Robert L. Hale, Minot
On July 12, 2012, the North Dakota Supreme Court rendered Article X, Section 18 of the North Dakota constitution meaningless. The court found that between 1889 and 1990 every court and governmental entity in North Dakota had improperly interpreted this section of our state Constitution.
Justice Crothers, joined by the other four members of the Court, ruled that by statute or ordinance governmental entities can make meaningless the limitations on government established by the Constitution. In other words, by simply stating a government program, " is primarily for public purposes" Constitutional provisions, to the contrary, don't apply.
No longer, ruled the Court, does the constitutional prohibition on government providing loans, giving its credit or making donations (giving gifts of money or property) to any individual, association or corporation or subscribing to or become the owner of capital stock in any association or corporation apply.
Article X, Section 18 of the N.D. Constitution has a very clear history. Prior to statehood cities and towns were vying for railroads to come through their jurisdiction. In order to attract them they indebted their citizens to massive financial obligations; the outcome of these activities was municipal bankruptcy seriously harming the general welfare. Because of this Article X, Section 18 was adopted.
Justice Crothers hinged his decision, obliterating 123 years of constitutional law, making meaningless Article X, Section 18, by claiming giving away our money is a legitimate "enterprise."
Crothers quoted only part of the definition of enterprise stating, "We held the term "enterprise" means "a project or undertaking that is especially difficult, complicated, or risky, or a systematic purposeful activity." Crothers failed to read the entire definition of enterprise, the part that defines it as a "business organization". There is no business organization in the "business" of giving away money, particularly other people's money (i.e. taxpayer money).
By selectively redefining "enterprise", Crothers concluded that if governmental entities define their economic development schemes as an enterprise Article X, Section 18 does not apply. Now, taxpayers have no protection from government taxing them to give away our money to some of the wealthiest companies in America.
In 1990 the Magic Fund was established. It was North Dakota's first "economic development" sugar daddy, funded with North Dakota's the first local option sales tax. The legislature authorized the creation of these entities to give public money, credit and make loans to private entities. The Magic Fund's track record shows more than 85 percent of all of its "investments" went up in smoke. What happened was exactly what the writers of North Dakota's constitution intended to stop when they adopted Article X, Section 18.
With Crothers' decision the court has thrown open the flood gates for public entities to, give our credit, make donations of our tax dollars, make unsecured loans to individuals, associations or corporations and invest in stock. All that is required to avoid the prohibition of Article X, Section 18 is to claim it is "for the public benefit." Good intentions certainly; however we know what road is paved with such intentions.
Beware; this decision makes as much sense as Chief Justice Robert's decision regarding Obamacare. It is ironic both came in July the month of the Declaration of Independence. Both radically and dramatically change the limitations our constitutions placed on government to the detriment of every one of us.
The U.S. is more than $15 trillion in debt. The Magic Fund stopped "giving away tax dollars" when it went millions in debt. Be prepared for billions of dollars in state and local revenues to be consumed by these once prohibited government "investments."
I would like to believe rational people agree politicians are not capable of making good business investment decisions. Politicians should not be permitted to give away tax dollars to private businesses; the framers of our Constitution got that right. The "public interest" is best served when our tax burden is reduced.
North Dakota's Supreme Court has unfortunately made it more difficult for us to keep our own money, to make our own investments, and to take care of ourselves.