One of the fundamental principles of popular government is that the power of taxation and the expenditure of taxes shall not be exercised for private benefit or for gratuities to private interests.
Iowa’s founders recognized this principle when they required that, for any payment or promise of public funds, there had to be a defined public benefit.
Senate File 390 (a companion bill to House File 561, which has passed the House) violates this fundamental principle and for that reason, alone, should not be enacted into law.
SF 390 sets forth an unprecedented scheme for transferring private citizen money and public taxpayer funds to MidAmerican Energy Co., a privately owned utility corporation, for the purpose of subsidizing the possible construction of one or more nuclear-power plants of indeterminate sizes, of undefined costs, at undisclosed locations, and at some indefinite time(s) in the future — if at all.
The funding would come from so-called "riders" that would be assessed on a monthly basis on the bills of each utility customer served by MidAmerican for as long as its owners aspire to build a nuclear-power plant— whether that customer be a private residence or business, a state, county or municipal government or agency, a local school district or community college.
Remarkably, should MidAmerican be prohibited by regulators from building, or should its owners simply choose not to build, any of the nuclear-power plants funded by taxpayers and ratepayers, the surcharges would be non-refundable, and no ratepayers or taxpayers would have legal recourse to get any of their money back.
In short, the bill proposes transferring private property from citizens and governmental agencies to a privately owned corporation for no proven or defined public benefit or purpose. Such a scheme palpably violates several separate provisions of the Iowa Constitution. Article III, Section 31, of that document states, in relevant part, as follows:
"[N]o public money or property shall be appropriated for local or private purposes, unless such appropriation, compensation, or claim, be allowed by two thirds of the members elected to each branch of the general assembly."
SF 390, if passed into law, would place at even more serious Constitutional risk all of Iowa’s governmental jurisdictions that are located in MidAmerican’s service territories. All of those jurisdictions use taxpayer money to pay their utility bills. And, as a result, the elected leaders of all of those local governments would be required to draw upon taxpayer funds to pay surcharges for the unenforceable nuclear dreams of this utility company’s managers (thereby effectively charging taxpayers who are also MidAmerican customers twice for these surcharges).
However, unlike the provisions of Article III, Section 31, which provide the Iowa General Assembly with a way of bypassing the proviso’s emphatic prohibition against using public funds for private purposes (with a two-thirds vote in both chambers every year), elected leaders of local jurisdictions have no such Constitutional fail-safe routes. By following the mandates of the new law, local office holders whose jurisdictions reside in MidAmerican’s electrical-service territory will be forced to violate Iowa’s Constitution.
While facing the political pressures from Iowa’s utility-industry lobbyists, state senators ought to reflect upon the hard-earned wisdom of our forefathers and deny MidAmerican’s unconstitutional proposal to finance this corporation’s ventures.
Jim Larew is an attorney at Larew Law Office in Iowa City.
