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| STATE OF NEW YORK APPELLATE DIVISION - THIRD DEPARTMENT _____________________________________________ ROBERT L. SCHULZ, CATHERINE M.J. WAJDA, ELMER F. BERTSCH and BURR V. DEITZ Appellants, ORDER TO SHOW CAUSE - against - THE NEW YORK STATE LEGISLATURE, and ________________________________________________ UPON the annexed Affidavit by Robert L. Schulz, Catherine M.J. Wajda and Burr V. Deitz, LET, the respondents, THE NEW YORK STATE LEGISLATURE, SHELDON SILVER, SPEAKER OF THE ASSEMBLY AND JOSEPH BRUNO, SENATE MAJORITY LEADER; and THE NEW YORK STATE EXECUTIVE, GEORGE PATAKI, GOVERNOR, H. CARL MC CALL, STATE COMPTROLLER, and the intervenor-respondent DORMITORY AUTHORITY OF THE STATE OF NEW YORK (DASNY), show cause by way of a submission at a term of the New York State Supreme Court, Appellate Division, Third Department, to be held at the Justice Building at the Empire State Plaza in Albany, New York, at 10:00o’clock in the forenoon, on the 2nd day of December, 1998, or as soon thereafter as counsel and or parties may be heard, why an order should not be made pursuant to CPLR 5518: a) preliminarily enjoining and prohibiting DASNY from issuing any bonds under, and the State Comptroller from making any payments pursuant to, Chapters 5 and 124 of the Laws of 1998, pending the hearing and determination of this appeal from the Order by the Hon. Bernard J. Malone, Jr., entered in the office of the Albany County Clerk on November 20, 1998, and b) for such other relief as to the Court may seem just and proper. ORDERED, that there will be no appearances or oral arguments, and it is further, ORDERED, that service of a conformed copy of this order and the papers upon which it is granted be served upon said defendants and intervenor personally or by overnight mail on or before 5 o’clock in the afternoon on the 23rd day of November, 1998, be deemed good and sufficient service. DATED: Troy, New York _____________________________
STATE OF NEW YORK ROBERT L. SCHULZ, CATHERINE M.J. WAJDA, AFFIDAVIT IN SUPPORT OF THE NEW YORK STATE LEGISLATURE, and DORMITORY AUTHORITY OF THE STATE OF NEW YORK, ________________________________________________ Robert L. Schulz, Catherine M.J. Wajda and Burr V. Deitz, being duly sworn, depose and say, 1. We are appellants in the matter captioned above and we make this Affidavit in support of the Order to Show Cause.
PRELIMINARY STATEMENT 2. Plaintiffs have appealed from an Order of Supreme Court (Hon. Bernard J. Malone, Jr.) issued November 20, 1998, which denied plaintiffs' motion for a preliminary injunction. 3. This affidavit is in support of appellants' motion for a preliminary injunction pending appeal and for a temporary restraining order.
BACKGROUND 4. Chapter 5 of the New York Laws of 1998 (attached as Exhibit B hereto) authorizes the Dormitory Authority of the State of New York ("DASNY") to issue tax-supported, long-term bonds to finance the construction of two new office buildings and a parking garage in Albany, which will be State owned and occupied (the "Albany Plan"). Chapter 5 directs the New York State Office of General Services ("OGS") and the State Comptroller to make annual payments to the holders of the DASNY bonds in amounts sufficient to cover the principal and interest on those bonds. Chapter 5 L98 amends Section 1680 of the Public Authorities Law by adding Sections 35 and 36, which contractually commits the Legislature to make the annual appropriations of the money required to service the DASNY bonds. On October 28, 1998, DASNY and the New York State Office of General Services (OGS) entered into a financing agreement, to implement the Albany Plan (Exhibit C-3). Section 5.5 of the Financing Agreement reads, "Covenant as to appropriations. In order to assure that sufficient moneys for payment by OGS, on behalf of the State, of the Annual Payments, the Commissioner covenants to include in the estimate furnished to the Governor in accordance with Article VII, Section 1 of the State Constitution for the preparation of the State budget, the amount of Annual Payments payable during the State's next succeeding fiscal year, which amount is required by Section 1680(36)(c) of the Act to be appropriated and paid by the State." (Plaintiffs' emphasis). See Exhibit C-3, page 11). The first series of bonds ($45 million) is in the process of being issued by DASNY. The bonds are scheduled to be priced on Monday, November 23, 1998 and issued approximately seven to fourteen days later. The current motion for injunctive relief is aimed at preventing the issuance of the DASNY bonds until there has been a final determination of the underlying claims. 5. Chapter 124 of the New York Laws of 1998 (attached as Exhibit A hereto) authorizes the Schenectady Metroplex Development Authority ("Metro Authority") to issue tax-supported bonds to finance construction of public facilities in Schenectady County (the "Schenectady Plan"). Chapter 124 directs the State Comptroller to annually pay enough money to the Metroplex Development Fund to cover the principal of and the interest on the bonds of the Metro Authority. Chapter 124 directs the Comptroller to make those annual payments out of sales tax revenue funds under his care and management, but to do so without an appropriation by law, in violation of Article VII, Section 7 of the NY Constitution. The first payment by the Comptroller will be made in the near future. The current motion for injunctive relief is aimed at preventing the disbursement of those funds until there has been a final determination of the underlying claims. 6. In regard to Chapters 5 and 124 of the New York Laws of 1998, plaintiffs, as citizens, seek a declaration of their constitutional rights under the New York Constitution, Article VII (sections 11, 7 and 8), Article VIII (sections 1, 2 and 12), Article X (section 5) and by, extension, under Article IV, Section 4 of the Constitution of the United States and the 14th Amendment thereto. Table 3 (attached) provides a summary glimpse of plaintiffs' claims as they apply to Chapter 5 L98 and Chapter 124 L98. 7. In the Court below, plaintiffs moved for a preliminary injunction and defendants moved to dismiss plaintiffs' challenge to Chapters 5 and 124. Plaintiffs opposed the motions. In sum, defendants' arguments are threefold: 1) regarding plaintiffs' Article VII, section 11 (voter referendum) claim, defendants argue, relying on Schulz v State, 84 NY2d 231, that the bonds of DASNY and the Metro Authority would not be legally enforceable and, therefore, would not be debt within the meaning of Article VII, section 11; 2) regarding plaintiffs' Article, section 7 claim (no payment by State comptroller without appropriations by law), defendants argue that Saratoga Harness Racing Assn., 22 NY2d 119 is dispositive; and 3) regarding the rest of plaintiffs' claims, including but not limited to plaintiffs' Article X, section 5 claim (no state or local tax revenues can be used to pay any part of any obligations of any public corporation such as DASNY and the Metro Authority), defendants, relying on Wein v Comptroller, 46 NY2d 394, argue that plaintiffs are prevented by SFL 123-b(1) from suing. 8. In sum, plaintiffs' response to these categorical defenses are as follows: 1) the bonds of DASNY and the Metro Authority would be legally enforceable given a) the mandate of Article VII, Section 16 of the NY Constitution, an issue not considered in Schulz v State, 84 NY2d 231, and b) the plain and unambiguous language of Chapters 5 and 124 of the Laws of 1998, the plain and unambiguous language of DASNY's October 28, 1998 bond resolutions (Exhibits C-1, C-2), the plain and unambiguous language of the October 28, 1998 financing agreement between DASNY and OGS, and the plain and unambiguous language of DASNY's Official Statement (Exhibit D), all of which are being used to induce investors to buy the DASNY bonds. Collectively and individually all the language represents contractual and legislative commitments on the part of the State to service the DASNY bonds, i.e., the language clearly provides for, holds out the promise of, and mandates payment of the principal and interest on the DASNY bonds by the Comptroller from tax funds; 2) Plaintiffs' Article VII, Section 7 claim in this case is clearly distinguishable from Saratoga Harness Racing Assn. where fees, not taxes, were the issue and where payment did not involve the State Comptroller or funds under the care and management of the State Comptroller; and 3) Wein v Comptroller prohibits mere taxpayers, but not citizens, from challenging public borrowing. Otherwise, SFL 123-b(1) would be unconstitutional, as a violation of the citizens' fundamental right to petition the government for a redress of grievances, i.e., a citizen's right to seek a declaration of his individual rights. 9. Table 4 (attached) provides a summary glimpse of defendants' arguments and plaintiffs' responses as argued in the Court below. 10. In regard to SFL 123-b(1), plaintiffs seek a declaration of their constitutional rights under SFL 123-b(1) and under the right to petition clauses of the N.Y. and U.S. Constitutions. Table 5 (attached) provides a summary glimpse of plaintiffs' claims as they apply to SFL 123-b(1). 11. In the Court below, defendants moved to dismiss plaintiffs' challenge to SFL 123-b(1). Plaintiffs opposed the motions. In sum, defendants argued, incredibly, that SFL 123-b(1) "does not deprive citizens of generalized standing with respect to certain bonding issues or deprive them of anything...Nothing in this record that [sic] indicates that Section 123-b(1) of the State Finance Law in any way prohibits plaintiffs from suing...challenges to the constitutionality of Section 123-b(1) have been repeatedly rebuffed." 12. In sum, plaintiffs' response is that SFL 123-b(1), a part of the Taxpayer Act of 1975, was written to prevent mere taxpayers from challenging the issuance of bonds, but (and this is the problem), it has been used to dismiss claims by citizens who were seeking a declaration of their individual rights in constitutional challenges to bond issues. It is on that basis that plaintiffs attack the constitutionality of SFL 123-b(1). 13. Table 6 (attached) provides a summary glimpse of defendants' arguments and plaintiffs' responses as argued in the Court below.
THE COURT BELOW ABUSED ITS DISCRETION 14. The Court below abused its discretion in denying plaintiffs' motion for injunctive relief. Plaintiffs showed that they were likely to suffer immediate and irreparable injury if their motion for a stay was not granted and either a likelihood of success on the merits of their case or sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in their favor. Reuters Limited versus United Press International, 903 Fed 2d 904 at 907. 15. Where the moving party seeks to stay governmental action taken in the public interest pursuant to a statutory scheme, the court should not apply the less rigorous fair-ground-for litigation standard and should not grant the injunction unless the moving party establishes, along with irreparable injury, a likelihood that he will succeed on the merits of his claim. Plaza Health Labs, Inc. v Perales, 878 Fed 2d 577, 580. 16. Plaintiffs met the standards that should have been applied by the Court below to their motion for an injunction. The Court below abused its discretion in denying the motion. 17. "If plaintiffs assert that the violation of their natural (constitutional) rights, even for a short time, is the irreparable injury, the two prongs of the threshold showing required for injunctive relief merge into one, and in order to show irreparable harm, plaintiffs need only show likelihood of success on the merits or fair-ground-for-litigation, together with likelihood of success." The Good News Club v Milford Central School, __ F. Supp. __ (August 8, 1998, 97-CV-302 motion decision by Chief Judge Thomas J. McAvoy, U.S. District Court, Northern District of New York). 18. Implying that plaintiffs may, in fact, have met their burden for a showing of sufficiently serious questions going to the merits to make them fair ground for litigation, together with a likelihood of success on the merits, Justice Malone, from the bench and on the record, said that he would be deciding the case on its merits as soon as possible, but could not do so before the closing on the DASNY bonds, an event expected to occur within 7-10 days. He directed all parties to let him know on Monday, November 23, 1998, how much time they felt they needed to submit any final arguments on the merits. He also said he would immediately issue an appealable order to allow plaintiffs to have the matter of injunctive relief decided by a "higher court." 19. Plaintiffs not only asserted that the violation of natural (constitutional) rights resulting from the adoption of Chapter 5 of the Laws of 1998 and the incurrence of tax-supported debt is the irreparable harm that they would suffer if the motion for a stay was not granted, they also argued the irreparable harm they would suffer if $42 million in tax-supported, long-term (30 year) bonds were issued on behalf of the State, under Chapter 5, with millions of dollars of the proceeds of the bond sale immediately disbursed to attorneys, underwriters and others as "fees", all part of the "cost of issuance," and millions more immediately disbursed as part of the "construction costs" including planning, engineering and administrative costs. These costs would not be recoverable. Nor would the enormous cost of the adverse effect of a final ruling of unconstitutionality on the issued bonds be recoverable. 20. Also, plaintiffs asserted that the violation of natural (constitutional) rights resulting from the adoption of Chapter 124 of the Laws of 1998 and the incurrence of tax-supported expenses and debt is irreparable harm that they would suffer if the motion for a stay was not granted. They also argued the irreparable harm they would suffer if the Comptroller made the million dollar payment he is about to make to the Schenectady Metroplex Development Fund, from the revenues received by the State from the imposition of the State authorized sales tax in Schenectady County. The disbursement of those funds would be immediate. Those tax funds, once disbursed, would not be recoverable. 21. In order to show irreparable injury in a case where plaintiffs are seeking the protection of their constitutional rights, plaintiffs need only show a fair ground for litigation together with likelihood of success on the merits. Good News v Milford Central School, id, citing Bery v City of New York, 906 F.Supp. 163, 166. 22. Plaintiffs made the required showing of fair grounds for litigation together with likelihood of success and that the balance of the hardships, tips in plaintiffs' favor. Plaintiffs now repeat the arguments made below.
