Court Opinion

ID: 9654966
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:56:35.340293+00
Date Added: 2024-06-11T18:13:15.091718
License: Public Domain

LEIBSON, Justice,
dissenting.
Respectfully, I dissent.
One can only hope that in the future this case will be viewed as a fact specific legal aberration, and not a precedent; a decision that our Court was not prepared to hold that the Toyota project offended the Constitution, and nothing more.
If this case becomes a precedent in future cases, it will be a watershed opinion in constitutional law, confirmation that so long as the Governor and General Assembly perceive the need, there are no constitutional restraints on the power of state government to raise and spend money for the benefit of a private business. Although the economic activity generated by Toyota will, hopefully, confer a public benefit as an incident to carrying out its private purpose, Toyota will perform no function of government. Its future contribution to the general welfare, if any, will be only indirect in the same sense that the public benefits more or less from the economic activity generated by every successful private business, the by-products of which are taxes, employment and a general increase in the level of economic activity.
The General Assembly has enacted SB 361 as enabling legislation behind one part of the Toyota Project, the agreement to convey to Toyota cost free a 1,600 acre project site in Scott County, Kentucky. The sum needed to acquire and develop this project will be generated by a bond issue from the State Property and Buildings Commission. The money to pay the debt service on these bonds, principal and interest, will be provided for by appropriations from the general funds of the Commonwealth, raised through taxation, and will flow through to the State Property and Buildings Commission as an expense item in the biennial budget of the Commerce Cabinet. SB 361 designates these bonds as “revenue bonds” and designates the appropriations needed by the Commerce Cabinet to pay the debt service on these bonds as “rent.” There is no explanation, and indeed no way to understand, what is being “rented.” The “rent” is deemed in SB 361 *806as generated by the “incremental tax” benefits to the Commonwealth which are anticipated from Toyota’s location in Kentucky. The legislation is scripted in this jargon to avoid constitutional limitations on the power of the General Assembly to contract debt. Unfortunately, the question is not whether the terminology applies to concepts which have passed constitutional scrutiny in previous cases, but whether the terminology is appropriate for this case.
In Fannin v. Williams, Ky., 655 S.W.2d 480 (1988), we recognize that it is the substance of the legislation that determines constitutionality, not the label. Legislative incantation, no matter how clever, in itself cannot change the result:
“We cannot sell the people of Kentucky a mule and call it a horse, even if we believe the public needs a mule.” Id. at 484.
Ky. Const. §§ 49 and 50 describe limitations on the General Assembly’s power to contract debts which foreclose the present legislation unless the financing scheme presented can avoid being classified as a debt contracted on behalf of the Commonwealth. Ky. Const. §§ 3 and 171 foreclose payment of public money to or for the benefit of a private individual or corporation except in consideration of public services and also provide that taxes shall be levied and collected only for public purposes. Ky. Const. § 177 forbids gift, pledge or loan of the credit of the Commonwealth to any individual, company or corporation, and also forbids the Commonwealth from making a donation to any private individual or corporation. It is the substance of these various constitutional fiscal restraints which are violated, and the labels should not change the results.
In Commonwealth v. O’Harrah, Ky., 262 S.W.2d 385, 389 (1953), when faced with a statute that violated the terms of the constitution although arguably of great public benefit, we said:
“Constitutional provisions, ... are to be enforced according to their letter and spirit, and cannot be evaded by any legislation which, though not in terms trespassing on the letter, yet in substance and effect destroy the grant or limitation.”
We stated that we “may not countenance an evasion ... of our fundamental law” no matter how popular the decision would be. Id.
We have succumbed to powerful nonjudicial arguments advanced to uphold this legislation in the face of the constitutional challenge. The proponents of SB 361 and the Toyota Agreement urge that we “breathe life” into the 1891 Kentucky Constitution. The benefits to our state to be derived from economic development and job opportunities are represented to us as so great that the constitution must be judicially amended to accommodate the present financing arrangements. It is represented that since construction at the job site is already underway, this project is a fait accompli, and the consequences that will flow from declaring this Act unconstitutional are so grave, we have no choice but to go along. Pressure on the judiciary to find some way around the constitution in the name of political expediency has proved to be overwhelming.
