Friday, October 19, 2012

LOT could be unconstitutional


This fall the voters in the cities of Sun Valley, Ketchum and Hailey will be asked to vote on approving a new local-option tax of 1 percent to be used to fund a minimum-revenue guarantee to airlines serving the Hailey airport. 

Use of MRGs by small regional airports is designated to ensure a minimum level of air service if paying passengers do not produce the minimum revenue necessary to pay the airlines for the level of service provided.

This likely would be a joint MRG among Sun Valley and other local cities and the airlines serving Friedman Memorial Airport. The Sun Valley City Council voted on Aug. 21 to put the passing of a new 1 percent LOT before the voters, knowing that such a LOT could be unconstitutional under the Idaho Constitution.

In 1980, the Idaho Transportation Department asked the Attorney General’s Office whether any of Idaho’s political subdivisions, such as cities and counties, could provide local rail service assistance, in the form of grants or loans, to private railroad companies, if such assistance is determined to effectuate a broad public purpose and to be in the best interests of the citizens of the state. The attorney general’s conclusion basically said no. 

Article 8, Section 4 of the Idaho Constitution provides that no city or other political subdivision, “shall lend, or pledge the credit or faith thereof … to, or in aid of any individual, association or corporation. … ” And Article 12, Section 4, reads: “No county, town, city, or other municipal corporation, by vote of its citizens or otherwise, shall ever become a stockholder in any joint stock company, corporation or association whatever, or raise money for, or make donation or loan its credit to, or in aid of, any such company or association.” 

A subsequent Idaho AG opinion dated March 13, 2012, directly addresses the MRG contemplated in Sun Valley’s case and concludes that they “appear legally defensible provided care is taken in their consideration, drafting and adopting.” Being told a proposed agreement by the city of Sun Valley is only “legally defensible” is tantamount to saying that the courts “may” uphold it if they accept the city’s arguments. 

In my opinion, the city of Sun Valley voters should not approve the new 1 percent LOT MRG, especially in light of the above earlier opinion of the attorney general that the city could not make grants to a railroad (read “airline”). 

The legal costs to defend this new LOT could easily approach the hundreds of thousands of dollars the city has paid because of its recent forensic audits and employee issues. It may perhaps be good for the lawyers, but surely not for taxpayers and residents. 

John R. Monson is a resident of Sun Valley.

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