FAIR GROUNDS FOR LITIGATION WERE PRESENTED TO A. PLAINTIFFS' ARTICLE VII, SECTION 16 ARGUMENT 23. The Bonds issued under Chapters 5 and 124 L98 would, in fact and in law, be legally enforceable obligations of the State, making Chapters 5 and 124 L98 subject to and violative of the debt-limiting restrictions and prohibitions of the New York Constitution. 24. One need go no further than the plain language and intent of Article VII, Section 16 of the NY Constitution, which directs that the Legislature shall annually provide by appropriation for the payment of the principal and interest on all debts created on behalf of the State and if at any time the Legislature shall fail to make any such appropriations, the Comptroller shall set apart from the first general fund revenues thereafter received a sum sufficient to pay such principal and interest and shall so apply the moneys thus set aside, and a bondholder may go to court for a writ of mandamus to compel the Comptroller to do so. 25. The N.Y. Constitution reads in part: "The Legislature shall annually provide by appropriation for the payment of the interest upon and installments of principal of all debts or refunding debts created on behalf of the state...as the same shall fall due, and for the contribution to all of the sinking funds created by law...If at any time the legislative shall fail to make any such appropriation, the comptroller shall set apart from the first revenues thereafter received, applicable to the general fund of the state, a sum sufficient to pay such interest, installments of principal, or contributions to such sinking fund, as the case may be, and shall so apply the moneys thus set apart. The comptroller may be required to set aside and apply such revenues as aforesaid, at the suit of any holder of such bonds." (Plaintiffs' emphasis). Article VII, Section 16 New York Constitution 26. The provisions now enshrined in Article VII, Section 16 (and a portion of Section 15), requires (a) appropriation by the Legislature of money enough in each year (i) to pay the principal of any state debt coming due that year, (ii) to pay interest on all state debt and (iii) to make deposits to build up sinking funds for maturing state debt as specified in Section 15, and (b) the making of such payments and deposits by the Comptroller without appropriation if necessary. 27. Conclusive evidence that the authors of the amendment recognized that state debt was otherwise subject to repudiation by legislative refusal to appropriate is provided by the existence of the amendment itself. It is nonetheless of historical interest to recall it's authors' own statements. The 1920 amendment was first proposed at the 1915 constitutional convention. The 1915 proposed constitution was turned down by the voters but several of its proposed changes, including the text of what became the 1920 amendment, were later adopted as individual amendments to the constitution then existing, without alteration. The 1938 Constitutional Convention proposed, and the voters approved, a reorganization and readoption of all of Article VII. Its general Committee described the effect of the 1920 enhancement as follows: "The [new provision] made the annual appropriations of interest and retirement of the debt absolutely mandatory on the legislature, and in fact established a priority of these appropriations over any others. [The amendment] provided a powerful safeguard against any possible default. [It] was a unique provision. It was tantamount to a surrender by the state of its sovereign right of repudiation of its debts" (1938 New York State Constitutional Convention Committee, Report, Vol. 10, "Problems Relating to Taxation and Finance," p. 132). 28. The grant of freedom from appropriation risk was given in 1920, 74 years after the 1846 adoption of the referendum requirement for state debt. 29. Ballentine's Law Dictionary, Third Edition, defines "behalf" as, "in the name of; on account of; for the benefit, advantage, interest, profit or vindication of." Ballentine's Law Dictionary, Third Edition, defines "on his behalf" as "For him and as authorized by him." 30. What Chapter 5 L98 attempts, by making the bonds issued under it "appropriation risk," is a forbidden waiver of Article VII, Section 16. 31. Defendants argue that bonds issued by DASNY and the Metro Authority under Chapters 5 and 124 would not be legally enforceable debt within the meaning of the N.Y. Constitution, because of the "Subject to annual appropriations of the Legislature" disclaimer found in Chapter 5 and the "Not State debt, no full faith and credit" disclaimer found in both Chapter 5 and Chapter 124. 32. The legislature has no power to interpret the constitution. Disclaimers in chapters 5 and 124 as to debt and obligations are nullities in light of Article VII, Section 16 of the NY Constitution and in light of the contractual and legislative provisions found in Chapter 5 and 124, the Bond Resolution (Exhibit C-1, C-2), the Financing Agreement (Exhibit C-3), and the Preliminary Official Statement (Exhibit D). See especially the provisions which plaintiffs have underlined. 33. Not only in this state, but nationally, and in most if not all other states, the constitutional system provides for a strict separation of powers. The legislature does not stand beside the judiciary as a co-interpreter of the fundamental law, particularly when it comes to consideration of restraints on legislative power. "It is, emphatically, the province of the judicial department, to say what the law is." Marbury v Madison, 1 Cranch [5US] 137, 176 (1803) (Marshall, Ch.J). 34. It is in this light that the Court must view the "not state debt" and "not legally enforceable obligations" and "obligations on the part of the state to pay moneys are executory only to the extent of appropriations available for such payments" declarations within Chapters 5 and 124 and within the DASNY Bond Resolutions (Exhibits C-1, C-2) and within the Financing Agreement between DASNY and OGS (Exhibit C-3), and within the Preliminary Official Statement (Exhibit D). "The Court can't close its eyes to the Constitution and see only the acts of the Legislature." Marbury. 35. The Legislature has no power to legislate constitutional interpretations. 36. DASNY and the Metro Authority as public corporations, are "the State" for purposes of the debt limiting clauses of the Constitution. These corporations are not independent of the State. The State is deeply entwined in the corporations and the corporations' bonds and notes. The corporations are established by Acts of the State Legislature. The corporations are not using toll revenues, rent revenues or service revenues to pay all the bonds and notes issued under Chapter 5 and 124. They simply issue long-term "Special" obligation bonds payable by annual taxes and fees imposed by the State. Under the Act, the public corporations are merely devices by which the State can borrow money while saying that the corporations, not it, were borrowing money. 37. Ignoring Article VII, Section 16 in their argument that the bonds of DASNY and the Metro Authority are not legally enforceable, defendants relied heavily on Schulz v State, 84 NY2d 231 (Schulz I), which, in turn, relied on Wein v City of N.Y., 36 NY2d 610 (Wein I). 38. Attached is a copy of the video tape provided by the Albany Law School of the oral arguments on June 7, 1994, before the New York State Court of Appeals in Schulz v State of New York, 84 NY2d 231 (Schulz I). 39. The video reveals that the Court was focused almost entirely on trying to get Schulz to tell the Court what a purchaser of bonds (issued under Chapter 56 of the Laws of 1993) would be able to do to get a court to order the State to service those bonds if the Legislature decided not to do so at any time that those bonds were outstanding. In other words, the Court was asking Schulz to support his claim that due to "investor expectations" and "contractual obligations" the State could be made to pay back money borrowed by or on behalf of the State, i.e., that a bondholder would be successful in court if the State didn't appropriate money to service the bonds. 40. The video, and the Court's decision, issued on June 30, 1994, (in Schulz I), clearly demonstrate that not only did Schulz fail, at oral argument, before the Court of Appeals, to support his claim with an argument based on the mandates of Article VII, Section 16 of the NY Constitution, he didn't even raise the issue and the Court's decision failed to address, much less "fully encompass," the mandate of Article VII, Section 16. It cannot be fairly argued that the decision in Schulz I is decisive of the Article VII, Section 16 issue, which plaintiffs in the instant case raised and argued in the Court below, in response to defendants' motions to dismiss and for summary judgment. 41. DASNY and the Metro Authority are agencies which, as public corporations of the State, created and controlled by the State through the State's Public Authorities Control Board, are clearly instrumentalities of the State contracting debt on behalf of the State, and promising to appropriate the money to pay that money back with interest. Thus, any investor in the bonds issued under Chapters 5 and 124 of the Laws of 1998 would be able to go to court, under Article VII, Section 16 of the NY Constitution, for a writ of mandamus to compel the State, either directly or through its instrumentalies, to comply with all of the provisions of Chapters 5 and 124 of the Laws of 1998, notwithstanding the "subject to annual appropriation of the Legislature" disclaimer found in Chapter 5 and notwithstanding the "no full faith and credit" disclaimer found in both Chapter 5 and Chapter 124. 42. With respect to the video tape attached, the Court is asked to note the question from the bench of Mr. Schulz, to the effect, "Is it your argument that in order to find for you in this case (Schulz I), we would have to overrule our decision in Wein v City of New York, (Wein I)?" Schulz answered "no". Obviously, in answering "no", Mr. Schulz was thinking of the distinguishing differences in contractual language in the legislation. He was not thinking of the mandates in Article VII, Section 16, which, in fact, does make the decision in Wein I suspect. And, since the decision in Schulz I relied so heavily on the decision in Wein I, and was not made in the light of Article VII, Section 16 of the NY Constitution, the decision in Schulz I is also quite suspect. 43. The Court below had sufficient legal grounds to find for plaintiffs on the merits, without violating any controlling principles of law, by relying on the mandates of Article VII, Section 16 of the NY Constitution, together with its (the Court's) reading of the contractual and legislative commitments to annually service the bonds of DASNY and the Metro Authority -- all clearly provided in Chapters 5 and 124 of the Laws of 1998, DASNY's October 28, 1998 bond resolutions, (Exhibit C-1, C-2), the October 28, 1998 Financing Agreement between DASNY and OGS (Exhibit C-3), and DASNY's Official Statement used to induce investors to purchase the DASNY bonds (Exhibit D).
