Albany, N.Y. – The State Court of Appeals could issue a decision as early as November regarding the legality of the state subsidizing private businesses in an effort to spur economic development.
Arguments in Bordeleau et. al. v. the State of New York were heard Wednesday in Albany. The lawsuit includes 50 complainants, including Cohocton Wind Watch.
The complainants’ Buffalo-based attorney, James Ostrowski, claimed that the practice of the state handing out millions of dollars to private entities is a violation of the state constitution and therefore illegal.
“They’ve been doing it for years, and they’ve never been challenged before, because who wants to sue the entire New York State government?” said Ostrowski on Friday.
Cohocton Wind Watch founder Jim Hall said the lawsuit is instep with the organization’s efforts against corporate subsidies “that waste taxpayer’s money.”
“The whole economic foundation of industrial wind power is based on government subsidies. As any rational taxpayer, I don’t see the benefit to the public to create an industry that produces energy at a higher cost than the traditional energy sources that are available,” said Hall.
While Ostrowski claims the state is awarding millions of dollars to companies such as IBM, Hornell IDA Executive Director Jim Griffin said it isn’t the state, but organizations such as the Urban Development Corporation, that actually awards the funds.
Such groups are under the auspices of the state, but the Urban Development Corporation and other organizations are designed to dispense money for economic development. It isn’t just New York that has such groups, either, he said.
“Those groups are what make us competitive in the United States with the other 49 states. In order to attract companies and to get companies to expand, you have to have programs out there like these,” said Griffin.
A ruling on the lawsuit isn’t expected until November at the earliest. If the state is stripped of providing subsidies, the impact isn’t clear.
Ostrowski claims that it would lead to tax cuts and more money for people to spend at area businesses, while Griffin said he didn’t think it would lead to tax cuts.
“This could immediately stimulate businesses, and not just the politically connected ones. Instead of subsidizing losing propositions because people made political donations, now the money would go back into the market economy,” he said. “The people in the state could start spending at businesses and services they like, and those would thrive and others would fall by the wayside. That’s how the market works.”
Most of all, claimed Griffin, pulling away the subsidies would hamper the state’s ability to lure new businesses.
“They’d put the state out of business as far as business and expansion. Every state has incentive programs for tax credits or payments in lieu of taxes,” said Griffin. “A lot of these now are low interest loans, with very few grants available.
“I think New York could kiss its economic development efforts goodbye (if the subsidies are eliminated), because every state in the union has these programs.”
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