Published: September 21, 2008 11:31 pm      

LAWSUIT: Written argument filed in effort to end state subsidies for corporations.

A legal brief has been filed by the plaintiffs in a case brought by a group of local taxpayers who believe state lawmakers have no right to give their tax dollars to private businesses.

James Ostrowski, the Buffalo attorney who represents 46 taxpayers interested in putting an end to state subsidies for corporations, presented the plaintiffs’ written argument as to why their case should prevail Sept. 15 in New York state Supreme Court in Albany.

“In light of all the financial meltdown it becomes increasingly harder to justify giving our money away to wealthy corporations,” Ostrowski said.

The suit, funded with taxpayer donations and driven by Lockport businessman Lee Bordeleau, asks the court for an injunction barring the state from giving public funds to private corporations. It also asks for the return of state funds transferred to private entities under this year’s budget and for a declaration that says it is illegal for the state to transfer money to private corporations unless the transaction falls under exceptions specifically outlined under Article VII of the state Constitution. The plaintiffs argue state law requires funds paid out of the state treasury be limited to those authorized by “appropriations of law” that “distinctly specify the sum appropriated and the object or purpose to which it is to be applied.” The plaintiffs argue that the state budget often includes provisions for cash grants without defining how exactly appropriated dollars will be spent.

“Such provisions not only violate the Constitution but also promote secrecy, concentrate enormous financial power into the hands of a few and reduce public accountability for appropriations such as cash grants for wealthy corporations,” the plaintiffs claim states.

The lawsuit, which required four months of legal research, traces New York state government’s financial dealings back to the 1840s when the plaintiffs say large loans and grants provided to businesses in the guise of economic development failed, leaving state taxpayers to deal with the higher taxes needed to pay off the loan guarantees. The plaintiffs note that the state’s Constitution was amended in 1846 to ban loans to private firms, with voters approving the amendment, 221,528 to 92,436. A year later, the plaintiffs say, the provision was expanded to include a ban on giving state money to private firms. And while the provision has been modified over the years, the plaintiffs claim that none of the subsequent exceptions give the state permission to give away public money in the name of “economic development.”

“We can find no reported appellate case that squarely holds that such cash grants pass constitutional muster,” the plaintiffs maintain.

Ostrowski said he expects the state to file its response in about two weeks.

In the past, representatives from the state’s Empire State Development Corp. have insisted that its financial dealings with companies, including grant-funded projects, are in compliance with the state’s constitution and all applicable laws.