B. CONTRACTUAL AND LEGISLATIVE PROVISIONS GUARANTEE 44. Given the plain and unambiguous language of Chapter 5 L98 and the plain and unambiguous contractual language found in DASNY's October 28, 1998 bond resolutions (see Exhibit C1, C-2), and the plain and unambiguous language found in the October 28, 1998 Financing Agreement between DASNY and OGS (see Exhibit C-3), and the plain and unambiguous language found in DASNY's Preliminary Official Statement (see Exhibit D), all used to induce investors to purchase DASNY's bonds, the bondholders would have no difficulty, under Article VII, Section 16, obtaining a Writ of Mandamus from a co-equal, independent Judiciary, to compel the State Comptroller to impound the next moneys to arrive in the State's General Fund, and to use those funds to pay the principal and interest due on the DASNY bonds if the Legislature failed to appropriate the moneys required to service those bonds -- bonds clearly issued on behalf of the State. 45. For instance, Chapter 5 of the Laws of 1998, which amends the Public Authorities Law by adding Section 1680.35 and Section 1680.36 reads as follows: "(a)The dormitory authority is empowered and authorized to enter into a lease, sublease, lease purchase, or other agreement with the office of general services of the state of New York on behalf of the department of audit and control of the state of New York pursuant to which one or more facilities are to be designed, acquired, constructed, reconstructed, rehabilitated, improved or otherwise provided for the department of audit and control of the state of New York, the New York state and local employees' retirement system and the New York state and local police and fire retirement system and pursuant to which such facilities are to be furnished or equipped provided, however, that any contract or lease for construction, reconstruction or rehabilitation authorized by this subdivision shall be governed by article eight of the labor law. Such lease, sublease, lease purchase, or other agreement may provide for the payment of annual rentals and other payments by the department of audit and control of the state of New York to the dormitory authority from appropriations as provided in paragraph (c) of this subdivision or from payments made pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to paragraph (f) of this subdivision and contain such other terms and conditions as may be agreed upon by the parties thereto, including but not limited to, provisions relating to the maintenance and operation of the facilities, the establishment of reserve funds, indemnities and the disposition of a facility or the interest of the dormitory authority therein, if any, prior to or upon termination or expiration of such lease, sublease or other agreement. Such lease, sublease, lease purchase, or other agreement shall be subject to the approval of the director of the budget." (b) Any such lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision may provide that the provisions thereof shall remain in full force and effect until the issue of the bonds of the dormitory authority to which it relates, together with interest thereon, interest on any unpaid installments of interest and the fees and expenses of the dormitory authority, are fully met and discharged, and any payments to be made by the state, the New York state and local employees' retirement system and the New York state and local policy and fire retirement system pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to paragraph (f) of this subdivision may be pledged by the dormitory authority to secure such bonds. (c) Any agreement entered into pursuant to this subdivision by and between the dormitory authority and the office of general services on behalf of the department of audit and control shall provide for state commitments to provide annually to the department of audit and control an amount equal to the aggregate amount of all annual rentals due to the dormitory authority from the department of audit and control on account of such facilities for the department of audit and control, the New York state and local employees' retirement system and the New York state and local police and fire retirement system pursuant to any such lease, sublease, lease purchase, or other agreement. Any such lease, sublease, lease purchase or other agreement shall further provide that the obligation of the state to appropriate amounts to the department of audit and control to pay annual rentals due to the dormitory authority from the department of audit and control on account of facilities for the department of audit and control, the New York state and local employees' retirement system and the New York state and local police and fire retirement system pursuant to any such lease, sublease, lease purchase or other agreement shall not constitute a debt of the state within the meaning of any constitutional and/or statutory provisions and shall be deemed executory only to the extent state moneys are appropriated and that no liability shall be incurred by the state beyond the moneys appropriated for that purpose and that such obligation is subject to annual appropriations by the legislature. (d) On or before November fifteenth of each year, the dormitory authority shall submit and thereafter may resubmit to the commissioner of general services, the director of the budget, the comptroller, the chairperson of the senate finance committee and the chairperson of the assembly ways and means committee, a report setting forth the amounts, if any, of all annual rentals and other payments estimated to be due in the succeeding state fiscal year to the dormitory authority from the department of audit and control pursuant to any lease, sublease, lease purchase, or other agreement between the dormitory authority and the office of general services on behalf of the department of audit and control entered into on or after July first, nineteen hundred ninety-seven to provide facilities for the department of audit and control, the New York state and local employees' retirement system and the New York state and local police and fire retirement system. (e) Notwithstanding any provision of law to the contrary, any lease, sublease, lease purchase or other agreement, including any contract for construction, reconstruction, rehabilitation or improvement entered into pursuant to this subdivision shall not be subject to public auction or bidding or any restriction as to the term of such lease, sublease, lease purchase or other agreement; provided however, that, with respect to any lease, sublease, lease purchase, or other agreement for facilities for the department of audit and control, the New York state and local employees' retirement system and the New York state and local police and fire retirement system, the dormitory authority shall determine that there has been a competitive process sufficient to comply with the authority's procurement contract guidelines as required pursuant to section twenty-eight hundred seventy-nine of this chapter. (f) Nothing herein shall be construed to diminish the authority of the comptroller, in his capacity as trustee of the New York state and local employees' retirement system and the New York state and local police and fire retirement system, to be a party to any agreement authorized pursuant to paragraph (a) of this subdivision or, in accordance with the provisions of this title to enter into separate leases, subleases, lease purchases or other agreements with the dormitory authority pursuant to which one or more facilities are to be designed, acquired, constructed, reconstructed, rehabilitated, improved or otherwise provided for the New York state and local employee's retirement system and the New York state and local police and fire retirement system. " (Plaintiffs' emphasis). Section 1680.35 NYS Public Authorities Law " (a) The dormitory authority is empowered and authorized to enter into a lease, sublease, lease purchase, or other agreement with the office of general services of the state of New York pursuant to which one or more facilities are to be acquired, designed, constructed, reconstructed, rehabilitated, improved or otherwise made available for the provision of parking facilities for the state of New York in the city of Albany, New York and pursuant to which such facilities are to be furnished or equipped an in furtherance of such authorization, the commissioner of general services is hereby empowered to grant or convey to the dormitory authority, such lands as may be necessary for such purposes upon such terms and conditions as the commissioner of general services may fix and determine provided, however, that any contract or lease for construction, reconstruction or rehabilitation authorized by this subdivision shall be governed by article eight of the labor law. Such lease, sublease, lease purchase, or other agreement may provide for the payment of annual rentals and other payments by the state of New York on behalf of the departments or agencies having occupancy of use thereof to the dormitory authority from appropriations as provided in paragraph (c) of this subdivision and may contain such other terms and conditions as may be agreed upon by the parties thereto, including but not limited to, provisions relating to the maintenance and operation of the facilities, the establishment of reserve funds, indemnities and the disposition of a facility or the interest of the dormitory authority therein, if any, prior to or upon termination or expiration of such lease, sublease, lease purchase or other agreement. Such lease, sublease, lease purchase, or other agreement shall be subject to the approval of the director of the budget. (b) Any such lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision may provide that the provisions thereof shall remain in full force and effect until the issue of the bonds of the dormitory authority to which it relates, together with interest thereon, interest on any unpaid installments of interest and the fees and expenses of the dormitory authority, are fully met and discharged, and any payments to be made by the state, pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to this subdivision may be pledged by the dormitory authority to secure such bonds. (c) Any lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision by and between the dormitory authority and the state of New York by the office of general services with respect to such parking facilities shall provide for state commitments to provide annually an amount equal to the aggregate amount of all annual rental due to the dormitory authority from the state on behalf of the state departments and agencies having occupancy or use of such facilities. Any such lease, sublease, lease purchase, or other agreement shall further provide that the obligation of the state to appropriate amounts to pay annual rentals due to the dormitory authority pursuant to any such lease, sublease, lease purchase, or other agreement shall not constitute a debt of the state within the meaning of any constitutional and/or statutory provisions and shall be deemed executory only to the extent state moneys are appropriated and that no liability shall be incurred by the state beyond the moneys appropriated for that purpose and that such obligation is subject to annual appropriations by the legislature. (d) On or before November fifteenth of each year, the dormitory authority shall submit to the commissioner of general services, the director of the budget, the comptroller, the chairperson of the senate finance committee and the chairperson of the assembly ways and means committee, a report setting forth the amounts, if any, of all annual rentals and other payments estimated to be due in the succeeding state fiscal year to the dormitory authority pursuant to any lease, sublease, lease purchase, or other agreement between the dormitory authority and the office of general services on behalf of the state entered into hereafter to provide for parking facilities for the state of New York in the city of Albany." (Plaintiffs' emphasis). Section 1680.36 NYS Public Authorities Law
C. A METRO AUTHORITY BOND HOLDER UNDER CHAPTER 124 L98 46. Given the plain and unambiguous language of Article VII, Section 16 of the NY Constitution and the plain and unambiguous language of Chapter 124 L98, language undoubtedly to be relied upon by investors to purchase Metro Authority bonds, the bondholders would have no difficulty obtaining a Writ of Mandamus from a co-equal, independent Judiciary, to compel the State Comptroller to impound the next moneys to arrive in the State's General Fund, and to use those funds to pay the principal and interest due on the Metro Authority bonds if the Comptroller failed to make the payment of the moneys required to service those bonds -- bonds clearly issued on behalf of "the State," including one of its political subdivisions, Schenectady County. 47. For instance, Chapter 124 reads in part (see Exhibit A for full text): "Pursuant to subdivision (c) of section twelve hundred ten-c of the tax law, the county of Schenectady shall dedicate one-half of one percent county sales and compensating use tax on all sales and compensating uses taxable pursuant to article twenty-nine of the tax law, and shall annually deposit such net collections received therefrom in, the Schenectady metroplex development authority support fund. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county shall transfer seventy percent of all net collections received from the one-half of one percent sales and compensating use tax and deposited in the Schenectady metroplex development authority support fund to the authority for deposit in the authority's general fund. The authority may use such dedicated sales tax revenue received for any lawful purpose or power of the authority. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county, after transferring seventy percent of all net collections received from the one-half of one percent sales and compensating use tax in the Schenectady metroplex development authority support fund to the authority for deposit in the authority's general fund, shall transfer all remaining monies in the Schenectady metroplex development authority support fund to the Schenectady county real property tax abatement and economic development fund." Section 2661.9 "Tax revenues received by the authority pursuant to section twelve hundred ten-C of the tax law, shall be applied in the following order of priority: first pursuant to the authority's contracts with bondholders, then to pay the authority's operating expense not otherwise provided for, and then the balance of such taxes not required to meet contractual or other obligations of the authority shall be deposited in the general fund of the authority." (Plaintiffs' emphasis). Section 2663.2 "The authority shall have the power and is hereby authorized from time to time to issue bonds, notes or other obligations in conformity with applicable provisions of the uniform commercial code to pay the cost of any project, the establishment of reserves to secure the bonds, the payment of principal of, premium, if any, and interest on the bonds and the payment of incidental expenses in connection therewith. The aggregate principal amount of such bonds, notes or other obligations shall not exceed fifty million dollars ($50,000,000), excluding bonds, notes or other obligations issued to refund or repay bonds, notes or other obligations therefore issued for such purposes." Section 2665.1 "Any resolution or resolutions authorizing bonds or any issue of bonds by the authority may contain provisions which may be a part of the contract with the holders of the bonds thereby authorized as to: (a) Pledging all or part of the revenues, together with any other monies or property of the authority to secure the payment of the bonds, or any costs of issuance thereof, including but not limited to, any contracts, earnings or proceeds of any grant to the authority received from any private or public source subject to such agreements with bondholders as may then exist." Section 2665.5(a) "In addition to the powers herein conferred upon the authority to secure its bonds, the authority shall have the power in connection with the issuance of bonds to adopt resolutions and enter into such trust indentures, agreements or other instruments as the authority may deem necessary, convenient or desirable concerning the use or disposition of its revenues or other monies or property, including the mortgaging of any property and the entrusting, pledging or creation of any other security interest in any such revenues, monies or property and the doing of any act, including refraining from doing any act which the authority would have the right to do in the absence of such resolutions, trust indentures, agreements or other instruments. The authority shall have power to enter into amendments of any such resolutions, trust indentures, agreements or other instruments within the powers granted to the authority by this title and to perform such resolutions, trust indentures, agreements or other instruments. The provisions of any such resolutions, trust indentures, agreements or other instruments may be made a part of the contract with the holders of bones of the authority." Section 2665.6 "Such trustee may, and upon written request of the holders of twenty-five per centum in principal amount of such bonds outstanding shall, in its own name: (a) By action or proceeding in accordance with the civil practice law and rules, enforce all rights of the bondholders, including the right to require the authority to collect rents, rates, fees and charges adequate to carry out any agreement as to, or pledge of, such rents, rates, fees and charges and to require the authority to carry out any other agreements with the holders of such bonds to perform its duties under this title." Section 2668.2(a) "Neither the state, the county nor any municipality therein shall be liable on the bonds or notes of the authority and such bonds or notes shall not be a debt of the state, the county or of any municipality therein and such bonds and notes shall contain on the face thereof a statement to such effect." Section 2669 "Agreement with state. The state does hereby pledge to and agree with the holders of any bonds issued by the authority pursuant to this title and with those persons or public authorities who may enter into contracts with the authority pursuant to the provisions of this title that the state will not alter, limit or impair the rights hereby vested in the authority to purchase, construct, own and operate, maintain, repair, improve, reconstruct, renovate, rehabilitate, enlarge, increase and extend, or dispose of any project, or any part or parts thereof for which bonds of the authority shall have been issued, to establish and collect rates, rents, fees and other charges referred to in this title, to fulfill the terms of any contracts or agreements made with or for the benefit of the holders of bonds or with any person or public authority with reference to such project or part thereof, or in any way to impair the rights and remedies of the holders of bonds, until the bonds, together with interest thereon, including interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders of bonds, are fully met and discharged and such contracts are fully performed on the part of the authority. The authority is authorized to include this pledge and agreement of the state in any agreement with the holders of bonds. Nothing contained in the section shall be deemed to restrict the right of the state to amend, modify, repeal or otherwise alter statutes imposing or relating to the taxes payable to the authority. Nothing in this section shall be deemed to obligate the state to make additional payments or impose any taxes to satisfy the debt service obligations of the authority." (Plaintiffs' emphasis). Section 2669-a "Agreement with county. The county is authorized to pledge to and agree with the holders of any bonds issued by the authority pursuant to this title and with those persons or public authorities who may enter into contracts with the authority pursuant to the provisions of this title that the county will not alter, limit or impair the rights hereby vested in the authority to purchase, construct, own and operate, maintain, repair, improve, reconstruct, renovate, rehabilitate, enlarge, increase and extend, or dispose of any project, or any part or parts thereof, for which bonds of the authority shall have been issued, to establish, collect and adjust rates, rents, fees and other charges referred to in this title, to fulfill the terms of any agreements made with the holders of the bonds or with any public authority or person with reference to such project or part thereof, or in any way impair the rights and remedies of the holders of bonds, until the bonds, together with interest thereon, including interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders of bonds, are fully met and discharged and such contracts are fully performed on the part of the authority. Nothing in this section shall be deemed to obligate the county to make additional payments or impose any taxes to satisfy the debt service obligations of the authority." (Plaintiffs' emphasis). Section 2669-b "Dedication of taxes authorized for cities and counties. (a) Notwithstanding any other provision of law to the contrary, any authorization for a city or county to impose a tax pursuant to this article, may condition such authorization upon the dedication of such revenue derived from such tax imposed, to a public benefit corporation established as an industrial development agency or an area revitalization agency pursuant to article eighteen-A of the general municipal law or to a public authority established for economic development or transportation purposes pursuant to the public authorities law. (b) In the event that a city or a county imposes a tax pursuant to this article, in accordance with a conditional authorization as described in subdivision (a) of this section, such city or county shall dedicate the revenue from such tax so imposed to the designated public benefit corporation established as an industrial development agency or an area revitalization agency pursuant to article eighteen-A of the general municipal law or public authority established for economic development or transportation purposes pursuant to the public authorities law." ("Plaintiffs' emphasis). Section 1201-d(a),(b) "Sales and compensating use tax for purposes of the Schenectady county metroplex development authority. (a) In addition to the taxes imposed by section twelve hundred ten of this article or any other provision of this article, the county of Schenectady is hereby authorized and empowered to adopt and amend a local law, ordinance or resolution imposing within the territorial limits of said county an additional sales and compensating use tax at the rate of one-half of one percent for the period beginning on or after September first, nineteen hundred ninety-eight and ending August thirty-first, two thousand twenty-eight, which tax shall be identical to the tax imposed by said county pursuant to section twelve hundred ten of this article. Except as hereinafter provided, all provisions of this article, including the definition and exemption provisions and the provisions relating to the administration, collection and distribution by the commissioner, shall apply for purposes of the tax imposed by this section in the same manner and with the same force and effect as if the language of this article had been incorporated in full in this section and had expressly referred to the tax imposed by this section; provided, however, that any provision of this article relating to a maximum rate shall be calculated without reference to the additional sales and compensating use tax herein authorized. For purposes of part IV of article twenty-nine of this chapter, relating to the disposition of revenues resulting from taxes collected and administered by the commissioner, the additional sales and compensating use tax herein provided shall be deemed to be imposed under the authority of section twelve hundred ten of this article and all provisions relating to the deposit, administration and disposition of taxes, penalties and interest relating to a tax imposed by a county under the authority of section twelve hundred ten of this article shall, except as otherwise specifically provided in this section, apply to the additional sales and compensating use tax imposed pursuant to this section." (Plaintiffs' emphasis). Section 1210-C (a) "(b) Notwithstanding any other provision of this article to the contrary, the net collections from the tax imposed pursuant to subdivision (a) of this section for the period beginning on or after September first, nineteen hundred ninety-eight and ending August thirty-first, two thousand twenty-eight shall, upon payment to the county of Schenectady, be deposited in the Schenectady metroplex development authority support fund, pursuant to subdivision nine of section twenty-six hundred sixty-one of the public authorities law, with such fund to be designated as a special dedicated support fund, to be created by said county therefor separate and apart from any other funds and accounts of the county. Pending deposit from such Schenectady metroplex development authority support fund into the general fund of the Schenectady metroplex development authority, all moneys therein may be invested in the manner provided in section eleven of the general municipal law. Any interest earned or capital gain realized on the moneys so deposited or invested shall accrue to and become part of such Schenectady metroplex development authority support fund." (Plaintiffs' emphasis). Section 1210-C (b) "(c) The county of Schenectady shall dedicate one-half of one percent county sales and compensating use tax on all sales and compensating uses taxable pursuant to this article, and shall annually deposit such net collections received therefrom in, the Schenectady metroplex development authority support fund. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county shall transfer seventy percent of all net collections received from the one-half of one percent sales and compensating use tax and deposited in the Schenectady metroplex development authority support fund to the authority for deposit in the authority's general fund. The authority may use such dedicated sales tax revenue received for any lawful purpose or power of the authority [including Public Authorities Law 2663.2]. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county, after transferring seventy percent of all net collections received from the one-half of one percent sales and compensating use tax in the Schenectady metroplex development authority support fund to the authority for deposit in the authority's general fund, shall transfer all remaining monies in the Schenectady metroplex development authority support fund to the Schenectady county real property tax abatement and economic development fund." Section 1210-C (c)
D. SCHULZ V STATE OF NEW YORK, 84 NY2D 231 (SCHULZ I) 48. In Schulz I the Court of Appeals declared the debt of the N.Y.S. Thruway Authority and the Metropolitan Transit Authority, issued pursuant to Chapter 56 of the Laws of 1993, to be constitutional for two reasons: 1) the disclaimer that was in the Act, itself, which declared that payments by the Comptroller to these two public corporations, from State funds, would be "subject to appropriation by the Legislature;" and 2) repayment of the debt was "not legally enforceable." 49. In the instant case, the disclaimer is not included in Chapter 124 of the Laws of 1998 and, as argued above, the debt to be incurred under Chapters 5 and 124 is legally enforceable, extinguishing any stare decisis defense. Debt incurred under the authority of Chapters 5 and 124 would, in fact, be legally enforceable in light of Article VII, Section 16 of the NY Constitution, and the contractual and legislative provisions.
