New York’s top court hears arguments on incentives
Written by JON CAMPBELL
ALBANY — The state’s top court heard arguments this week on whether there’s any merit to a lawsuit that could upend New York’s long-standing system of distributing billions in economic development incentives to private businesses.
A group of 50 anti-tax New Yorkers sued the state and a handful of private companies in 2008, claiming that bonds, grants and tax breaks from public authorities to businesses or trade groups violate the state constitution, which prohibits state money from being “given or loaned to” private corporations or associations.
Solicitor General Barbara Underwood told the Court of Appeals on Tuesday that the incentives are legal because once the funds are transferred to the Empire State Development Corp. — a public authority that is the state’s main economic-development engine — then technically the money no longer belongs to the state.
An attorney for the plaintiffs argued that funneling grants through Empire State Development Corp. or any other public authority “amounts to a money-laundering scheme.”
The suit targets a number of specific subsidies from the mid-to-late 2000s, including a $5 million appropriation in the 2008-09 state budget for what is now Sahlen’s Stadium in Rochester.
Other funds were distributed to trade groups representing the state’s apple growers and wineries by the state Department of Agriculture and Markets, which Underwood said was constitutional because the money went to promoting the state’s agricultural industries.
The lawsuit was originally filed in state Supreme Court in Albany County, which ruled it didn’t have legal standing and dismissed it. A state Appellate Court overturned the dismissal, saying the funds were indirectly appropriated and may have been in violation.
If the Court of Appeals upholds the Appellate Court’s decision, it would move back to state Supreme Court.
James Ostrowski, the plaintiffs’ Buffalo-based attorney, said he would then ask that court for what amounts to an immediate ruling.
A court spokesman said a decision could come in mid-to-late November.
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