Bordeleau v. State of NY
18 N.Y.3d 305
NY2011Background
- 50 New York taxpayers filed a declaratory judgment against the State, UDC/ESDC, IBM, AMD, West Genesee Hotel Associates, American Axle & Manufacturing, and others challenging 2008-2009 budget loans/grants to private entities for economic development.
- Plaintiffs allege that certain grants constitute unconstitutional gifts of state money to private firms, focusing on two categories of appropriations.
- Category 1: funds appropriated to the UDC for payment to private entities (e.g., Albany Nanotech/GlobalFoundries) for development projects.
- Category 2: funds allocated to the Department of Agriculture and Markets to contract with not-for-profit groups promoting New York agricultural products (apple/grape programs).
- Supreme Court dismissed; Appellate Division reversed as to the first cause of action; certified a question to the Court of Appeals; outcome depends on Gift Clause interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Category 1 appropriations violate the Gift Clause? | Gifts of state money to private firms via a public authority are unconstitutional. | Public benefit corporations may receive state funds for public purposes without violating the Gift Clause. | No infirmity; category 1 permissible |
| Do Category 2 appropriations violate the Gift Clause? | State money to private associations for marketing constitutes a gift to private interests. | Appropriations serve a predominantly public purpose and are valid under Murphy v Erie County. | No infirmity; category 2 permissible |
| Should Murphy v Erie County standard apply over Westchester County practice in evaluating public funding? | Westchester County approach should control, olding gifts to private entities invalid unless directly public. | Murphy provides the appropriate predominant public purpose standard for evaluating appropriations. | Murphy standard applies |
| Was the Appellate Division's modification proper in light of the above? | The Gift Clause issue should be resolved with discovery and a full record; reversal was improper. | Public funds used for public purposes are constitutionally valid; record supports dismissal. | Order reversed in part; first cause of action dismissed; question answered affirmatively |
Key Cases Cited
- Schulz v State of New York, 84 N.Y.2d 231 (1994) (public funding programs deserve deference unless patently illegal)
- Wein v State of New York, 39 N.Y.2d 136 (1976) (public funding programs essential to addressing modern problems)
- Ohrenstein v. State, 77 N.Y.2d 38 (1990) (interpretation of gift/credit prohibition broadens to private entities)
- Westchester County Natl. Bank of Peekskill, 231 N.Y.465 (1921) (gift of credit to private enterprises; central to Gift Clause analysis)
- Murphy v. Erie County, 28 N.Y.2d 80 (1971) (predominant public purpose standard; incidental private benefit ok)
- Dalton v. Pataki, 5 N.Y.3d 243 (2005) (legislative wisdom not a judicial concern when evaluating constitutionality)
- People v. New York State Thruway Auth., 77 N.Y.2d 86 (1990) (state control over public authorities and funds)