E. SFL 123-b(1) CANNOT PROHIBIT THE JUDICIARY FROM ARTICLE 7-A, WHICH INCLUDES SFL 123-B(1), WAS NAMED 50. Plaintiffs offered the following argument in response to defendants' attempt in the Court below to have the Court dismiss most of the claims against Chapters 5 and 124 for lack of standing under SFL 123-b(1). The following argument is based on a close analysis of Wein v Comptroller, 46 NY2d 394. This argument was not presented or raised in any case which followed Wein v Comptroller, 46 NY2d 394, including any of the Schulz cases, cases in which numerous causes of action were dismissed for "lack of standing under SFL 123-b(1)." 51. In Wein, the Court of Appeals held, "Under prior law it was held that the courts lacked the power to 'interfere' with the 'acts of another department of government' except to determine 'the individual rights of the parties' and that a taxpayer's interest in the expenditure of State moneys was not sufficiently direct or immediate for him to be considered an aggrieved party." (Plaintiffs' emphasis). Wein v Comptroller, 46 NY2d 394, 397, quoting Schieffelin v Komfort, 212 NY 520, 530. NOTE: Plaintiffs in the instant case are clearly identified as citizens, quite apart from their status as taxpayers and quite apart from their status as voters. Plaintiffs are clearly suing as citizens, seeking a declaration of their individual rights under the fundamental law. 52. In Wein, the Court of Appeals went on to say, "In the Boryszewski case we held that a citizen and a taxpayer can maintain an action 'to test the constitutionality of a State statute authorizing the expenditure of State moneys...Thus, the recognition in Boryszewski of the taxpayer's legitimate and significant interest in State expenditures did not call for the recognition of a new constitutional right of standing but rather the abandonment of an old constitutional impediment to standing in these cases...Boryszewski v Brydges, supra at 364." (Plaintiffs' emphasis). Wein v Comptroller, 46 NY2d 394, 397. NOTE: To the extent Chapters 5 and 124 of the Laws of 1998 authorize the State comptroller to make payments to DASNY and to the Metro Authority, plaintiffs, as citizens, and, separately, as taxpayers, are challenging the expenditure of funds of the state. 53. In Wein, the Court of Appeals went on to say, "Within two months of the Boryszewski decision, the Legislature added Article 7-A to the State Finance Law which permits a citizen taxpayer to 'maintain an action for equitable or declaratory relief, or both, against an officer or employee of the State who in the course of his or her duties has caused, is now causing, or is about to cause a wrongful expenditure, misappropriation, misapplication, or any other illegal, or unconstitutional disbursement of state funds or state property, except that the provisions of this subdivision shall not apply to the authorization, sale, execution or delivery of a bond issue, or notes issued in anticipation thereof by the State or any agency, instrumentality or subdivision thereof or by any public corporation, or public benefit corporation'...Subsequent to the effective date of Article 7-A...Boryszewski was extended to permit a taxpayer to challenge the constitutionality of a revenue raising, as distinguished from an expenditure, measure. In Wein v Carey (41 NY2d 498, 500, 501, supra) it was held that a taxpayer had standing to contest the issuance of tax and revenue anticipation notes issued by the State. This was viewed as a logical consequence of Wein v State of New York, 39 NY2d 136, supra), an earlier taxpayer's suit, which involved a claimed unconstitutional lending of the State's credit in connection with the issuance of tax and revenue anticipation notes. In no case however have we held that a taxpayer has standing to challenge the issuance of State bonds or bond anticipation notes." (Plaintiffs' emphasis). Wein v Comptroller, 46 NY2d at 398. NOTE: The complaint in the instant case (para. 3, 4, 5 and 6) has clearly identified plaintiffs: a) as citizens, rather than taxpayers, seeking a declaration of their individual constitutional rights, under the fundamental law, in a challenge to the issuance of bonds by public corporations/instrumentalities of the State; and b) as citizens and also as taxpayers seeking a declaration of their rights in relation to the payment (expenditure) from State funds, by the State comptroller, to DASNY and to the Metro Authority; and c) as voters denied their right to vote on State debt. 54. In Wein, the Court concluded that SFL 123-b(1) "does 'not apply' to taxpayer suits involving revenue raising through State bonds and bond anticipation notes...the statutory 'exception' does indicate a reasonably clear legislative intent to prevent taxpayer challenges with respect to a State 'bond issue or notes issued in anticipation thereof.' (State Finance Law, Section 123-b, subd 1)...Thus we have concluded that whether the taxpayer relies on the statute or the case law, he lacks standing to challenge the issuance of State bonds or bond anticipation notes." NOTE: To repeat, plaintiffs are suing, inter alia, as citizens rather than taxpayers. Plaintiffs, as citizens, have a right to seek a declaration of their individual, constitutional rights under the fundamental law, in a challenge to actions alleged to have violated Article VII, Article VIII and Article X of the N.Y. Constitution. Otherwise, what would be the purpose of the Constitution? Of the Judiciary? 55. A construction of SFL 123-b(1) which would allow the Judiciary to dismiss such a constitutional challenge by citizens to the "authorization, sale, execution or delivery of a bond issue or notes issued in anticipation thereof by the State or any agency, instrumentality or subdivision thereof, or by any public corporation" would mean SFL 123-b(1) would be abrogated. It would be unconstitutional, null and void because it would be violative of fundamental republican principles and of the citizens right to petition the government for a redress of grievances. See for instance, NY Constitution Article I, Section 14. 56. Under Point I in its Memo of Law, submitted to the Court below, the State argued, "the exception in subdivision (1) of section 123-b of the State Finance Law does not deprive citizens of generalized standing with respect to certain bonding issues or deprive them of anything – it simply does not of itself confer taxpayer standing with respect to bonding. Thus all plaintiffs must do with respect to a challenge to the authorization, sale, execution or delivery of bond issues or notes issued in anticipation thereof by the State or any State agency is point to a justiciable basis for standing independent of Section 123-b with respect to same, like the right to vote upon State bonding under section 11 of article VII of the State Constitution." 57. The State knows that standing rises to a constitutional right on matters of constitutionality and that the courthouse door cannot be closed to citizens seeking judicial review of legislative acts on constitutional grounds, as in the case at bar, without violating numerous controlling principles of law. 58. Under Point I in its Memo of Law, the State went on to argue, "Nothing in this record that indicates that section 123-b of the State Finance Law in any way prohibits plaintiffs from suing, speaking, assembling, grieving, voting, and enjoying all the privileges, immunities and constitutional protections they otherwise have. Plaintiffs retain the right to assert any other statutory or constitutional right they may have to challenge bond-related enactments, provided only that they present a justiciable controversy in doing so. For these reasons, challenges to the constitutionality of section 123-b(1) of the State Finance Law have been repeatedly rebuffed." 59. The grammar of the first sentence in paragraph 58 is not correct, so the meaning is a bit blurred. However, the State seems to be saying that SFL 123-b(1) has not been used by the judiciary to prevent plaintiffs from seeking the protections of any constitution in any of the Wein or Schulz cases, so, therefore, SFL 123-b(1) is not unconstitutional. This is utter nonsense. Plaintiffs Schulz, Wein and others have had numerous constitutional claims, against numerous acts of the Legislature authorizing the incurrence of public debt, brought in numerous lawsuits, dismissed for lack of standing, citing SFL 123-b(1). See, for instance, Wein v Comptroller, 46 NY2d 394; Coalition v Coughlin, 64 NY2d 660 (the UDC prison construction case); Schulz v State, 185 AD2d 596, 81 NY2d 336 (the UDC Attica case); Schulz v State, 193 AD2d 171, 84 NY2d 231 (the Thruway Authority $6 billion case); Schulz v NYS Executive, 233 AD2d 43, __ NY2d __ (the Clean Water/Clean Air Bond Act case); and Schulz v NYS Legislature, __ AD2d __ (July 30, 1998), app dismissed __ NY2d __ (October 22, 1998), lv to appeal pending (the NYC Transition Finance Authority case). 60. The final sentence in the quote in paragraph 58 above is a non-sequitur and avoids plaintiffs' primary argument against SFL 123-b(1) -- that it cannot be used to dismiss constitutional claims without violating the petition clause of the 1st Amendment, the guarantee clause of Article IV and the privileges and immunities clause of the 14th Amendment, all of the US Constitution. 61. SFL 123-b(1) is unconstitutional. Unfortunately, SFL 123-b(1) has never been compared with the fundamental law, including the petition clause of the 1st Amendment to the US Constitution. Defendants were not able to show otherwise in the Court below. 62. Defendants pointed the Court's attention to page 4 of the Opinion and Order of the Appellate Division in Schulz v NYS Legislature, __ AD2d __ (July 30, 1998). "We have no quarrel with the proposition, that plaintiffs indeed possess standing as voters to assert that the public referendum requirement of N.Y. Constitution, Article VII, Section 11 (See, e.g., Matter of Schulz v New York State Executive, 233 AD2d 43, 48, aff'd __ NY2d __ [June 9, 1998] [finding that the Court of Appeals' decision in Matter of Schulz v State of New York (81 NY2d 336) evidenced 'an intent to permit voter standing in an action or proceeding predicated upon an alleged violation of any of the fundamental requirements of N.Y. Constitution, Article VII, Section 11'])...Such standing does not, however, extend to plaintiffs' claims that the Act violates N.Y. Constitution, Article VII, Section 8 (gift or loan of State money or credit), N.Y. Constitution, Article VIII, Section 12 (limits upon local indebtedness) or N.Y. Constitution, Article X, Section 5 (restriction on assumption of obligations of a public corporation), as such provisions are not linked to any voting rights (see, e.g., Matter of Schulz v State of New York, 193 AD2d 171, affd 84 NY2d 231, cert denied 513 AD2d 1127)." 63. Implied in this opinion is the belief that State Finance Law Section 123-b(1) was, itself, compared with the fundamental law and found to be constitutional, in one or more of the constitutional law cases brought by Robert L. Schulz against the incurrence of public debt, between 1990 and 1998, or in one or more of the constitutional law cases brought by Professor Wein between 1975 and 1982 against the incurrence of public debt. 64. In fact, no court has ever compared State Finance Law Section 123-b(1) with the fundamental law, including the right to petition clause of the U.S. Constitution (1st Amendment) and the N.Y. Constitution (Article I, Section 9.1), or the right to a government republican in form and substance clause (Article IV, Section 4) of the U.S. Constitution, or the freedom from State laws which abridge our privileges and immunities (Section 1, cl 2, 14th Amendment). Plaintiff Schulz challenged the constitutionality of SFL 123-b(1) in the so-called "Attica case" (Schulz v State of N.Y., 185 AD2d 596, 81 NY2d 336, and in numerous cases since then. In 185 AD2d 596 the appellate Division said that based on Wein v Comptroller 46 NY2d 394, SFL 123-b(1) was not unconstitutional. However, the constitutionality of SFL 123-b(1) was not addressed or determined in Wein v Comptroller. The Unified Court System has continued to misapprehend this material fact.
