A ruse to expand debt, promote corporate welfare

By Christopher Cole
Charlotte

If the state General Assembly recommended a constitutional amendment to expand state debt or to promote corporate welfare, such a proposal would probably die before it even reached the ballot box. That's why legislators chose to seek the same ends, while simply calling it Amendment One, a completely innocuous, non-threatening, bland and highly deceptive title.

Amendment One would allow local municipalities to use "self-financing bonds." These are simply government-issued bonds that don't require voter approval. They are used in several states to finance economic development, with the bonds paid from the resulting property taxes, rather than as a general obligation of the issuing government unit.

This isn't a new idea. North Carolina politicians try to slip similar schemes past the voters every 10 years or so. The last time this idea was defeated in a statewide referendum in 1993, it was called "tax increment financing." Obviously, no respectable politician wants to go on record in favor of taxes, so they changed the name to self-financing bonds.

Whatever it's called, it was bad idea then (and in the previous referendum in 1982) and it is a bad idea now.

Voters won't even be able to read the text of the actual amendment on the ballot. What they will read is a self-serving description that calls it a constitutional amendment to "promote local economic and community development projects."

This is simply an expansion of corporate welfare. Not only would new businesses demand self-financing bonds to finance their investments, but they would also hold the public budget hostage to their continuing success.

Why should taxpayers underwrite corporate expansion and profits? This proposal will put a corporate gun to local officials. "Give us subsidies, or we'll stick you with useless bonds," businesses will say. It will be a disaster for local government and it will make inefficient businesses into parasites on productive companies.

Then there's the dirty little secret no Amendment One proponent will admit: There are inevitable tax increases hidden behind supposed limited debt.

As some of the subsidized businesses fail, the property tax income will dry up, leaving the self-financing bonds as a general obligation on the local budget. In addition, the tax burden on neighbors of such businesses will necessarily increase, as the burden increases on roads, police, fire and other public services, while the increased tax income disappears down the self-financing bond money pit.

Let businesses bear their own risks and let them contribute to the tax base just like their neighbors. North Carolina voters should say no to corporate welfare, decreased accountability of government and increasing taxes. Vote no on Amendment One.

Christopher Cole is the Libertarian candidate for lieutenant governor.

Copyright 2004 The Fayetteville (N.C.) Observer (http://www.fayettevillenc.com)