But in my view the Governor, Toyota and the General Assembly should be presumed to have acted with their eyes wide open to the fact that the constitutionality of their financial arrangements was subject to judicial review. Indeed, it is clear from the terminology utilized in both their agreement and in the legislation, terminology carefully crafted from previous decisions of our Court deciding on the constitutionality of past bond issues, that the Governor, Toyota, and the General Assembly understood from the outset that their agreement and the legislation was contingent upon constitutional scrutiny.
If the language of the Constitution is to be rewritten, it should be done by constitutional amendment, by vote of ,the people, and not as a matter of judicial expediency. Where the words and meaning of the constitution are reasonably in doubt, we can *807think in terms of contemporaneous construction. But when called upon to approve a transparent evasion of the plain meaning of the constitutional provisions, we should do so without regard to whether the decision will be unpopular. In Fannin v. Williams, supra, we were faced with the onerous duty of declaring unconstitutional a statute supplying text books in the state’s nonpublic schools. We stated:
“The people of Kentucky specified by the language of the Constitution in terms that are clear and unmistakable that the type of expenditure authorized by the statute in question should be unconstitutional. If the people of Kentucky wish to change their position in this matter, it is their right to do so.
... Section 184 of the Kentucky Constitution provides that public money can be expended for education other than in common schools when a majority of the legal voters approve the expenditure by public referendum. [A provision not unlike that for bond issues in § 50.] If the legislature thinks the people of Kentucky want this change, they should place the matter on the ballot.” 655 S.W.2d at 484.
In this dissenting opinion I will take up those constitutional provisions, previously cited, which are in direct conflict with the legislation and financing arrangements. Broadly grouped, there are three: (1) § 49 and 50; (2) §§ 177; and (3) §§ 3 and 171. These provisions are overlapping and interlocking in character. The proponents of the Toyota Agreement and SB 361 have urged us to accept language isolated from past opinions to allow the new legislation to escape one or the other of the various constitutional provisions at issue, disregarding the fact that arguments used to avoid one or the other of these constitutional provisions serve only to trigger another. There is no doubt but that this was done by the Constitutional Convention of 1890 by design to frustrate such evasion. See McGuffey v. Hall, Ky., 557 S.W.2d 401, 411 (1977); Official Report of the Proceedings and Debates in the Convention Assembled at Frankfort, On the Eighth Day of September, 1890, to Adopt, Amend or Change the Constitution of the State of Kentucky, 4 Volumes (hereinafter referred to as Constitutional Convention of 1890).
I. KENTUCKY CONSTITUTION §§ 49 AND 50
Ky. Const. §§ 49 and 50 provide limitations on the power of the General Assembly to contract debt. § 49 provides a $500,-000 limitation on the amount of such debt. § 50 provides that no debt shall be incurred in excess of the limitations provided in § 49 unless the enabling legislation provides for the debt to be paid off through a bond issue that “shall have been submitted to the people at a general election, and shall have received a majority of all the votes cast.”
Because of these two sections, the General Assembly has been unable to enact legislation financing public projects payable by general obligation bonds without a vote of the people. To avoid these limitations the General Assembly has developed a financing arrangement characterized as a “revenue” bond, a type of funding which, when applicable, does not add to the debts of the Commonwealth. SB 361 was enacted as theoretically complying with the revenue bond concept. Until now this revenue bond concept has encompassed the following features:
1) The legislation creates a public agency such as the Turnpike Authority, or designates an existing one, such as the State Property and Buildings Commission, to be entrusted with title to the project and the obligation to pay for it. Thus the Commonwealth is removed from a constitutionally untenable position of borrowing money to pay for the project.
2) The legislation then authorizes this public agency to issue “revenue bonds” to pay the cost of the project. The “revenue” that will be generated by the use of the project after completion will be used to pay off the bonds.