CONCLUSION 65. Based on the above and on the complaint (attached), plaintiffs respectfully request an order granting a preliminary injunction pending the appeal from the order of Supreme Court, issued November 20, 1998. ROBERT L. SCHULZ, Pro Se, 2458 Ridge Road, Queensbury, NY 12804 BURR V. DEITZ, Pro Se, 444 Whitehall Road ,Albany, NY 12208 CATHERINE M.J. WAJDA, Pro Se, 2165 The Plaza, Schenectady, NY 12309-5831 STATE OF NEW YORK _____________________________________________ ROBERT L. SCHULZ, CATHERINE M.J. WAJDA, AFFIDAVIT - against - THE NEW YORK STATE LEGISLATURE, SHELDON SILVER, Robert L. Schulz, Catherine M.J. Wajda, Elmer F. Bertsch and Burr V. Deitz, being duly sworn, depose and say: 1. We are plaintiffs in the matter captioned above and we make this affidavit in opposition to the motion to dismiss by defendants, in support of the motion to intervene and in opposition to the motion to dismiss by the Dormitory Authority of the State of New York and in support of plaintiffs’ motion for injunctive relief and for a final order. 2. Initially, plaintiffs informed counsel to the N.Y.S. Dormitory Authority ("DASNY") that plaintiffs would oppose any motion to intervene on the ground a) that there was no evidence that DASNY would soon be issuing any bonds under the authority of Chapter 5 of the Laws of 1998 (the "Albany Act"); b) that this action attacks the power of the legislative and executive branches to adopt the Albany Act; and c) that DASNY would not be prejudiced in any way if they were not a party to the case because the interests of DASNY would be well represented by the N.Y.S. Department of Law which is representing the Legislature and the Executive defendants. 3. Now, however, there is evidence that DASNY’s Board of Directors passed a Bond Resolution on October 28, 1998, and may be close to issuing bonds. Plaintiffs are moving to restrain the issuance of bonds. Any court order directing defendants to refrain from issuing tax-supported bonds through DASNY under the Albany Act would in all likelihood, be appealed by defendants on the incredible ground that DASNY is not a part of the legislative or executive branches of the government of the State of New York. A statutory stay of the order on appeal would apply. Plaintiffs would then have to seek an order vacating the stay, and so on. 4. Under the circumstances of this case, and in the interest of plaintiffs’ resources and the economy of the Court, and without prejudicing our right to challenge any notion that DASNY is not part of the government of the State of New York and limited by the Constitution of the State of New York, plaintiffs do not oppose DASNY’s motion to intervene. 5. Attached is a copy of the video tape provided by the Albany Law School of the oral arguments on June 7, 1994, before the New York State Court of Appeals in Schulz v State of New York, 84 NY2d 231.
PLAINTIFFS ARE ENTITLED TO INJUNCTIVE RELIEF 6. By Order to Show Cause, plaintiffs request an order: a) preliminarily enjoining and prohibiting DASNY from issuing any bonds or incurring any expense under, and the State Comptroller from making any payments pursuant to, Chapters 5 and 124 of the Laws of 1998, until the Court makes a determination of the underlying claims in this matter, and b) temporarily enjoining and prohibiting DASNY from issuing any bonds or incurring any expense under, and the State Comptroller from making any payments pursuant to, Chapters 5 and 124 of the Laws of 1998, until the return date of the motion for a preliminary injunction or any adjournment or extension thereof. 7. Plaintiffs are entitled to such injunctive relief. They have a strong likelihood of succeeding on the merits. See plaintiffs’ Memorandum of Law (attached). Without the injunctive relief, plaintiffs will suffer the injury and harm they are seeking by this action, to prevent. Without the injunctive relief, that harm will be immediate and irreparable. The State will have contracted for tax-supported debt in spite of the debt-limiting restrictions of the Constitution, and the Comptroller will be making dedicated payments from tax revenues under his care and management to the Schenectady Metroplex Development Fund. On the other hand, if the injunctive relief is granted, neither defendants nor intervenors will not be unduly harmed or prejudiced. A balancing of the equities argues in favor of plaintiffs. ROBERT L. SCHULZ Pro Se
MEMORANDUM OF LAW IN OPPOSITION TO Index No. 5545-98 (all Tables have been omitted from this website) DATED: November 16, 1998
PRELIMINARY STATEMENT This Memorandum of Law accompanies plaintiffs’ affidavit of even date and is in opposition to defendants’ motions to dismiss and in support of plaintiffs’ motion for injunctive relief. Plaintiffs will establish that the defendants would have the Court misapply controlling principles of law and misapprehend material facts. In the interest of justice and jurisprudence, this Court should grant plaintiffs’ request for relief. Chapter 5 of the New York Laws of 1998 authorizes the Dormitory Authority of the State of New York ("DASNY") to issue tax-supported, long-term bonds to finance the construction of new buildings in Albany which will be State owned and occupied (the "Albany Plan"). Chapter 124 of the New York Laws of 1998 authorizes the Schenectady Metroplex Development Authority ("Metro Authority") to issue tax-supported bonds to finance construction of public facilities in Schenectady County (the "Schenectady Plan"). In regard to Chapters 5 and 124 of the New York Laws of 1998, plaintiffs seek a declaration of their constitutional rights under the New York Constitution, Article VII (sections 11, 7 and 8), Article VIII (sections 1, 2 and 12), Article X (section 5) and by, extension, under Article IV, Section 4 of the Constitution of the United States and the 14th Amendment thereto. Table 3, which follows this page, provides a summary glimpse of plaintiffs’ claims as they apply to Chapter 5 L98 and Chapter 124 L98. Defendants move to dismiss plaintiffs’ challenge to Chapters 5 and 124. Plaintiffs oppose the motions. In sum, defendants’ arguments are threefold: 1) regarding plaintiffs’ Article VII, section 11 (voter referendum) claim, defendants argue, relying on Schulz v State, 84 NY2d 231, that the bonds of DASNY and the Metro Authority would not be legally enforceable and, therefore, would not be debt within the meaning of Article VII, section 11; 2) regarding plaintiffs’ Article, section 7 claim (no payment by State comptroller without appropriations by law), defendants argue that Saratoga Harness Racing Assn., 22 NY2d 119 is dispositive; and 3) regarding the rest of plaintiffs’ claims, including but not limited to plaintiffs’ Article X, section 5 claim (no state or local tax revenues can be used to pay any part of any obligations of any public corporation such as DASNY and the Metro Authority), defendants, relying on Wein v Comptroller, 46 NY2d 394, argue that plaintiffs are prevented by SFL 123-b(1) from suing. In sum, plaintiffs’ response to these categorical defenses are as follows: 1) the bonds of DASNY and the Metro Authority would be legally enforceable given a) the mandates of Article VII, Section 16 of the NY Constitution, an issue not considered in Schulz v State, 84 NY2d 231, and b) the provisions of Chapters 5 and 124 themselves which provide for, hold out the promise of, and mandate payment of principal and interest by the comptroller from tax funds; 2) this case is clearly distinguishable from Saratoga Harness Racing Assn. where fees, not taxes, were the issue and where payment did not involve the State Comptroller or funds under the care and management of the State Comptroller; and 3) Wein v Comptroller prohibits mere taxpayers, but not citizens, from challenging public borrowing. Otherwise, SFL 123-b(1) would be unconstitutional, as a violation of the citizens’ fundamental right to petition the government for a redress of grievances, i.e., a citizen’s right to seek a declaration of his individual rights. Table 4, which follows this page, provides a summary glimpse of defendants’ arguments and plaintiffs’ responses which are argued more fully in the points below. In regard to SFL 123-b(1), plaintiffs seek a declaration of their constitutional rights under SFL 123-b(1) and under the right to petition clauses of the N.Y. and U.S. Constitutions. Table 5 provides a summary glimpse of plaintiffs’ claims as they apply to SFL 123-b(1). Defendants move to dismiss plaintiffs’ challenge to SFL 123-b(1). Plaintiffs oppose the motions. In sum, defendants argue, incredibly, that SFL 123-b(1) "does not deprive citizens of generalized standing with respect to certain bonding issues or deprive them of anything...Nothing in this record that indicates that Section 123-b(1) of the State Finance Law in any way prohibits plaintiffs from suing...challenges to the constitutionality of Section 123-b(1) have been repeatedly rebuffed." (Defendants’ Memorandum of Law, page 4). In sum, plaintiffs’ response is that while it is true that SFL 123-b(1), a part of the Taxpayer Act of 1975, is written to prevent mere taxpayers from challenging the issuance of bonds, it has been used to dismiss claims by citizens who were seeking a declaration of their individual rights in constitutional challenges to bond issues. It is on that basis that plaintiffs’ attack the constitutionality of SFL 123-b(1). Table 6 provides a summary glimpse of defendants’ arguments and plaintiffs’ responses which are argued more fully in the points below. The issues are of great public importance. At stake is the right of the majority of people to control the incurrence of public debt and the overburdensome level of taxation that results when a law is enacted which closes the door to judicial review of other laws which authorize the unconstitutional incurrence of public debt. Fundamental rights are invaded, weakened, limited or destroyed by the legislative acts under challenge. They are evidently of the kind which has been frequent of late, a kind which has been so frequent of late, a kind which is meant to protect some class in the community against the fair, free and full competition of some other class (the ordinary, non-aligned citizens who happen also to be voters and who happen also to be taxpayers), the members of the former class thinking it impossible to hold their own against such competition, and therefore flying to the Legislature to secure some enactment which shall operate favorably to them or unfavorably to their competitors in the socio-political and socio-economic fields. The acts under challenge restrain the ordinary, non-aligned citizen in the free enjoyment of his faculties, which he ought to have and use in the pursuit of his happiness. These laws interfere with plaintiffs’ right not to have the fruits of their labor taken from them except by constitutional due process. If these laws and others like it are valid, the fact of their existence is a complete answer to the complaints of the citizens as plaintiffs, that their liberty and freedom from oppressive debt and taxation are greatly impaired. The legislative acts under challenge here are as opposed to a safe state policy as to the very letter of the Constitution. SFL 123-b(1), if left undisturbed by the court, would mean laws can be enacted which can restrict the judicial authority to hear constitutional challenges to the acts of the other branches and to fashion remedies; a patently unconstitutional infringement on the power of the judiciary. Chapters 5 and 124, if left undisturbed by the court would mean the executive and legislative can merely refer to "economic development" or a "need for more government office space" as their justification for circumventing the inconvenient but intentionally protective constitutional debt limiting provisions. Chapters 5 and 124, if left undisturbed by the court would mean the legislative and executive branches will henceforth be able to : 1) use public authorities to incur debt on behalf of the state and its municipalities; 2) have the Authority contract with the State and/or one of its municipalities to apply tax revenues to the Authority for the priority purpose of servicing that debt; 3) assign (by contract) the debt service contract to a trustee of the bondholders, thereby transferring the State’s pledge of tax revenues to the bondholders; 4) contract directly with the bondholders, pledging to never pass any laws which would weaken the State’s contractual commitments to assign tax revenues to the Authority; and 5) paper over the whole misdeed with a legislative disclaimer of "subject to annual appropriation of the legislature," and a disclaimer of "not public debt." However, in spite of the above, if push ever came to shove whereby the State attempted to get away with not servicing the debt timely, the State would be forced to pay the bondholders based not only on the strength of the promise of the provisions of the Chapter laws themselves, but upon the mandates of Article VII, Section 16 of the NY Constitution -- the clear language, and intent of the framers being "New York will service its debts above all else."
