Tea Party Group Mounts Legal Challenge to New York State Corporate Subsidies
The New York State Court of Appeals – the state’s highest court – heard arguments Wednesday over a lawsuit brought by a group of taxpayers allied with the tea party movement seeking to end the state’s direct cash subsidies to corporations, The Associated Press reports.
“We’re asking all the tea party groups in the country to endorse our war against corporate welfare,” said James Ostrowski, an attorney from Buffalo who is representing the plaintiffs in the case. “All the money we save if we win this lawsuit we want to turn into an immediate tax cut.”
Just before oral arguments began in the nearby courthouse, the Tea Party Coalition held a rally outside the Capitol building in Albany.
The plaintiffs contend that New York’s constitution makes no allowance for providing state funds to private organizations and makes no exception for economic incentives. The 50 taxpayers sued the state, its Urban Development Corp., Erie Canal Harbor Development Corp. and six companies, including IBM and Global Foundries – a computer chip maker in upstate New York that’s building a $6.8 billion factory, expected to employ 1,500 people.
The taxpayer group cites Article VII, Section 8 of the state’s constitution that “the money of the state shall not be given or loaned to or in aid of any private corporations or association, or private undertaking.”
Still, defendants say state spending for the public purpose of economic development is supported by legal precedent and in no way violates the constitution.
“Even if the grant to Global Foundries was funded by the state, the grant was not a ‘gift’ in any sense of the word,” attorney Harold Iselin wrote. “The [Empire State Development Corp.] is authorized by state law to provide financial and technical assistance to promote job opportunities, urban renewal and economic development.”