Appeals court tosses tea party suit

ALBANY -- New York's highest court Monday dismissed a lawsuit by a group of tea party affiliates who had tried to end the practice of giving state funds to private organizations.

In a 5-2 decision, the State Court of Appeals said lawmakers, through the state budget, may earmark grants to specific organizations. A group of 50 Western New York-based taxpayers had sued to have the practice declared illegal.

Their claim outlined a slew of state grants to what they called "unlawful recipients," ranging from millions of dollars (Global Foundries, a semiconductor manufacturer, $650 million; Rochester Rhinos soccer stadium, $5 million) to a few thousand (Long Island Wine Council, $25,000; Peconic River Sportsmen's Club, $3,000).

The lawyer representing the taxpayers' group said it was a "sad day for the State of New York."

"The court's given the green light to corporate welfare," said James Ostrowski of Buffalo.

The taxpayers' group focused on an article of the state constitution that says "the money of the state shall not be given or loaned to, or in aid of, any private corporation or association or private undertaking." They challenged grants given out by the state's Economic Development Corp., a public-benefit corporation, and other agencies. Besides suing the state, the group also named three grant recipients: IBM, Global Foundries and the West Genesee Hotel.

But a majority of the Court of Appeals said it was a "well settled" legal determination that public benefit corporations existed independently of the state, had greater spending flexibility and weren't bound by the constitutional prohibition. Ostrowski's group, therefore, faced an "exceedingly strong" legal burden.

"As such, unconstitutionality must be proved beyond a reasonable doubt," Judge Theodore T. Jones Jr. wrote for the majority, joined by Chief Judge Jonathan Lippman and judges Carmen Ciparick, Victoria Graffeo and Susan Read.

The two dissenting judges harshly criticized their colleagues.

"Unconstitutional acts do not become constitutional by virtue of repetition, custom or passage of time," Judge Eugene Pigott Jr. wrote. "But that is what the majority opinion holds today. The arguments made by [the defendants] are precisely the kind of claims that sully taxpayers' view of our state government."

"I seem to remember a time when IBM would make money by selling its products for more than it cost to produce them," added Judge Robert Smith. "I would have thought semiconductor manufacturers could do the same. If they cannot, a bailout for their shareholders is not a prudent use of more than a billion dollars in taxpayer funds."

A spokesman for the legislature's top Democrat applauded the outcome, saying lawmakers acted within their powers.

"We are pleased that the court upheld the legislature's legitimate role in helping to spur economic development in New York," said Michael Whyland, aide to Assembly Speaker Sheldon Silver (D-Manhattan).

Aides to Senate Majority Leader Dean Skelos (R-Rockville Centre) declined to comment. Gov. Andrew M. Cuomo's office didn't immediately return a request to comment.