QUESTIONS PRESENTED 1. Whether payment of the principal of and the interest on the bonds of DASNY and the Metroplex Authority would be legally enforceable. 2. Whether SFL 123-b(1) can deny plaintiffs, as citizens, standing to challenge Chapters 5 and 124 and to seek a declaration of their constitutional rights. 3. Whether Saratoga Harness Racing Association v Agriculture and Horse Breeding Dev. Fund, 22 NY2d 119 is dispositive of plaintiffs’ Article VII, Section 7 claim against the Metro Authority Act. 4. Whether plaintiffs’ fundamental rights under the U.S. Constitution to petition the government for a redress of constitutional grievances (First Amendment), to a guarantee against State laws which abridge fundamental privileges and immunities (Section 1, Clause 2 of the Fourteenth Amendment), to have state judges bound by the provisions of the U.S. Constitution (Article VI, cl 2), and to a government republican in form and substance (Article IV, Section 4) have been violated by the New York State Legislative and Executive when they enacted State Finance Law Section 123-b(1) which, in the case of matters involving the incurrence of public debt, is preventing plaintiffs as citizens from petitioning State courts for a redress of State constitutional grievances. 5. Whether the will and intent of the people to prohibit any and all payments out of funds under the management of the State without appropriations by law, as expressed in Article VII, Section 7 of the NY Constitution has been violated by Chapter 124 of the Laws of 1998, thereby abrogating the Act. 6. Whether the will and intent of the people to prohibit the use of State and local funds to pay any part of any debt obligation of any public corporation, as expressed in Article X, Section 5 of the NY Constitution has been violated by Chapters 5 and 124 of the Laws of 1998, thereby abrogating the Acts. 7. Whether the will and the intent of the people to prohibit the State and the County of Schenectady from lending their credit to a public corporation as expressed in Article VII, Section 8 and Article VIII, Section 1 of the NY Constitution has been violated by Chapters 5 and 124 of the Laws of 1998, thereby abrogating the Acts. 8. Whether the will and intent of the people to prohibit the State from contracting indebtedness without the approval of the voters, as expressed in Article VII, Section 11 of the NY Constitution has been violated by Chapters 5 and 124 of the Laws of 1998 thereby abrogating the Acts. 9. Whether the will and intent of the people to prohibit the County of Schenectady from contracting indebtedness without pledging the full faith and credit of the County for the payment of the principal thereof and the interest thereon, as expressed in Article VIII, Section 2 of the NY Constitution has been violated by Chapter 124 of the Laws of 1998, thereby abrogating the Act. 10. Whether the will and intent of the people to restrict abusive borrowing and credit lending, as expressed in Article VIII, Section 12 of the NY Constitution has been violated by Chapter 124 of the Laws of 1998, thereby abrogating the Act. 11. Whether Chapters 5 and 124 of the Laws of 1998 violate the US Const. (Art. IV, 1st and 14th Amendments).
FEDERAL CONSTITUTIONAL PROVISIONS INVOLVED 1. The preamble to the Constitution of the United States provides: "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquillity, provide for the common Defence, promote the general Welfare and secure the Blessing of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." 2. Article VI of the Constitution of the United States provides in relevant part: "The Judges in every state shall be bound by this Constitution." 3. The First Amendment to the United States Constitution reads, in relevant part: "Congress shall make no law...abridging...the right of the people…to petition the Government for a redress of grievances." 4. The Fourteenth Amendment (Clause 2) to the United States Constitution provides, in relevant part: "No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States...." 5. An implicit constitutional (structural) safeguard is "separated powers" among the legislative, executive and judicial branches. 6. Article IV, Section 4 of the United States Constitution reads in relevant part: "The United States shall guarantee to every citizen in this Union a republican form of government."
NEW YORK CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED 7. New York State Finance Law Section 123-b(1) reads: "notwithstanding any inconsistent provision of law, any person, who is a citizen taxpayer, whether or not such person is or may be affected or specially aggrieved by the activity herein referred to, may maintain an action for equitable or declaratory relief, or both against an officer or employee of the state who in the course of his or her duties has caused, is now causing, or is about to cause a wrongful expenditure, misappropriation, misapplication, or any other illegal or unconstitutional disbursement of state funds or state property, except that the provisions of this subdivision shall not apply to the authorization, sale, execution, or delivery of a bond issue or notes issued in anticipation thereof by the state or any agency, instrumentality or subdivision thereof or by any public corporation or public benefit corporation." (Petitioners’ emphasis) 8. Article I, Section 9.1 of the New York Constitution provides in relevant part: "No law shall be passed abridging the rights of the people peaceably to assemble and to petition the government or any department thereof...." 9. Article VII, Section 7 of the New York Constitution reads: "No money shall ever be paid out of the state treasury or any of its funds, or any of the funds under its management; except in pursuance of an appropriation by law...." Article VII, Section 7, NY Constitution 10. Article VII, Section 8 of the New York Constitution reads: "...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...." Article VII, Section 8, New York Constitution 11. Article VII, Section 11 of the New York Constitution reads: "no debt shall be hereinafter contracted by or in behalf of the state, unless such debt shall be authorized by law, for some single work or purpose, to be distinctly specified therein. No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election...." Article VII, Section 11, New York Constitution 12. Article VII, Section 16 of the New York Constitution reads: "The Legislature shall annually provide by appropriation for the payment of the
interest upon and installments of principal of all debts or refunding debts created on
behalf of the state...as the same shall fall due, and for the contribution to all of the
sinking funds created by law...If at any time the legislative shall fail to make any such
appropriation, the comptroller shall set apart from the first revenues thereafter
received, applicable to the general fund of the state, a sum sufficient to pay such
interest, installments of principal, or contributions to such sinking fund, as the case
may be, and shall so apply the moneys thus set apart. The comptroller may be required to
set aside and apply such revenues as aforesaid, at the suit of any holder of such
bonds." (Plaintiffs’ emphasis). 13. Article VIII, Section 1 of the New York Constitution reads: "...nor shall any county, city, town, village or school district give or loan its credit to or in aid of any individual, or public or private corporation or association, or private undertaking...." Article VIII, Section 1, New York Constitution 14. Article VIII, Section 2 of the New York Constitution reads: "No indebtedness shall be contracted by any county, city, town, village or school district unless such county, city, town, village or school district shall have pledged its faith and credit for the payment of the principal thereof and the interest thereon...Provision shall be made annually by appropriation by every county, city, town, village and school district for the payment of interest on all indebtedness and for the amounts required for (a) the amortization and redemption of term bonds, sinking fund bonds and serial bonds...." Article VIII, Section 2, New York Constitution 15. Article VIII, Section 12 of the New York Constitution reads: "It shall be the duty of the legislature, subject to the provisions of this constitution, to restrict the power of taxation, assessment, borrowing money, contracting indebtedness, and loaning the credit of counties, cities, towns and villages, so as to prevent abuses in taxation and assessments and in contracting of indebtedness by them...." Article VIII, Section 12, New York Constitution 16. Article X, Section 5 of the New York Constitution reads: "Neither the state nor any political subdivision thereof shall at any time be liable for the payment of any obligations issued by such a public corporation heretofore or hereafter created, nor may the legislature accept, authorize acceptance of or impose such liability upon the state or any political subdivision thereof...." Article X, Section 5, New York Constitution 17. Chapter 124 of the Laws of 1998 reads in relevant part: "Pursuant to subdivision (c) of section twelve hundred ten-c of the tax law, the county of Schenectady shall dedicate one-half of one percent county sales and compensating use tax on all sales and compensating uses taxable pursuant to article twenty-nine of the tax law, and shall annually deposit such net collections received therefrom in, the Schenectady metroplex development authority support fund. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county shall transfer seventy percent of all net collections received from the one-half of one percent sales and compensating use tax and deposited in the Schenectady metroplex development authority support fund to the authority for deposit in the authority’s general fund. The authority may use such dedicated sales tax revenue received for any lawful purpose or power of the authority. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county, after transferring seventy percent of all net collections received from the one-half of one percent sales and compensating use tax in the Schenectady metroplex development authority support fund to the authority for deposit in the authority’s general fund, shall transfer all remaining monies in the Schenectady metroplex development authority support fund to the Schenectady county real property tax abatement and economic development fund." Section 2661.9 "Tax revenues received by the authority pursuant to section twelve hundred ten-C of the tax law, shall be applied in the following order of priority: first pursuant to the authority’s contracts with bondholders, then to pay the authority’s operating expense not otherwise provided for, and then the balance of such taxes not required to meet contractual or other obligations of the authority shall be deposited in the general fund of the authority." (Plaintiffs’ emphasis). Section 2663.2 "The authority shall have the power and is hereby authorized from time to time to issue bonds, notes or other obligations in conformity with applicable provisions of the uniform commercial code to pay the cost of any project, the establishment of reserves to secure the bonds, the payment of principal of, premium, if any, and interest on the bonds and the payment of incidental expenses in connection therewith. The aggregate principal amount of such bonds, notes or other obligations shall not exceed fifty million dollars ($50,000,000), excluding bonds, notes or other obligations issued to refund or repay bonds, notes or other obligations therefore issued for such purposes." Section 2665.1 "Any resolution or resolutions authorizing bonds or any issue of bonds by the authority may contain provisions which may be a part of the contract with the holders of the bonds thereby authorized as to: (a) Pledging all or part of the revenues, together with any other monies or property of the authority to secure the payment of the bonds, or any costs of issuance thereof, including but not limited to, any contracts, earnings or proceeds of any grant to the authority received from any private or public source subject to such agreements with bondholders as may then exist." Section 2665.5(a) "In addition to the powers herein conferred upon the authority to secure its bonds, the authority shall have the power in connection with the issuance of bonds to adopt resolutions and enter into such trust indentures, agreements or other instruments as the authority may deem necessary, convenient or desirable concerning the use or disposition of its revenues or other monies or property, including the mortgaging of any property and the entrusting, pledging or creation of any other security interest in any such revenues, monies or property and the doing of any act, including refraining from doing any act which the authority would have the right to do in the absence of such resolutions, trust indentures, agreements or other instruments. The authority shall have power to enter into amendments of any such resolutions, trust indentures, agreements or other instruments within the powers granted to the authority by this title and to perform such resolutions, trust indentures, agreements or other instruments. The provisions of any such resolutions, trust indentures, agreements or other instruments may be made a part of the contract with the holders of bones of the authority." Section 2665.6 "Such trustee may, and upon written request of the holders of twenty-five per centum in principal amount of such bonds outstanding shall, in its own name: (a) By action or proceeding in accordance with the civil practice law and rules, enforce all rights of the bondholders, including the right to require the authority to collect rents, rates, fees and charges adequate to carry out any agreement as to, or pledge of, such rents, rates, fees and charges and to require the authority to carry out any other agreements with the holders of such bonds to perform its duties under this title." Section 2668.2(a) "Neither the state, the county nor any municipality therein shall be liable on the bonds or notes of the authority and such bonds or notes shall not be a debt of the state, the county or of any municipality therein and such bonds and notes shall contain on the face thereof a statement to such effect." Section 2669 "Agreement with state. The state does hereby pledge to and agree with the holders of any bonds issued by the authority pursuant to this title and with those persons or public authorities who may enter into contracts with the authority pursuant to the provisions of this title that the state will not alter, limit or impair the rights hereby vested in the authority to purchase, construct, own and operate, maintain, repair, improve, reconstruct, renovate, rehabilitate, enlarge, increase and extend, or dispose of any project, or any part or parts thereof for which bonds of the authority shall have been issued, to establish and collect rates, rents, fees and other charges referred to in this title, to fulfill the terms of any contracts or agreements made with or for the benefit of the holders of bonds or with any person or public authority with reference to such project or part thereof, or in any way to impair the rights and remedies of the holders of bonds, until the bonds, together with interest thereon, including interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders of bonds, are fully met and discharged and such contracts are fully performed on the part of the authority. The authority is authorized to include this pledge and agreement of the state in any agreement with the holders of bonds. Nothing contained in the section shall be deemed to restrict the right of the state to amend, modify, repeal or otherwise alter statutes imposing or relating to the taxes payable to the authority. Nothing in this section shall be deemed to obligate the state to make additional payments or impose any taxes to satisfy the debt service obligations of the authority." (Plaintiffs’ emphasis). Section 2669-a "Agreement with county. The county is authorized to pledge to and agree with the holders of any bonds issued by the authority pursuant to this title and with those persons or public authorities who may enter into contracts with the authority pursuant to the provisions of this title that the county will not alter, limit or impair the rights hereby vested in the authority to purchase, construct, own and operate, maintain, repair, improve, reconstruct, renovate, rehabilitate, enlarge, increase and extend, or dispose of any project, or any part or parts thereof, for which bonds of the authority shall have been issued, to establish, collect and adjust rates, rents, fees and other charges referred to in this title, to fulfill the terms of any agreements made with the holders of the bonds or with any public authority or person with reference to such project or part thereof, or in any way impair the rights and remedies of the holders of bonds, until the bonds, together with interest thereon, including interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders of bonds, are fully met and discharged and such contracts are fully performed on the part of the authority. Nothing in this section shall be deemed to obligate the county to make additional payments or impose any taxes to satisfy the debt service obligations of the authority." (Plaintiffs’ emphasis). Section 2669-b "Dedication of taxes authorized for cities and counties. (a) Notwithstanding any other provision of law to the contrary, any authorization for a