Category: State Politics

The Cost of 9 IDAs in Buffalo-Niagara

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Assemblyman Sean Ryan (A-144) held a press conference yesterday to protest the way in which Industrial Development Agencies in Erie County do business. Specifically done in response to the Amherst IDA’s granting of an incentive package to facilitate Premier Liquor & Gourmet’s move from Kenmore to Amherst, Ryan issues three documents outlining the cost/benefit to running nine separate IDAs in Erie and Niagara Counties. By comparison, New York City has only one IDA.

This chart outlines the cost of these tax breaks, and what other things they might have bought, and then compares the annual IDA tax subsidies that are granted each year in New York State against the much-touted Regional Economic Council regional plans submitted and reported on in Albany last week:

IDA chart : Assemblyman Sean Ryanhttp://www.scribd.com/embeds/75676491/content?start_page=1&view_mode=list&access_key=key-1cin0wzjammva2g84ts3//

Ryan avers that the IDAs have an incentive to remain open as separate entities, and to grant property and sales tax breaks even in cases where one WNY community is poaching from another – the fact that each announced IDA transaction results in a fee to the IDA itself.

IDA Report – Assemblyman Sean Ryanhttp://www.scribd.com/embeds/75676457/content?start_page=1&view_mode=list&access_key=key-p407dtjcd99ij974twf//

Even more egregiously, if the IDA recipient business fails to meet its obligation to create jobs, there is no recourse or “clawback” provision. The common misconception is that IDA incentives exist to lure businesses to the area. Yet Ryan’s study reveals that, of all 71 incentive packages given by the IDAs in Erie and Niagara Counties in 2010, exactly one was to attract a business from out-of-state. The rest were for the expansion or intraregional relocation of existing businesses.

It’s high time the region started streamlining its business development and retention strategies in a coordinated, regional way. IDA incentives given to well-off local companies as a “freebie” with little to no return on investment, which oftentimes results in one WNY community poaching from another needs to stop. Assemblyman Ryan is on the right track here, and it echoes what Erie County Executive-elect Poloncarz was advocating during the last election cycle.


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Ostrowski’s Anti-Pork Lawsuit Dismissed

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Libertarian activist and attorney Jim Ostrowski had been spearheading a lawsuit brought against several corporations, Empire State Development, and the state of New York, alleging that state business development incentives were violative of the state constitution. The New York State Court of Appeals put an end to that suit in a decision released today.

§8. 1. 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, but the foregoing provisions shall not apply to any fund or property now held or which may hereafter be held by the state for educational, mental health or mental retardation purposes.

Ostrowski filed suit, and the defendants won a motion to dismiss, which was then reversed on appeal to the Appellate Division. At issue in the fight was whether state would continue to have a right to grant money and incentives to various private entities in order to help businesses and create jobs – it goes to the very heart of contemporary state business development strategies.

The Court explains how constitutionality is not only presumed, but that a violation must be found “beyond reasonable doubt”, because the Court had found as far back as 1976 that it will uphold “public funding programs essential to addressing the problems of modern life, unless such programs are ‘patently illegal'” The current prohibition was devised throughout the 19th century to prevent the state from being required to bail out and insure businesses who have received public monies, and to “insulate the state from the burden of long-term debt”. This is why the state created public benefit corporations and authorities. Case law has repeatedly found that public benefit corporations operate independently from the state, and that the state can grant money to them for lawful public purposes.

Because public benefit corporations are independent from the state, the Court finds that Article VII Section 8(1) does not apply to them gifting or loaning money the state has provided to them.

The Court also affirmed grants of public money to benefit things like stadiums, which may provide a private entity with a monetary benefit but also serves a public purpose. As such, county subsidies to the Bills and Rich Stadium may continue unimpeded by constitutional uncertainty. Justices Pigott and Smith offer dissenting opinions, arguing that longstanding practice does not magically render the unconstitutional, constitutional, and that the system merely rewards the well-connected at society’s expense.

It’s quite an interesting read (if you’re used to reading legal opinions) and, absent a constitutional convention, the end of the road for this particular argument.

Bordeleau v. Statehttp://www.scribd.com/embeds/73363162/content?start_page=1&view_mode=list&access_key=key-o6ro7p2n4oqko2zn2xe//

Ostrowski's Anti-Pork Lawsuit Dismissed

10 comments

Libertarian activist and attorney Jim Ostrowski had been spearheading a lawsuit brought against several corporations, Empire State Development, and the state of New York, alleging that state business development incentives were violative of the state constitution. The New York State Court of Appeals put an end to that suit in a decision released today.

§8. 1. 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, but the foregoing provisions shall not apply to any fund or property now held or which may hereafter be held by the state for educational, mental health or mental retardation purposes.

Ostrowski filed suit, and the defendants won a motion to dismiss, which was then reversed on appeal to the Appellate Division. At issue in the fight was whether state would continue to have a right to grant money and incentives to various private entities in order to help businesses and create jobs – it goes to the very heart of contemporary state business development strategies.

The Court explains how constitutionality is not only presumed, but that a violation must be found “beyond reasonable doubt”, because the Court had found as far back as 1976 that it will uphold “public funding programs essential to addressing the problems of modern life, unless such programs are ‘patently illegal'” The current prohibition was devised throughout the 19th century to prevent the state from being required to bail out and insure businesses who have received public monies, and to “insulate the state from the burden of long-term debt”. This is why the state created public benefit corporations and authorities. Case law has repeatedly found that public benefit corporations operate independently from the state, and that the state can grant money to them for lawful public purposes.

Because public benefit corporations are independent from the state, the Court finds that Article VII Section 8(1) does not apply to them gifting or loaning money the state has provided to them.

The Court also affirmed grants of public money to benefit things like stadiums, which may provide a private entity with a monetary benefit but also serves a public purpose. As such, county subsidies to the Bills and Rich Stadium may continue unimpeded by constitutional uncertainty. Justices Pigott and Smith offer dissenting opinions, arguing that longstanding practice does not magically render the unconstitutional, constitutional, and that the system merely rewards the well-connected at society’s expense.

It’s quite an interesting read (if you’re used to reading legal opinions) and, absent a constitutional convention, the end of the road for this particular argument.

Bordeleau v. State

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