*8083) The executive department of state government which utilizes the project then pays “rent” to the public agency which has issued the bonds and which ostensibly holds title to the project.
4) The department of state government is provided the money to pay the “rent” by treating the “rent” as a current expense, a cost of doing business covered in the biennial appropriation to the department along with other ongoing, routine expenses necessary to operate the department. Technically, future sessions of the General Assembly are not legally obligated to appropriate money to pay off the debt service on the bond issue.
Through this device the debt service for the project avoids being accounted for as payment of an outstanding obligation against the public treasury. Otherwise the financing scheme would violate §§ 49 and 50 because it would qualify as a debt that requires raising additional tax money. The proponents of the Toyota legislation conceded at oral argument that this bond issue did not meet the criteria of the revenue bond concept, arguing instead that these fiscal restrictions of the constitution were outdated and should be expanded by judicial fiat. Although we do not acknowledge it, we have acceded to that demand.
The development of the concept of revenue bonds as a device to avoid §§ 49 and 50 can be traced through a series of significant cases starting with J.D. Van Hooser & Co. v. University of Kentucky., 262 Ky. 581, 90 S.W.2d 1029 (1936) and culminating in Blythe v. Transportation Cabinet of Com., Ky., 660 S.W.2d 668 (1983).
In J.D. Van Hooser & Co., the General Assembly authorized state educational institutions to construct and finance necessary buildings through the issuance of revenue bonds. We held that the proposed bond issue did not violate the Constitution because the “bonds authorized by the act are payable only from the income and revenues to be derived from the operation of the buildings, and no obligation to pay the bonds or the interest thereon is assumed by the Commonwealth.” Id. 90 S.W.2d at 1031.
In Preston v. Clements, 313 Ky. 479, 232 S.W.2d 85 (1950), the revenue bond concept was expanded to cover construction and financing of the Capitol Annex office building. The revenue supposedly generated to pay off the bonds was derived from “rentals or operation of the building.” Presumably the state offices occupying the building would have to be paying rent somewhere, so our Court agreed to view this arrangement as payment of current operating expense.
The concept was further expanded in Turnpike Authority of Ky. v. Wall, Ky., 336 S.W.2d 551 (1960), which permitted a bond issue based on the concept of revenues derived from the operation of state toll roads and additional motor fuel taxes which would be generated by the new toll roads. The funds were segregated and pledged for the payment of rent to pay off the bonds, although as a practical matter the anticipated funds probably would be insufficient to cover the total cost.
The latest expansion of the revenue bond concept came in Blythe v. Transportation Cabinet, Ky., 660 S.W.2d 668 (1983). In Blythe we approved legislation providing for revenue bonds to cover economic development road projects which would be “secured” solely by income and revenue derived from the leasing of any such project to the Department of Transportation, with no tolls to be imposed. However, in Blythe as in Wall the Turnpike Authority, the agency issuing the bonds, had possession of the roads and thus something to lease for which “rent” can be expected. In Blythe we incorporated by reference preexisting Turnpike Authority statutes into the Economic Development Road Project Act. This was important to the decision because in the preexisting statutes the Department of Transportation was authorized to agree to provide rental income to amortize any bond coming under the Turnpike Authority statutes through pledged motor fuel taxes. Thus, by a rather circuitous route, we gave *809the bonds the status of revenue bonds and avoided the present situation where there is no identifiable source for the concept of “rentals” except general tax revenues.
The Blythe case stretches the concept of “revenue” bonds supported by the payment of “rent” to the maximum. The further expansion in this case creates an unacceptable judicial credibility gap and a loss of integrity.
In Dalton v. State Property and Buildings Commission, Ky., 304 S.W.2d 342, 352 (1957), we defined revenue bonds as follows:
“The term ‘revenue bonds’ is a descriptive qualification indicating that the instruments are payable solely from a revenue producing public project.”
