The best friend most North Carolina taxpayers don't realize they have poured himself a glass of wine Tuesday night and eased onto his sofa.
Bob Orr, a former chief justice of the N.C. Supreme Court, Republican candidate for governor and honest-to-God fiscal conservative, had just absorbed two legal gut punches, and it was nearly too much to take in one day.
While Orr was unsuccessfully trying to convince a Superior Court judge in Wake County that it is wrong for the state to give public subsidies to a private culinary school in Charlotte, the N.C. Court of Appeals was ruling that taxpayers have no right to question $90 million in exemptions from the state's retail sales and use tax that state officials handed to Google to open a plant in Caldwell County.
"The gate to the treasury is wide open now," Orr said. "I just don't understand why the public isn't up in arms. The way this is going, the government is going to end up broke or taxing everybody into poverty."
Dose of reality
The easy answer to Orr's question is that most of us either don't know or don't care how much of their money politicians spend, or how it gets spent.
Article V, section 2 (1) of the state constitution seems clear enough: "The power of taxation shall be exercised in a just and equitable manner, for public purposes only, and shall never be surrendered, suspended, or contracted away."
The courts have decided -- most notably in a lawsuit filed by the N.C. Institute for Constitutional Law against the roughly $300 million that state and local governments were willing to toss at Dell Inc. -- that incentives have a public purpose in terms of economic development.
Politicians use a more simple argument to support corporate welfare. Theirs goes something like this: But Mom-my, everybody else jumped off the bridge, so we should, too.
In its ruling in the Google case, the appeals court said that the citizens who sued can't do so because they weren't hurt by the tax exemptions. Allowing one company to pay less in taxes, the court said, doesn't cause others to pay more.
What Orr and others at the institute would like to be able to do is argue in court whether any tangible benefits actually result from incentives.
Orr's position would seem to be supported by the $23.4 million in incentive-reimbursement checks issued by Dell to Winston-Salem and Forsyth County shortly after the computer-maker announced last fall, barely four years after opening, that it would close its plant on Union Cross Road. Just like that, hundreds of people lost the jobs that were supposed to be a long-term salvation for the region.
"I'm not one who easily gives up ... but I'm enough of a realist to know that if the courts shut down every avenue of legal challenge, how productive is it to keep pounding the issue?" Orr said.
Where's ours?
The real stick-in-the-eye was a decision by Judge Michael Morgan of Wake Superior Court to toss out a legal challenge to the $10 million appropriated by the legislature in 2003 to the Johnson & Wales University campus in Charlotte. That little scheme was cooked up by former Speaker of the House Jim Black, the crook from Mecklenburg County who is doing federal prison time now.
$10 million for a private cooking school in Charlotte? You want fries with that?
"Johnson & Wales didn't have to commit to create any jobs, and there are no clawbacks," Orr said, referring to provisions in incentive agreements that allow governments to attempt to get money, a la Dell, back if things don't turn out as rosy as promised.
Morgan decided that the $10 million had a public purpose -- education and economic development -- and therefore those who dared question government spending should instead just lie there and take it. Call it an unintended consequence, but here's the thing: If Johnson & Wales can get a $10 million appropriation, what's stopping other private colleges and universities from saying, "Where's ours? We provide educational benefits and jobs, too."
"In light of Johnson & Wales, Salem College and Wake Forest, every one of them, ought to be pounding on the doors of their legislators and city officials demanding their share," Orr said.
ssexton@wsjournal.com
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