A Constitutional Body Blow

The constitutional rights of North Carolina citizens took a full body blow yesterday with the Court of Appeals decision in the Dell incentives case. While an adverse ruling was not unexpected, the flawed reasoning of the three judge panel sends a chilling message about just how little taxpayers can rely on the courts to protect their rights guaranteed by the N.C. Constitution.

Without launching into a legal dissertation let me try and summarize what the ruling means. One constitutional theory was that the subsidies to Dell did not conform to the uniformity requirements of the Constitution. The Court said that the taxpayers had no standing...in other words no right to even challenge that use of tax dollars. The reasoning was that they were not in the class potentially injured by the alleged violation. The bottom line is that virtually no one, other than perhaps another giant computer manufacturer, could challenge the subsidy. And since that would never happen, then the government has a free pass on handing out money to individual companies without fearing a challenge to the uniformity of the grant.

Secondly, the Court said that the long standing second part of the test to decide whether a tax expenditure was for a public purpose as required by the Constitution, was met as a matter of law, as long as government said it was for a public purpose. The court held that the trial court didn't need to conduct an inquiry based upon evidence that the $300 million subsidy to Dell benefitted Dell primarily rather than the public. Since the General Assembly and the local governments said their intent was to benefit the public, that's all it took and the taxpayers could forget the opportunity to show otherwise at trial.

There were other aspects of the ruling but those two particularly make the point that the court is simply going to let government do whatever it wants when it comes to so-called economic development. The limitations placed on government by our state constitution have been virtually eliminated by this opinion. It's now fully open season on spending your tax dollars by handing out grants and breaks to the favored major corporations. The governments and big business PR machine can crank it up even further because there's nothing out there to stop them. That is unless the Supreme Court ultimately reviews the case and puts some constitutional limitations on the practice or unless the voters decide they've finally had a enough and elect candidates who are willing to step up and limit the practice.