"Mother of All Taxpayer Lawsuits"

Cohocton Wind Watch is a plaintiff on this legal action. Another reason to support the CWW legal fund.

Jim Ostrowski is representing a large group of plaintiffs who are suing the state, state leadership, and several companies who have (or may) receive state economic development incentives. The defendants include Delphi, American Axle, IBM, and Bass Pro.

Ostrowski argues that this provision of the state constitution prohibits “corporate welfare”:

“The money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking; nor shall the credit of the state be given or loaned to or in aid of any individual, or public or private corporation or association, or private undertaking, but the foregoing provisions shall not apply to any fund or property now held or which may hereafter be held by the state for educational, mental health or mental retardation purposes.”

The Bass Pro example wouldn’t apply because there isn’t a loan or donation being given by the state (or any state-controlled entity) to Bass Pro. The incentive package has to do with tax reduction or elimination - not a handout. But other examples do involve outright grants from the Empire State Development Corporation to private firms to enable some form of expansion with corresponding pledges of job creation.

The Empire State Development Corporation, however, is not named as a defendant in the lawsuit despite the fact that it is the entity that makes the incentives.

By way of a guess, I’d suspect that the creation of the ESDC is the workaround this constitutional prohibition. By using the ESDC, it is not the “state” per se which is giving out the money, but a public benefit corporation (a.k.a. Authority). As we all know, Authorities in New York have been carved out and created in such a way as to best avoid public oversight and scrutiny, so the counterargument will most likely be that the ESDC is a legal creation, and it - not the state - hands out the pork.

But it’ll be interesting to see what happens. Also, as far as I’m aware, the Wendt Foundation is not funding this lawsuit.