city or county to impose a tax pursuant to this article, may condition such authorization upon the dedication of such revenue derived from such tax imposed, to a public benefit corporation established as an industrial development agency or an area revitalization agency pursuant to article eighteen-A of the general municipal law or to a public authority established for economic development or transportation purposes pursuant to the public authorities law. (b) In the event that a city or a county imposes a tax pursuant to this article, in accordance with a conditional authorization as described in subdivision (a) of this section, such city or county shall dedicate the revenue from such tax so imposed to the designated public benefit corporation established as an industrial development agency or an area revitalization agency pursuant to article eighteen-A of the general municipal law or public authority established for economic development or transportation purposes pursuant to the public authorities law." ("Plaintiffs’ emphasis). Section 1201-d(a),(b) "Sales and compensating use tax for purposes of the Schenectady county metroplex development authority. (a) In addition to the taxes imposed by section twelve hundred ten of this article or any other provision of this article, the county of Schenectady is hereby authorized and empowered to adopt and amend a local law, ordinance or resolution imposing within the territorial limits of said county an additional sales and compensating use tax at the rate of one-half of one percent for the period beginning on or after September first, nineteen hundred ninety-eight and ending August thirty-first, two thousand twenty-eight, which tax shall be identical to the tax imposed by said county pursuant to section twelve hundred ten of this article. Except as hereinafter provided, all provisions of this article, including the definition and exemption provisions and the provisions relating to the administration, collection and distribution by the commissioner, shall apply for purposes of the tax imposed by this section in the same manner and with the same force and effect as if the language of this article had been incorporated in full in this section and had expressly referred to the tax imposed by this section; provided, however, that any provision of this article relating to a maximum rate shall be calculated without reference to the additional sales and compensating use tax herein authorized. For purposes of part IV of article twenty-nine of this chapter, relating to the disposition of revenues resulting from taxes collected and administered by the commissioner, the additional sales and compensating use tax herein provided shall be deemed to be imposed under the authority of section twelve hundred ten of this article and all provisions relating to the deposit, administration and disposition of taxes, penalties and interest relating to a tax imposed by a county under the authority of section twelve hundred ten of this article shall, except as otherwise specifically provided in this section, apply to the additional sales and compensating use tax imposed pursuant to this section." (Plaintiffs’ emphasis). Section 1210-C (a) "(b) Notwithstanding any other provision of this article to the contrary, the net collections from the tax imposed pursuant to subdivision (a) of this section for the period beginning on or after September first, nineteen hundred ninety-eight and ending August thirty-first, two thousand twenty-eight shall, upon payment to the county of Schenectady, be deposited in the Schenectady metroplex development authority support fund, pursuant to subdivision nine of section twenty-six hundred sixty-one of the public authorities law, with such fund to be designated as a special dedicated support fund, to be created by said county therefor separate and apart from any other funds and accounts of the county. Pending deposit from such Schenectady metroplex development authority support fund into the general fund of the Schenectady metroplex development authority, all moneys therein may be invested in the manner provided in section eleven of the general municipal law. Any interest earned or capital gain realized on the moneys so deposited or invested shall accrue to and become part of such Schenectady metroplex development authority support fund." (Plaintiffs’ emphasis). Section 1210-C (b) "(c) The county of Schenectady shall dedicate one-half of one percent county sales and compensating use tax on all sales and compensating uses taxable pursuant to this article, and shall annually deposit such net collections received therefrom in, the Schenectady metroplex development authority support fund. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county shall transfer seventy percent of all net collections received from the one-half of one percent sales and compensating use tax and deposited in the Schenectady metroplex development authority support fund to the authority for deposit in the authority’s general fund. The authority may use such dedicated sales tax revenue received for any lawful purpose or power of the authority [including Public Authorities Law 2663.2]. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county, after transferring seventy percent of all net collections received from the one-half of one percent sales and compensating use tax in the Schenectady metroplex development authority support fund to the authority for deposit in the authority’s general fund, shall transfer all remaining monies in the Schenectady metroplex development authority support fund to the Schenectady county real property tax abatement and economic development fund." Section 1210-C (c) 18. Chapter 5 of the Laws of 1998 reads in relevant part: "35 (a) The dormitory authority is empowered and authorized to enter into a lease, sublease, lease purchase, or other agreement with the office of general services of the state of New York on behalf of the department of audit and control of the state of New York pursuant to which one or more facilities are to be designed, acquired, constructed, reconstructed, rehabilitated, improved or otherwise provided for the department of audit and control of the state of New York, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system and pursuant to which such facilities are to be furnished or equipped provided, however, that any contract or lease for construction, reconstruction or rehabilitation authorized by this subdivision shall be governed by article eight of the labor law. Such lease, sublease, lease purchase, or other agreement may provide for the payment of annual rentals and other payments by the department of audit and control of the state of New York to the dormitory authority from appropriations as provided in paragraph (c) of this subdivision or from payments made pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to paragraph (f) of this subdivision and contain such other terms and conditions as may be agreed upon by the parties thereto, including but not limited to, provisions relating to the maintenance and operation of the facilities, the establishment of reserve funds, indemnities and the disposition of a facility or the interest of the dormitory authority therein, if any, prior to or upon termination or expiration of such lease, sublease or other agreement. Such lease, sublease, lease purchase, or other agreement shall be subject to the approval of the director of the budget. (b) Any such lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision may provide that the provisions thereof shall remain in full force and effect until the issue of the bonds of the dormitory authority to which it relates, together with interest thereon, interest on any unpaid installments of interest and the fees and expenses of the dormitory authority, are fully met and discharged, and any payments to be made by the state, the New York state and local employees’ retirement system and the New York state and local policy and fire retirement system pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to paragraph (f) of this subdivision may be pledged by the dormitory authority to secure such bonds. (c) Any agreement entered into pursuant to this subdivision by and between the dormitory authority and the office of general services on behalf of the department of audit and control shall provide for state commitments to provide annually to the department of audit and control an amount equal to the aggregate amount of all annual rentals due to the dormitory authority from the department of audit and control on account of such facilities for the department of audit and control, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system pursuant to any such lease, sublease, lease purchase, or other agreement. Any such lease, sublease, lease purchase or other agreement shall further provide that the obligation of the state to appropriate amounts to the department of audit and control to pay annual rentals due to the dormitory authority from the department of audit and control on account of facilities for the department of audit and control, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system pursuant to any such lease, sublease, lease purchase or other agreement shall not constitute a debt of the state within the meaning of any constitutional and/or statutory provisions and shall be deemed executory only to the extent state moneys are appropriated and that no liability shall be incurred by the state beyond the moneys appropriated for that purpose and that such obligation is subject to annual appropriations by the legislature. (d) On or before November fifteenth of each year, the dormitory authority shall submit and thereafter may resubmit to the commissioner of general services, the director of the budget, the comptroller, the chairperson of the senate finance committee and the chairperson of the assembly ways and means committee, a report setting forth the amounts, if any, of all annual rentals and other payments estimated to be due in the succeeding state fiscal year to the dormitory authority from the department of audit and control pursuant to any lease, sublease, lease purchase, or other agreement between the dormitory authority and the office of general services on behalf of the department of audit and control entered into on or after July first, nineteen hundred ninety-seven to provide facilities for the department of audit and control, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system. (e) Notwithstanding any provision of law to the contrary, any lease, sublease, lease purchase or other agreement, including any contract for construction, reconstruction, rehabilitation or improvement entered into pursuant to this subdivision shall not be subject to public auction or bidding or any restriction as to the term of such lease, sublease, lease purchase or other agreement; provided however, that, with respect to any lease, sublease, lease purchase, or other agreement for facilities for the department of audit and control, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system, the dormitory authority shall determine that there has been a competitive process sufficient to comply with the authority’s procurement contract guidelines as required pursuant to section twenty-eight hundred seventy-nine of this chapter. (f) Nothing herein shall be construed to diminish the authority of the comptroller, in his capacity as trustee of the New York state and local employees’ retirement system and the New York state and local police and fire retirement system, to be a party to any agreement authorized pursuant to paragraph (a) of this subdivision or, in accordance with the provisions of this title to enter into separate leases, subleases, lease purchases or other agreements with the dormitory authority pursuant to which one or more facilities are to be designed, acquired, constructed, reconstructed, rehabilitated, improved or otherwise provided for the New York state and local employee’s retirement system and the New York state and local police and fire retirement system. (Plaintiffs’ emphasis). 36. (a) The dormitory authority is empowered and authorized to enter into a lease, sublease, lease purchase, or other agreement with the office of general services of the state of New York pursuant to which one or more facilities are to be acquired, designed, constructed, reconstructed, rehabilitated, improved or otherwise made available for the provision of parking facilities for the state of New York in the city of Albany, New York and pursuant to which such facilities are to be furnished or equipped an in furtherance of such authorization, the commissioner of general services is hereby empowered to grant or convey to the dormitory authority, such lands as may be necessary for such purposes upon such terms and conditions as the commissioner of general services may fix and determine provided, however, that any contract or lease for construction, reconstruction or rehabilitation authorized by this subdivision shall be governed by article eight of the labor law. Such lease, sublease, lease purchase, or other agreement may provide for the payment of annual rentals and other payments by the state of New York on behalf of the departments or agencies having occupancy of use thereof to the dormitory authority from appropriations as provided in paragraph (c) of this subdivision and may contain such other terms and conditions as may be agreed upon by the parties thereto, including but not limited to, provisions relating to the maintenance and operation of the facilities, the establishment of reserve funds, indemnities and the disposition of a facility or the interest of the dormitory authority therein, if any, prior to or upon termination or expiration of such lease, sublease, lease purchase or other agreement. Such lease, sublease, lease purchase, or other agreement shall be subject to the approval of the director of the budget. (b) Any such lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision may provide that the provisions thereof shall remain in full force and effect until the issue of the bonds of the dormitory authority to which it relates, together with interest thereon, interest on any unpaid installments of interest and the fees and expenses of the dormitory authority, are fully met and discharged, and any payments to be made by the state, pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to this subdivision may be pledged by the dormitory authority to secure such bonds. (c) Any lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision by and between the dormitory authority and the state of New York by the office of general services with respect to such parking facilities shall provide for state commitments to provide annually an amount equal to the aggregate amount of all annual rental due to the dormitory authority from the state on behalf of the state departments and agencies having occupancy or use of such facilities. Any such lease, sublease, lease purchase, or other agreement shall further provide that the obligation of the state to appropriate amounts to pay annual rentals due to the dormitory authority pursuant to any such lease, sublease, lease purchase, or other agreement shall not constitute a debt of the state within the meaning of any constitutional and/or statutory provisions and shall be deemed executory only to the extent state moneys are appropriated and that no liability shall be incurred by the state beyond the moneys appropriated for that purpose and that such obligation is subject to annual appropriations by the legislature. (d) On or before November fifteenth of each year, the dormitory authority shall submit to the commissioner of general services, the director of the budget, the comptroller, the chairperson of the senate finance committee and the chairperson of the assembly ways and means committee, a report setting forth the amounts, if any, of all annual rentals and other payments estimated to be due in the succeeding state fiscal year to the dormitory authority pursuant to any lease, sublease, lease purchase, or other agreement between the dormitory authority and the office of general services on behalf of the state entered into hereafter to provide for parking facilities for the state of New York in the city of Albany." (Plaintiffs’ emphasis).
STATEMENT OF THE CASE A. INTRODUCTORY STATEMENT This is a declaratory judgment action in which plaintiffs as citizens seek a declaration of their constitutional rights. Plaintiffs are citizens of the United States. They happen also to be registered voters residing in the State of New York. It just so happens, and quite apart from their status as citizens coming under the protection of the Constitutions of New York and of the United States, that they pay state, local and federal taxes. At issue are numerous provisions of the Constitutions of the State of New York and of the United States. The instant complaint, filed on September 14, 1998, challenges the constitutionality of State Finance Law 123-B(1) and Chapter 5 of the New York Laws of 1998 (authorizing the Dormitory Authority of New York State (DASNY) to issue $240 million in tax-supported bonds to finance the construction of two office buildings and a parking garage on behalf of the State), and Chapter 124 of the New York Laws of 1998 (creating a new public corporation, the Schenectady Metroplex Authority (Metroplex Authority), and authorizing it to issue tax-supported bonds to finance the construction of public and private facilities on behalf of the State and its political subdivisions).
