Cohocton Wind Watch: Court hears arguments in suit challenging state subsidies for business
Cohocton Wind Watch is a community citizen organization dedicated to preserve the public safety, property values, economic viability, environmental integrity and quality of life in Cohocton, NY and in surrounding townships. Neighbors committed to public service in order to achieve a reasonable vision for a Finger Lakes region worthy of future generations.


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Thursday, October 13, 2011

Court hears arguments in suit challenging state subsidies for business

ALBANY -- In a case that unites liberal and conservative causes, the state's highest court today will hear arguments over a lawsuit seeking to end the state's direct cash subsidies to corporations as part of Albany's economic development programs.

The case, brought by Lockport financial planner Lee Bordeleau and 40 others in an anti-tax group, challenges the underpinnings of what critics say is a longstanding -- and illegal -- corporate welfare system at the Capitol.

Besides an afternoon appearance before the Court of Appeals, a rally sponsored by the Tea Party Coalition is being held at noon outside the Capitol.

"We want to end these cash grants," said Buffalo lawyer James Ostrowski, who is representing the plaintiffs who, if successful, could turn on its head the state's funding of everything from Fortune 100 companies to small startups.

"All the money we save if we win this lawsuit we want to turn into an immediate tax cut," Ostrowski said.

The group says Gov. Andrew M. Cuomo is continuing the corporate subsidy program done by generations of governors. They are zeroing in on his recent deal with IBM, Intel and others in which $500 million will be steered through the state university as part of a nanotechnology package based in the Albany area.

Ostrowski said such subsidies -- whether indirectly made through the state university or direct, such as the $600 million to a chip manufacturing facility near Saratoga Springs -- all violate the state constitution.

The lawsuit specifically targets everything from direct cash appropriations the state has made in recent years to IBM, apple and grape growers, Delphi Harrison, the Hyatt Regency Buffalo, a Rochester soccer stadium and others. Even the now-scuttled cash Albany was trying to use to lure Bass Pro Shops to Buffalo was in the earliest court papers when the case was filed three years ago.

The lawsuit was tossed from State Supreme Court. But a mid-level appeals court last year rejected legal arguments by lawyers for Cuomo -- when he served as attorney general representing the state in the case -- and unanimously said the suit could go forward.

"Giving the funds to private entities by channeling them through authorized public entities will not shield these appropriations from challenge," the Appellate Division's Third Department warned last year.

The state has said the grants are legal and necessary for the "public purpose of promoting economic development." A state lawyer last year said the lawsuit could spawn "months or years of uncertainty and the potential for a multitude of additional disputes" over state spending.

Ostrowski said the case has attracted the interest of conservatives from the Tea Party and liberals from the Occupy Wall Street movement.

The state's constitution -- in Article VII, Section 8 -- states that "the money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking." Critics say besides directly violating the ban in annual budget appropriations, the state has used public benefit corporations, authorities and other off-budget ways to steer money to companies.

That Cuomo's nanotechnology announcement sent money to the state university and not directly to IBM and Intel shows the state is nervous about the lawsuit, Ostrowski said. "They're afraid they're going to lose the lawsuit and they're already restructuring their corporate welfare."

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