NY taxpayers seek to recoup billions

ALBANY -- Taxpayers allied with the tea party movement urged New York's top court yesterday to help them end what they call corporate welfare and require companies to return what could be billions of dollars to state taxpayers.

In their lawsuit at the Court of Appeals, 50 taxpayers said New York's constitution prohibits giving state funds to private organizations and makes no exception for economic incentives. They want the practice stopped and companies that received grants since the suit was filed in August 2008 to repay them.

"Our primary concern is going forward," said attorney James Ostrowski, when Judge Victoria Graffeo questioned the likely impact from overturning the longtime state practice. He said the money recouped would probably depend on a review by the attorney general's office.

The taxpayer group cited a provision in New York's 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; nor shall the credit of the state be given or loaned to or in aid of any individual, or public or private corporation or association, or private undertaking." It has an exception for funds or property used for education and mental health.

Defendants countered that the funding for public purposes through state-designated economic development agencies is supported by law and precedents and doesn't violate the constitution.

The taxpayers sued the state, its Urban Development Corp., Erie Canal Harbor Development Corp. and six companies, including IBM. A trial judge dismissed the suit, but a midlevel court reinstated it.

The taxpayers want the case sent back to the trial court, where they would immediately request a summary judgment based on the law, Ostrowski said. If they lose at the Court of Appeals, the case is over. A ruling is expected in November.