The bond issue must fit this definition to avoid conflict with the constitution. SB 361 exceeds any reasonable application of this definition. It authorizes the Commerce Cabinet to initiate industrial development projects and to finance those “projects” through “revenue bonds” issued by the Property and Buildings Commission. But the Toyota Project Site is not a “public project.” Id. SB 361 permits, and the Toyota Agreement provides for, the immediate conveyance of the project site to the “Industrial Entity” which is to own and occupy the project. The Industrial Entity (Toyota) that is to occupy the project pays no “revenue” now or in the future, no tangible renumeration to cover the cost of the project site which is conveyed to it. Instead, the Commerce Cabinet will pay the “rent” to pay off the project, but it will neither occupy nor utilize the project in any meaningful sense connected directly with carrying on the activities of the department. The “rent” paid by the Commerce Cabinet will come from future biennial appropriations which SB 361 provides for automatically; the General Assembly would have to legislate to terminate payment of this debt service.
Never before has the revenue bond concept been called upon to cover a project which cannot be described as owned by or in possession of the public agency issuing the bonds until the bonds are paid, and never before has the revenue bond concept been applied where the project did not provide an ongoing service of the kind usually provided by an agency of government. Making motor vehicles does not so qualify.
The requirement for “revenue” generated to cover the cost of the project is addressed in SB 361 through a device designated “incremental taxes.” Under SB 361 the concept of “incremental taxes” means the additional state tax revenue which the state anticipates will flow from the location of this new profit making enterprise within the Commonwealth. These “incremental taxes” are deemed sufficient to satisfy the requirement of “rent,” but the Commerce Cabinet which is making the rent payments to provide for the debt service has no further connection with the project once it has been approved other than providing the money to pay off the debt.
The concept of incremental taxes as set up in SB 361 means taking taxes that are being paid today within certain specified categories, then comparing this with taxes collected in future years, and classifying any future increase that occurs in tax collections as “incremental taxes” to be attributed to the location of Toyota in Kentucky by legislative mandate. To the extent that the legislation includes taxes paid by Toyota in this total, Toyota is given a double credit for its tax payments: first satisfying current tax obligations and next applying the same taxes towards the “rent” required for the issuance of revenue bonds. This concept violates the constitutional prohibition against the grant of “exclusive, separate public emoluments or privileges” found in the Ky. Const., § 3, for reasons that we will later discuss. For present purposes it is enough to say that it fails to make a general obligation bond into a revenue bond.
To the extent that the legislation gives credit to Toyota for any increase in the tax revenues received from other Kentucky taxpayers, we are engaged in recognizing *810as fact the fiction that Toyota is a public facility carrying on the business of the Commerce Cabinet. We should' not make this leap in logic. Toyota is a private business engaged in a profit making enterprise. It does not conduct its operation in order to carry on the functions of the Commerce Department except in a remote sense that applies to all privately conducted commercial activity.
Past state bond issues which we have approved as not offending Ky. Const. §§ 49 and 50 were bonds financing state owned, state operated projects, projects that carry out functions performed by the state, and thus the biennial appropriation of tax money from the state treasury to an operating department of state government qualified as “rent” to cover current operating expenses of the department. We cannot stretch the incidental public benefits from Toyota’s profit making enterprise to fit this “rent” scenario without doing violence to the Constitution. These bonds cannot qualify as “revenue” bonds. Their proponents admitted as much at oral argument, arguing that we should redefine the concept by stretching it to cover any project that serves a public purpose.
Ky. Const. § 50 provides that the limitation on the state’s ability to acquire new debt cannot be exceeded without a vote of the people. The effect of our decision is to hold that these bonds are not bonds, that the money that is being used to pay off these bonds is not tax money but new money, and that the annual budgetary appropriation to pay off these bonds is being used to pay current operating expenses of the Commerce Department.
