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Lawsuit Marches On

Click here to read the eight-page decision handed down on Thursday by the NYS Supreme Court, Appellate Division, Third Judicial Department. The lawsuit was brought by Lee Bordeleau and 49 others, and argued by James Ostrowski. In their decision, the judges unanimously agree that handing out state money to private businesses goes against New York’s Constitution.

Specifically, the following provision, which was added in 1846: “[t]he money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking.” Our forefathers wrote it in 164 years ago “in reaction to the [Legislature’s] prior practices of subsidizing private railroad and canal companies through long-term State debt obligations, which the State ultimately was forced to pay when many of those private enterprises failed during the depression of 1837-1842. Thus, subsidization by gifts of public funds to private undertakings, or by pledging public credit on their behalf, was banned, irrespective of how beneficent or desirable to the public the subsidized activity might seem to be.”

The opinion states: “Giving the funds to private entities by channeling them through authorized public entities will not shield these appropriations from challenge, for the State may not do ‘indirectly that which cannot be done directly.'”

So let’s say you want to build a huge fishing store on the Buffalo waterfront using public money filtered through the Erie Canal Harbor Development Corporation…

The case now heads back to State Supreme Court.


  • chester

    Wouldn’t this also preclude the awarding of grants by the state for any number of things (arts, community development, etc.) and keep Senator Thompson from handing out those giant checks? Or stop the loan work done by the IDAs?

    A strict interpretation of that clause could have a truly epic effect on how the state conducts business.