Judge Files Historic Lawsuit Against Corporate Subsidies

This morning, Robert Orr -- a former North Carolina Supreme Court justice and leader of the conservative North Carolina Institute for Constitutional Law -- filed a historic lawsuit seeking to block $225 million in subsidies awarded to Dell Inc. last year.

For those unfamiliar with the deal: last year Gov. Mike Easley (Dem) secretly pushed a major deal to recruit Dell to set up a manufacturing plant in the state. In a special session, the North Carolina legislature went along, awarding Dell tax breaks and other incentives that will cost the state $225 million over 15 years. Along with county and city subsidies for the plant, which may generate up to 6,000 jobs in hard-hit Forsyth County, the total price tag comes to over $242 million -- or roughly $120,000 per job.

But a growing coalition of advocates are questioning the deal and fighting to ensure such a give-away doesn't happen again. What makes Orr's lawsuit historic is that he is a well-known judge who is part of a conservative movement that opposes corporate subsidies because they violate principles of free interstate commerce enshrined by the constitution:

The North Carolina Institute for Constitutional Law is part of a network of groups seeking to bring lawsuits around the country in support of a ruling in the case of Cuno v. DaimlerChrysler. In 2004, a U.S. federal appeals court ruled in that case that Ohio's investment tax credit unconstitutionally discriminated against interstate commerce.

The Ohio decision does not apply in North Carolina, but the parties in the case are seeking review by the U.S. Supreme Court that anti-subsidy groups hope could set a precedent.

Progressives need allies like this. For decades, corporations have soaked billions of dollars from cash-strapped governments seeking to lure footloose companies to their areas. The corporate bidding game now costs state and local governments some $50 billion a year in deals that are often made in secret, and offer little protections for workers, the environment and the communities they move into.

For those interested in learning more about the dangerous game of corporate "recruitment" subsidies and how citizens can fight back, visit our friends at Good Jobs First. You can also check out this great book by GJF director Greg LeRoy, The Great American Jobs Scam.