Although the majority opinion implies otherwise, all previous bond issues upheld by our Court provide some security for the bondholders other than the bare promise of the Commonwealth to seek payment in budgetary appropriations from the general fund. If nothing else, the continued existence of the public project which was paid for by the bond issue can be viewed as fulfilling the function of providing a type of security for the bonds. But here the Project is conveyed to Toyota, and the continued existence of the project is not guaranteed. So, if we are to assume that the current bond issue does no more than promise the bondholders that the Commerce Cabinet will seek future appropriations to pay debt service as a current operating expense, there is no security of any kind for the bonds. There is no credible explanation that our Court can offer in this case to explain away the constitutional limitations in §§ 49 and 50 prohibiting the present financial arrangements.
There are other significant problems with regard to the concept of “incremental taxes” as defined in SB 361(7). To name some of them: the definition in SB 361 fails to take into account the extent to which taxes may increase from economic growth unrelated to Toyota; the taxes are not generated by a publicly operated facility, as with toll roads, but by a privately operated facility which can be closed; Toyota has no obligation so long as it retains any portion of the premises, however small. One must conclude that the concept of “incremental taxes” as used in this case is a “first” for our state and quite probably for any state.
Reluctantly, I conclude that the present financial arrangements violate §§ 49 and 50 of the Kentucky Constitution.
II. KENTUCKY CONSTITUTION § 177
The pertinent language of § 177 specifies that the “credit of the Commonwealth shall not be given, pledged or loaned to any individual, company, corporation or association ... nor shall the Commonwealth ... make donation to, any company, association or corporation....”
The proposal for financing the Toyota industrial development project and for conveyance of the Toyota Project Site is either a lending of the Commonwealth’s credit or a donation to a private corporation. If we accept the premise that the transfer of the 1,600 acre site for the Toyota plant is not a “donation” to a private corporation, then *811we are at once impaled upon the constitutional prohibition against the “lending” of the Commonwealth’s credit to a private corporation, and vice versa.
A. A Lending of Credit
The present legislation offers as the reason this transfer is not a donation that it will be paid for by incremental taxes. But if we accept the proposition that Toyota is going to pay for the property through future taxes, the state has surely lent the money in the meantime.
It is a lending of credit because, as stated in the previous section, technically there is supposed to be no other security for the bondholders except the state’s promise to provide for payment of debt service in biennial appropriations from the general fund. For each two-year period, as well as future periods, it is the credit of the Commonwealth, and nothing else, to which the bondholder must look for payment. The bond issuer, State Property and Buildings Commission, has neither proprietary nor possessory interest in the project or the project site. Thus, unlike previous bond issues, the issuing agency, the State Property and Buildings Commission, is a mere conduit, but not a stakeholder.
Toyota Corporation is the stakeholder but it has no obligation to generate funds for bond service; not even an obligation to generate “incremental taxes.” If it fails to generate incremental taxes, Toyota has no obligation unless and until it elects to convey the entire project site to some third party. At that time, for the first time, it will be required to make up the calculable difference, if any, between the total of incremental tax revenues accruing since the time the property was conveyed to Toyota and the agreed $35,000,000 value of the property. This hypothetical contingent liability supplies no security for the bonds. The reasonable expectation that the Commonwealth will see to the payment of the bonds is the only security, or there is no security.
In past cases there has been, theoretically, a state owned project generating an identified source of revenue to pay off the bonds, even though appropriations from the state treasury provide the debt service. Here, the Act provides no source of revenue for the money that will be used to repay the bonded indebtedness. For debt service purposes it is irrelevant whether incremental taxes are ever collected. The obligation to pay the bonds has no connection to the incremental taxes which the state hopes to generate by the Toyota Project. The incremental taxes are not even credited against the “rent.” The Commonwealth’s credit is all that stands behind the bonds.
There is no escape from the fact that SB 361 and the Finance Agreement between the Commerce Cabinet and the State Property and Buildings Commission represent to the buying public that the state has arranged to pay the debt service on the bonds from the general fund. This representation is either a lending of the state’s credit or a misrepresentation, and we will not designate it the latter.
