβs new headquarters. All this adds $15 million in long-term debt to the countyβs balance sheet β which is already deeply in the red β and if the company defaults, the county will either lose its buildings or taxpayers will be forced to make up the difference.
World View will lease the property at below-market rent with an option to buy, but the county doesnβt expect any return on its investment until Year 18 of the 20-year plan. And though World View agreed to employ a certain number of people, thereβs nothing the county can do if it doesnβt β except cancel the contract, leaving it with an empty balloon pad on its hands.
Fortunately, the Arizona Constitution protects taxpayers against schemes like this. The Arizona Constitution makes it illegal for the county to βgive or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any ... corporation.β
These words were written a century ago, after lawmakers squandered countless dollars on railroad projects that increased public debt, encouraged backroom deals, and never brought benefits to the public. The Arizona Supreme Court explained in 1925 that counties exist for βpolitical and governmental, as aside from business purposes.β When governments use their powers to benefit businesses, the results are usually βso disastrous to the public that the wisdom and purpose of the constitutional provision ... is plain.β
For the same reason, Arizona statutes require fair and open competition when a county leases property or signs construction contracts. Instead of protecting taxpayers with an appraisal, an auction and competitive bidding, Pima County agreed to rush the project and sidestep these transparency requirements.
The Goldwater Institute has filed suit against Pima County to stop this wasteful plan.
The county says its plan will βcreate jobs.β Pima County deserves credit for trying to improve the economy, but thatβs a job for entrepreneurs who take risks with their own money and have real incentives to protect their investments. Government risks other peopleβs money and has less incentive to choose wisely. Thatβs what gets us government-created βghost towns.β
There are better ways to help. Lowering taxes and reducing regulatory burdens benefits all businesses, not just the politically connected few with the flashiest projects.
Taxpayer subsidies to businesses encourage backroom deals that benefit the politically connected and leave taxpayers with the short end of the stick. Thatβs why Arizona banned public subsidies 100 years ago.
Itβs time Pima County got the memo.
