Gift Clause case is shunted by judge

A Carson City judge has dismissed on a technicality a lawsuit challenging as unconstitutional the governor’s so-called Catalyst Fund, which has doled out nearly $20 million in recent years to companies that promise to hire workers.

The suit was brought by Michael Little, owner of a company that converts recycled landscape trimmings into biomass, a renewable energy source. It claimed a $1.2 million handout to competitor SolarCity, which at the time installed solar panels on rooftop, violated the Gift Clause of the state Constitution, which prohibits the state donating or loaning money to any company. SolarCity has since pulled out of the state due to an adverse ruling by the Public Utilities Commission making that business unprofitable.

Little is represented by the Center for Justice and Constitutional Litigation (CJCL), a division of the Nevada Policy Research Institute.

The Nevada Appeal reports the judge dismissed the case because CJCL failed to add Clark County and SolarCity as parties to the case as he had instructed.

But CJCL attorney Joseph Becker told the judge SolarCity was not added because it has left the state. What happens next is unclear.

 

Plaintiff Michael Little

The Nevada Constitution specifically states: “The State shall not donate or loan money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation, except corporations formed for educational or charitable purposes.” Voters have three times rejected amendments that would have removed the Gift Clause.

 

Becker explained in an interview a year ago that CJCL is in the business of trying to set precedent that serves the public interest.

Gift clauses started appearing in state constitutions in the mid-1800s after state governments in the East invested heavily in private companies building infrastructure such as canals and railroads that went bust. The states of Indiana, Illinois and Michigan were bankrupted as a result.

“We needed a vote of the people to change the Constitution, which never happened, but now suddenly its OK for the state to do something that up until now, even they insisted, would take a constitutional amendment,” Becker said earlier.

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