In McGuffey v. Hall, Ky., 557 S.W.2d 401 (1977), we declared unconstitutional an arrangement whereby the state established a Claimant’s Compensation Fund to pay medical negligence claims against private health care providers. Although payment of claims would be funded entirely by assessments against members of the fund, because the enabling legislation provided that state money could be temporarily advanced, if necessary, if a shortage should occur in the money available in the fund to pay claims, we held this was an unconstitutional pledge of the state’s credit. We held that the prohibition against the pledge of “credit” aspect of Constitution § 177 does not hinge on whether the legislation achieves a “public purpose” when the pledge benefits private individuals. The legislation was written to achieve the availability of medical care, a public purpose comparable to promoting employment which is the avowed purpose of SB 361. In McGuffey v. Hall, we said:
“It [§ 177] is a ‘clincher,’ making certain that if perchance some court might hold *812a contingent or secondary liability not to be a ‘debt’ under Const. § 50, it would nevertheless fall under the interdict of Const. § 177.” Id. at 411.
In the present situation where the entire project will be owned by a private corporation, the constitutional prohibition against pledging the state’s credit for the benefit of a private corporation is not avoided by the budget appropriation device, because the only security for payments on the bonds for the current biennium, as well as in futuro, is the state’s credit. As we held in McGuffey, although § 177 does not prohibit using the state’s credit to back the financial integrity of one of its own agencies, it prohibits legislation to do so for any private person, even temporarily, and even though it serves a public purpose.
I have already discussed why the future incremental tax concept in SB 361 does not satisfy any payment obligation on Toyota’s part. But if we adopt the opposite premise, then the fact that conveyance occurs at the inception of the financing triggers the prohibition against temporary lending of credit to a private individual or corporation as declared unconstitutional in McGuffey v. Hall, supra. Any way one chooses to view the matter, the incremental tax concept does not suffice to circumvent § 177.
B. A Donation
Because the prospect of incremental taxes is not payment in any direct sense of the word, the conveyance of the Project Site is a “donation” to a private corporation prohibited by § 177. Toyota’s obligation to pay taxes in the future is no more than the obligation of every taxpayer. And the payment of future taxes by persons other than Toyota cannot qualify as payment on behalf of Toyota.
Likewise, Toyota’s promise to build a manufacturing and assembly plant in Kentucky does not qualify as sufficient to avoid § 177. While this new business adds to Kentucky’s economic development and provides additional jobs to our residents, the same thing is true with every new business and every expansion of an existing business within this state. The difference between Toyota’s business and any other is quantitative and not qualitative, and a quantitative difference does not suffice to satisfy the requirement for payment to the state for the transfer of state property. If we examine the published debates of the Constitutional Convention of 1890, we can only conclude that a primary motivating force behind the Kentucky Constitution of 1891 was to prevent just such legislation as that with which we are confronted. In Tabler v. Wallace, Ky., 704 S.W.2d 179, 183-4 (1985), we quoted a sampling from these debates. See Constitutional Convention of 1890, 4 Volumes.
“Delegate Young:
‘[N]o special provisions for anybody, no exemptions, but all to have the same protection and all live under the same law, and no special benefits to anybody....’ Vol. 3, p. 3996-97.
Delegate Knott:
‘[L]ook at the ponderous volumes of private acts passed our Legislature within the last few years, and enumerate the horde of railroad and other corporations which have been exempted from taxation, and allowed a variety of other special privileges, while battening like vampires upon the substance of the people; all upon the specious pretext of performing public services.’ ” Vol. 1, p. 466.
The legislative declaration of a public purpose standing alone is not enough to avoid our constitutional prohibition against public grants to a private person or corporation, no matter how powerful the arguments that the public will benefit from the business conducted by the private enterprise.
III. KENTUCKY CONSTITUTION §§ 3 AND 171
When considering the constitutional issues raised by SB 361 and the financial arrangements in this case, §§ 3 and 171 are *813complementary and interacting in effect, as well as interacting with § 177, supra.
§ 3 provides that “no grant of exclusive, separate public emoluments or privileges shall be made to any man or set of men, except in consideration of public services.”
§ 171 provides that “[t]axes shall be levied and collected for public purposes only and shall be uniform upon all property of the same class subject to taxation.” (Emphasis added.)
