Use by state and local governments of tax dollars to reward special interests is a longstanding plague on the health of our public finances. But it was not always so. Indeed, early in the 19th century, American taxpayers demanded elected politicians cure their sickness by erecting a wall of separation between government and private business.
That wall came in the form of a gift clause, which prohibits public subsidies to private interests. Gift clauses, still in force in 47 states, reduce government waste and give taxpayers faith their dollars are at least committed to public purposes. Courts have weakened state bans on gifts to private entities, but the clauses remain effective ways by which to fight spending.
The gift clause is back in the news in Arizona, where the Goldwater Institute, a free-market think tank in Phoenix, has spearheaded an effort to force the state to end the practice of union “official time” (also known as release time) which permits government employees to perform union business unrelated to their civic duties on the taxpayers dime. Goldwater has gone to court to highlight the question of whether the public derives any benefit from union release time.
So far, the good guys are winning. Recently, the Maricopa County Superior Court struck down for a second time the union official time provisions agreed upon in the Memorandum of Understand (2012-2014) between the City of Phoenix and the Police Law Enforcement Association.
The court ruled the provisions are unlawful under Arizonas Gift Clause, which states that no state or local government agency shall make any donation or grant, by subsidy or otherwise, to any individual, association or corporation. In determining whether public funds aiding private interests violate the Arizona Gift Clause, both components of a two-part analysis must be satisfied:
- The expenditures of public funds must promote a public purpose
- There must be adequacy of consideration public entity must receive proportionate, quantifiable and direct benefit for the aid given
As to the public purpose question, in her April 23 decision, Judge Katherine Cooper stated, official time does not advance a public purpose. It diverts resources away from the mission of the Phoenix Police Department, which is the safety of the community. Further, the benefits of release time are exclusive to police employees and used to protect their interests. Activity performed by PLEA officials on official time includes providing representation for disciplinary or grievance hearings, lobbying advocating for better pay and engaging in local and national politics. In the decision, the court established PLEA uses release time to do what it exists to do to advance the interests of its members. Union release time does not meet either part of the Gift Clause analysis. To provide sufficient consideration under the Gift Clause, the private entity must promise to provide fair-market value in return for the public aid. In addition, the consideration has to be direct and quantifiable.
The labor contract between PLEA and the City of Phoenix does not require the union to perform any service in return for the $1.7 million of official time over the two-year contract. Specifically, the contract authorizes six full-time paid PLEA positions, a bank of approximately 1,900 hours for PLEA business, nearly 1,000 hours of paid overtime for the full-time positions and 500 hours for a PLEA lobbyist.
Further, Judge Cooper found the absence of any transparency or accountability governing release time makes it impractical to quantify whether the city receives any value for the subsidy. Even PLEAs own expert witness admitted no mechanism exists to quantify or estimate the value of benefits of release time that supposedly accrue to the city. Thats because union official time clearly is an illegitimate subsidy to labor unions with no redeeming value to the public.
Now it is up to residents in other states to take action. Union release time is found in almost every state, but – fortunately – so is the Gift Clause. Citizens everywhere should follow Arizona’s example and challenge the practice of official time to re-establish public control over the public purse.