BISMARCK (AP) - Critics of taxpayer subsidies for North Dakota businesses said they were pondering how to respond to two state Supreme Court rulings that declared the practice is legal, despite what foes said was clear language in the North Dakota Constitution to the contrary.
"Essentially the courts have said that part of the constitution doesn't matter," said Brett Narloch, director of the North Dakota Policy Council, a libertarian group that opposes business subsidies. "It is kind of taking up space."
Two possible responses are to launch an initiative campaign to change the constitution to explicitly ban taxpayer support for private ventures or ask lawmakers to approve restrictions, Narloch said. The GOP-controlled Legislature has generally not welcomed such proposals.
"We're going to have to fight this on a political front," Narloch said. "I think that's the message the court sent, was that this is a political matter."
Andy Peterson, president of the North Dakota Chamber of Commerce, said Monday he believed some taxpayer backing of business ventures should be acceptable "as long as there is a public purpose," such as redeveloping or sprucing up a city's downtown, "and there is some elected body that making these decisions."
"I do think cities need to have these kinds of tools available," Peterson said. "But you've got to have some reasonable limits on the whole thing. You can't just give the store away."
The Supreme Court ruled earlier this month in two separate cases that the state and local governments are allowed to run economic development and job creation programs if they promote the broad public good.
In the rulings, both of which were unanimous, the justices said critics of economic development programs were misinterpreting a constitutional provision that said state and local governments could not loan or donate money, extend credit or buy stock in private ventures "except for reasonable support of the poor."
The complete provision allows the state and local governments to "make internal improvements" and "engage in any industry, enterprise or business," the Supreme Court said in one ruling.
"Economic development programs are "an enterprise for a public purpose, (and) governmental entities engaged in that enterprise may extend credit, make loans or make donations in furtherance of those programs," Justice Daniel Crothers wrote in the decision.
Several western states have similar language in their constitutions, court filings say. In North Dakota, it was originally intended to block taxpayer subsidies for construction of new railroad lines in the early days of North Dakota's statehood.
The rulings were made in separate lawsuits filed by Curly Haugland, a Bismarck businessman, and Robert Hale, a Minot attorney and businessman. Hale was a leader of an initiative campaign to abolish North Dakota property taxes; it was defeated in June, with 77 percent of the voters rejecting the idea.
Haugland argued the city of Bismarck was abusing a program that subsidizes property development projects. Hale's lawsuit was aimed at programs run by the state Department of Commerce and the city of Minot that provide aid for business startups, expansions and other projects.
Hale argued that the state constitution required the state or local governments to operate the enterprises themselves to make them legal.
"There is a lack of accountability, preferential treatment and taking of taxpayer money and literally giving it away to corporations, including some of the wealthiest corporations in the world," Hale said.
Dustin Gawrylow, former director of the North Dakota Taxpayers Association and a critic of business subsidies, said opponents should consider proposing elimination of the constitution's language on restricting taxpayer support for business.
"If they're not going to go by the plain language that's there, then I guess the law needs to be changed, to accommodate what they are already doing," Gawrylow said. "By taking that approach, it will at least illustrate the absurdity of the way that they've gotten out of control."
Narloch said that approach would "take a lot of work, and it wouldn't change much." A constitutional amendment instead should try to limit public subsidies for businesses, he said.
"We would just have to find a way to make the language clearer," he said. "The problem is, we think it's pretty clear as it is now."