As earlier discussed, even if the prospect of future “incremental taxes” from Toyota would be sufficient to escape the proviso against donation to a private corporation in § 177, SB 361 is then in conflict with § 171 because Toyota would benefit by the double counting of future taxes. This means that taxes then are not “uniform upon all property of the same class subject to taxation,” as required by § 171. If the “incremental taxes” concept were restricted to the prospect of collections from persons other than Toyota, then Toyota pays nothing for the Project Site and it is a donation in violation of § 177. Going one step further, either way giving Toyota credit for future incremental taxes violates the constitutional proviso in § 3 prohibiting “exclusive, separate public emoluments ... except in consideration of public service.”
Taxes have not been “levied and collected for public purposes” as required by § 171 unless those taxes have been paid out or expended to a lawful recipient “in consideration of public services” under § 3. The Constitutional Convention of 1890 acted to forbid the legislature from “grant of exclusive, separate public emoluments ... except in consideration of public services.” See quote from Delegate Knott, supra.
The constitutional concept of payment from the state treasury for “public services” in § 3 does not permit payment from the Commonwealth for those benefits to the general welfare which flow incidentally from the profit making activity of a private corporation. The Commonwealth cannot pay a private corporation for conducting its business in Kentucky unless it is performing a service directly for the government. The economic activities of the Toyota Corporation are not performed as services to the government, but are conducted for a private purpose. They benefit Toyota Corporation and not the State of Kentucky except in the same general sense that applies as well to the productive activity of all private individuals and corporations within this state. The fact that a by-product of this private economic activity is an incidental benefit to other citizens, through providing employment or otherwise, does not change the character of Toyota’s economic activity from private to public. Conveyance to Toyota cost free of the Project Site cannot avoid the prohibition in our constitution against “grant of exclusive, separate public emoluments ... except in consideration of public services” simply because Toyota’s operation is bigger and may provide more jobs and more future tax revenue than other businesses. Functioning as a private corporation, Toyota is not entitled to any right not possessed by other private persons or corporations.
The closest case in point is City of Corbin v. Louisville & N.R. Co., 233 Ky. 709, 26 S.W.2d 539 (1930). In that case the governmental entity, the City of Corbin, agreed to a contract with the railroad for reimbursement of a tax assessment in exchange for permission to utilize a portion of the railroad’s property in constructing a portion of a sewer system. In holding that the ordinance and contract violated § 3, the Court stated:
“[T]he railroad secured by the ordinance and contract ... a right or privilege denied to other property owners similarly situated.... The ordinance was for the benefit of one taxpayer.” Id. at 540.
Here Toyota gets a special privilege. It is receiving double credit for future taxes, and also credit for taxes from other businesses supposedly generated by Toyota’s presence. Toyota and all taxpayers have equal right to expect and receive certain governmental services for their taxes. But *814under SB 361 and the financial arrangements in this case these same taxes are utilized a second time to “pay for” the Project Site.
Toyota Agreement, § 9, illuminates the illusory nature of incremental taxes as consideration for conveying the Project Site to Toyota. Toyota has no obligation to pay anything for the Project Site even if the incremental tax accounting method fails to produce an amount equal to the project’s cost, unless at some future time Toyota should elect to dispose of the entire property. SB 361 permits this arrangement. However the Toyota Agreement can make this fictional payment arrangement even more meaningless because Toyota can sell or dispose of portions of the property given to it by the state, portions great or small, with no accounting for it unless and until Toyota sells or disposes of the entire property.
The trial court concluded that the reduction of unemployment was the sole objective of SB 361 and that reduction of unemployment is a valid public purpose within the reasonable exercise of legislative discretion. Reduction of unemployment may well satisfy the requirement of § 171 that taxes must be levied and collected for “public purposes,” but public purpose in § 171 requires that the method utilized to attack unemployment be through public means, not private means. A supplement to selected private businesses does not qualify. This is so because under § 3 the only persons entitled to public emoluments are those performing services for the Commonwealth. Although such persons need not be public employees, the services must be those that are directly performed on behalf of the government, not those services which indirectly, incidentally or remotely benefit the public. Reid v. Robertson, 304 Ky. 509, 200 S.W.2d 900 (1947).
