Arizona’s Landmark ‘Bailout’ Battle
6th June 2009
Arizona’s founders banned gifts to private companies as the result of bitter experience. In the closing decades of the 19th century, local governments borrowed money to force-feed private railroad development. Pima County outside of Tucson, for example, took out $300,000 in bonds in 1882 for a railroad that promised to build some 100 miles of track. The money was spent but the railroad dissolved after a mere 10 miles of track was constructed. The bonds were worthless, but taxpayers were still on the hook for the money.
This time around it’s shopping malls and the like, and the preferred subsidy is tax rebates rather than bonds. But the result is the same. Local governments are foisting the cost of private development onto taxpayers as private companies promise that with just a few tax dollars they will create a wealth of new jobs.