Grimm v. Malone, Ky., 358 S.W.2d 496 (1962) and Watkins v. Fugazzi, Ky., 394 S.W.2d 594 (1965), cited as authority in the majority opinion are different in their facts. In Grimm and Watkins, we approved the concept that an anticipated increase in receipts from occupational license fees would cover the cost of urban renewal projects. But the urban renewal projects would be government owned and operated, and, unlike our case, no portion of the property would be conveyed to a private corporation without payment of fair market value.1 Taxpayers’ money was not donated directly to a private corporation as an inducement to locate.
The proponents of constitutionality argued that “the public purpose of alleviation of unemployment ... is actually articulated in § 170 of the Kentucky Constitution, which permits the General Assembly to authorize cities ‘to exempt manufacturing establishments from municipal taxation for a period not exceeding five years, as an inducement to their, location.’ ”
However, § 170, when juxtaposed with the limitations on the state’s power to tax as delineated in the next section, 171, provides a compelling argument against the constitutionality of the present legislation, rather than serving to support it. If the General Assembly already has the authority to pass laws authorizing municipalities to “exempt manufacturing establishments from municipal taxation, for a period not exceeding five years, as an inducement to their location,” under the general taxing authority in § 171, then there is no need for § 170. There is no need to create an exception to a rule, unless first there is a rule. § 171 is the general rule, and § 170 states the exemptions to that rule. This leads to the conclusion that the General Assembly has no authority to exempt manufacturing establishments from municipal taxation as an inducement to their location except as provided in § 170. Likewise, this leads to the conclusion that the “double counting” for taxes mechanism inherent in the present legislation violates the uniform tax assessment and collection proviso in § 171.
*815The proponents of constitutionality have admitted that, in the final analysis, it is the “inducement” of the Toyota Corporation to locate a major manufacturing and assembly plant in this state, with the incidental economic benefits that should follow, and this alone, that must suffice to meet the various constitutional challenges raised by the expenditure of $35,000,000 from the public treasury to cover the cost of the Project Site which will then be conveyed cost free to the Toyota Corporation. It does not suffice.
It has been over thirty years since our Court has forthrightly declared a major bond issue unconstitutional. Curlin v. Weatherby, Ky., 275 S.W.2d 934 (1955). For reasons stated at the outset, this is an exceedingly difficult step for our Court to take. It is time that we apply to bond issues the controlling principles of constitutional construction stated in Commonwealth v. O’Harrah, supra, and Fannin v. Williams, supra:
“[W]e must look through the form of the statute to the substance of what it does. The courts may not countenance an evasion or even an unintentional avoidance of our fundamental law.” 655 S.W.2d at 484.
We have reached the point reached by the Arkansas Supreme Court in City of Hot Springs v. Creviston, 288 Ark. 286, 705 S.W.2d 415, (1986). Like our Court, the Arkansas Court had been steadily eroding constitutional limitations on state bond financing. Finally, faced by an industrial revenue bond issue with problems in some respects similar to our own, the Arkansas Court stated:
“We believe that the only proper and permanent course is for us simply to give effect to the plain language of the Constitution. It states that no city or county shall ever issue interest-bearing evidences of indebtedness without the consent of the electors. That mandate is binding. It includes, of course, transparent evasions by which a token commission or other body is created to sign the bonds while disclaiming any responsibility on the part of its creator.” Id. at 417.
The present legislation and financing arrangements violate §§ 49 and 50, § 177, and §§ 3 and 171 of our Constitution, and we should so state, putting aside every result-oriented, nonjudicial, nonlegal argument to the contrary.
STEPHENSON, J., joins in this dissent.

. The primary purposes of the plan was to "induce” the U.S. Housing and Home Finance Administrator to make a federal grant of three-fourths of the cost.