B. STATEMENT OF FACTS The people know that public debt is one of the greatest of dangers to be feared. Because of the hard lessons of history in this state, the people of this state have placed constitutional limits on public debt. See Schulz v State, 81 NY2d 336 and Schulz v State, 84 NY2d 231. For instance, the will of the people, as expressed in the New York Constitution, is that under Article X, Section 5, no tax revenues can be used to pay any part of any obligations of any public corporation such as DASNY or the Metroplex Authority, under Articles VII and VIII neither the State nor Schenectady County can lend public credit to a public corporation, and under Article VIII, Section 4, public debt incurred by or on behalf of a municipality is limited to a percentage of the average full valuation of taxable real estate of the municipality. It is to be noted that the people were cognizant of and sympathetic to the extensiveness of and the cost to build local water, sewer, transportation and transit systems, and the complexities of the local budgeting processes and the need to borrow, from time to time, in anticipation of the receipt of taxes and revenues. The New York Constitution allows the municipalities to exclude debt incurred for these purposes from the total outstanding debt level, when determining how much a municipality can borrow, given the percentage caps of Article VIII, Section 4. In 1975, the New York State Legislature and the Executive adopted a law [State Finance Law Section 123-b(1)] which is designed to deny "citizen taxpayers" their right to petition their government for a redress of grievances, even those deeply rooted in the New York Constitution -- i.e., to assert their constitutional rights in any forum -- by specifying that citizen taxpayers shall not be allowed to maintain a lawsuit if the subject matter deals with public debt -- i.e., the "authorization, sale, execution or delivery of a bond issue or notes issued in anticipation thereof by the State or any agency, instrumentality or subdivision thereof, or by any public corporation or public benefit corporation." In 1979, in apparent violation of the "Separate Powers" doctrine, the New York Court of Appeals issued its decision in Wein v. Comptroller, 46 NY2d 394, ruling that SFL 123-b(1) "does indicate a reasonably clear legislative intent to prevent taxpayer challenges with respect to a State bond issue or notes issued in anticipation thereof [SFL 123-b(1)]. Under the circumstances it would be inappropriate for the courts to confer standing in these cases since such a determination would, in effect, render the statutory ‘exception’ a nullity and ignore the expressed legislative policy to the contrary," and that to allow taxpayers to challenge legislative acts that authorize the incurrence of public debt would "increase the cost of raising revenue by creating uncertainty in the minds of potential investors." (Plaintiffs’ emphasis). Note: The constitutionality of SFL 123-b(1) under the First Amendment was neither raised, presented nor determined in Wein, and a close reading of Wein suggests that the Court was saying SFL 123-b(1) can be used to prohibit not citizens but mere taxpayers from challenging public bond issues. Since 1979, the New York Judicial branch has been honoring SFL 123-b(1) by dismissing most claims by taxpayers that involve public borrowing. By doing so it has been cooperating with the Executive and Legislative branches, allowing the NY Constitution, in effect, to be changed by the Legislative and Executive branches: first, by SFL 123-b(1), and then by various legislative acts which authorize public borrowing and which are obnoxious to the NY Constitution but which are shielded from suits and judicial review by the impenetrable, door-closing barrier represented by SFL 123-b(1). Elected officials knew in 1994 that their customary, free-wheeling, politically expedient, tax, spend and borrow practices were bumping up against various constitutionally prescripted debt limits. In 1994, rather than pursue a course of fiscal integrity by reducing the amount of money they were expending, or by increasing revenues to cover spending, elected officials chose not to end their politically expedient, profligate ways. They chose, instead, to ask the people of the State to approve a constitutional amendment to allow our elected officials to create public corporations (such as the Schenectady Metroplex Development Authority), or use existing public corporations (such as the Dormitory Authority of New York State), and to have the public corporations borrow money on behalf of "distressed cities" and to use tax revenues to pay the principle of and interest on the bonds of the public corporations. In 1995 the Legislature gave second passage to, and placed before the voters of the state, a proposed constitutional amendment which would have allowed the state to:
See the Concurrent Resolution of the Senate and Assembly. (Defendants’ Memorandum of Law, dated October 3, 1998, Exhibit 7). On election day, 1995, approximately 1.2 million voters voted "no" to the proposed constitutional amendment while approximately 600,000 voters voted "yes". Now, our elected officials have the effrontery to do what the voters of this state specifically said they didn’t want them to do. Our elected officials have adopted laws that create and use public corporations to incur debt on behalf of the "distressed" cities of Schenectady and Albany. In 1998, the Legislature passed and the Governor signed into law as Chapters 5 and 124 of the Laws of 1998, Acts which created the Schenectady Metroplex Development Authority and authorized it and DASNY to contract for roughly $300 million in long-term, tax-supported debt in aid of these two cities. The Legislature is saying, in effect, "We are in charge now, we are seizing the ultimate power from the people, and the courts will have to go along because we have directed them [by adopting State Finance Law 123-b(1)] to throw out of court any citizen who petitions for a redress of this grievance, if their complaint pertains to the incurrence of public debt." Plaintiffs, as citizens, have petitioned this court to declare SFL 123-b(1) unconstitutional, null and void (because it is violative of a citizen’s fundamental right to petition the government for a redress of grievances), and to declare the Albany Act and the Schenectady Act unconstitutional, null and void because they violate various provisions of the NY Constitution and the US Constitution. Defendants would have this Court do what State Supreme Court has been doing with all other challenges to unconstitutional public borrowing: rule that the constitutionality of SFL 123-b(1) was upheld in a 1979 decision written by Judge Sol Wachtler and then use SFL 123-b(1) to dismiss the bulk of this complaint for lack of standing. Causes not dismissed for lack of standing, defendants argue, should be dismissed under the doctrines of res judicata or stare decisis. However, plaintiffs, as citizens seeking a declaration of their individual constitutional rights, are shielded from SFL 123-b(1), and, it is important to note the constitutionality of SFL 123-b(1) was never an issue in Wein v Comptroller 46 NY2d 394 (1979). Finally, it is important to note that no prior decision, including Wein I and Schulz I, is decisive of the issues presented in this case, particularly plaintiffs’ Article VII, Section 16 argument.
POINT I BONDS ISSUED BY DASNY AND THE A. CHAPTERS 5 AND 124 MUST BE CONSTRUED IN THEIR ENTIRETY Defendants argue that bonds issued by DASNY and the Metro Authority under Chapters 5 and 124 would not be legally enforceable debt within the meaning of the N.Y. Constitution. Defendants rely heavily on Schulz v State, 84 NY2d 231 (Schulz I), which, in turn, relied on Wein v City of N.Y., 36 NY2d 610 (Wein I). Attached is a copy of the video tape provided by the Albany Law School of the oral arguments on June 7, 1994, before the New York State Court of Appeals in Schulz v State of New York, 84 NY2d 231 (Schulz I). The video reveals that the Court was focused almost entirely on trying to get Schulz to tell the Court what a purchaser of bonds (issued under Chapter 56 of the Laws of 1993) would be able to do to get a court to order the State to service those bonds if the Legislature decided not to do so at any time that those bonds were outstanding. In other words, the Court was asking Schulz to support his claim that due to "investor expectations" and "legal obligations" the State could be made to pay back money borrowed by or on behalf of the State, i.e., that a bondholder would be successful in court if the State didn’t pay. The video, and the Court’s decision, issued on June 30, 1994, clearly demonstrate that not only did Schulz fail, at oral argument, to support his claim with an argument based on the mandates of Article VII, Section 16 of the NY Constitution, but the Court’s decision failed to address much less "fully encompass" the mandate of Article VII, Section 16. It cannot be fairly argued that the decision in Schulz I is decisive of any Article VII, Section 16 questions, which plaintiffs in the instant case now raise and argue, in response to defendants’ motions. The New York Constitution reads in part: "The Legislature shall annually provide by appropriation for the payment of the interest upon and installments of principal of all debts or refunding debts created on behalf of the state...as the same shall fall due, and for the contribution to all of the sinking funds created by law...If at any time the legislative shall fail to make any such appropriation, the comptroller shall set apart from the first revenues thereafter received, applicable to the general fund of the state, a sum sufficient to pay such interest, installments of principal, or contributions to such sinking fund, as the case may be, and shall so apply the moneys thus set apart. The comptroller may be required to set aside and apply such revenues as aforesaid, at the suit of any holder of such bonds." (Plaintiffs’ emphasis). Article VII, Section 16, NY Constitution DASNY and the Metro Authority are agencies which, as public corporations of the State, created and controlled by the State through the State’s Public Authorities Control Board, are clearly instrumentalities of the State contracting debt on behalf of the State. Thus, any investor in the bonds issued under Chapters 5 and 124 of the Laws of 1998 would be able to go to court for a writ of mandamus to compel the State, either directly or through its instrumentalies, to comply with all of the provisions of Chapters 5 and 124 of the Laws of 1998, notwithstanding the "subject to annual appropriation of the Legislature" disclaimer found in Chapter 5 and notwithstanding the "no full faith and credit" disclaimer found in both Chapter 5 and Chapter 124. With respect to the video tape attached, the Court is asked to note the question from the bench of Mr. Schulz, to the effect, "Is it your argument that in order to find for you in this case (Schulz I), we would have to overrule our decision in Wein v City of New York, (Wein I)?" Schulz answered "no". Obviously, in answering "no", Mr. Schulz was not thinking of the mandates in Article VII, Section 16, which, in fact, does make the decision in Wein I suspect. And, since the decision in Schulz I relied so heavily on the decision in Wein I, the decision in Schulz I is also quite suspect. It would certainly appear that this Court has sufficient legal grounds to find for plaintiffs on the merits, without violating any controlling principles of law, by relying on the mandates of Article VII, Section 16 of the NY Constitution, together with its reading of the provisions of Chapters 5 and 124 of the Laws of 1998 cited on Table 1 and Table 2 in the Complaint and spelled out below. Defendants argue in effect that plaintiffs’ constitutional claims are premised upon "an erroneous belief" that any debt incurred pursuant to the Acts is a debt of the State and/or the County and "an erroneous belief" that the State and County are obligated, through the payments made to the Authority by the Comptroller, to fund the debt service on the bonds issued by the Authority. Defendants base their "erroneous belief" arguments not only on the plain language of Public Authorities Law Section 1680 and Section 35(c) and 36(c) of Chapter 5 and Public Authorities Law Section 2669, but also the Court of Appeals’ prior decisions in Wein v City of New York (36 NY2d 610) and Schulz v State of New York (84 NY2d 231, cert denied 513 US 1127), which, defendants say, are entirely dispositive of this matter. Defendants argue that a review of the funding mechanisms at issue in Wein and Schulz, each of which contained language virtually identical to that set forth in Public Authorities Law Section 1680, plainly reveals that the payments made by the Comptroller here are ‘permissible gifts’ to the Authority as in Wein v City of New York, at 618-619. Defendants argue that plaintiffs have failed to meet their heavy burden of demonstrating beyond a reasonable doubt that, pursuant to the Acts, the State and City are legally obligated to the holders of the bonds in the event of the Authority’s default and, thus, have incurred debt in contravention of the relevant constitutional mandates. This Opinion is based on a misapprehension of material facts. To support its opinion that the Court of Appeals’ prior decisions in Wein v City of New York, 36 NY2d 610 (Wein I) and Schulz v State of New York, 84 NY2d 231 (Schulz I) are "entirely dispositive of this matter" the defendants say, "funding mechanisms at issue in Wein and Schulz, each of which contained language virtually identical to that set forth in Public Authorities Law Sections 1680 and 2669, plainly reveals that the payments made by the Comptroller here are ‘permissible gifts’ to the Authority." Defendants quote a very small portion of the language of Chapters 5 and 124. Defendants would have the Court misapprehended the rest of the language of the Acts which belie the provisions quoted by defendants. The Court is respectfully requested to compare the meaning of the sections of Chapters 5 and 124 quoted by the defendants with the meaning of the rest of the Act, particularly the following sections of Chapters 5 and 124: Chapter 124 of the Laws of 1998 reads in relevant part: "Pursuant to subdivision (c) of section twelve hundred ten-c of the tax law, the county of Schenectady shall dedicate one-half of one percent county sales and compensating use tax on all sales and compensating uses taxable pursuant to article twenty-nine of the tax law, and shall annually deposit such net collections received therefrom in, the Schenectady metroplex development authority support fund. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county shall transfer seventy percent of all net collections received from the one-half of one percent sales and compensating use tax and deposited in the Schenectady metroplex development authority support fund to the authority for deposit in the authority’s general fund. The authority may use such dedicated sales tax revenue received for any lawful purpose or power of the authority. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county, after transferring seventy percent of all net collections received from the one-half of one percent sales and compensating use tax in the Schenectady metroplex development authority support fund to the authority for deposit in the authority’s general fund, shall transfer all remaining monies in the Schenectady metroplex development authority support fund to the Schenectady county real property tax abatement and economic development fund." Section 2661.9 "Tax revenues received by the authority pursuant to section twelve hundred ten-C of the tax law, shall be applied in the following order of priority: first pursuant to the authority’s contracts with bondholders, then to pay the authority’s operating expense not otherwise provided for, and then the balance of such taxes not required to meet contractual or other obligations of the authority shall be deposited in the general fund of the authority." (Plaintiffs’ emphasis). Section 2663.2 "The authority shall have the power and is hereby authorized from time to time to issue bonds, notes or other obligations in conformity with applicable provisions of the uniform commercial code to pay the cost of any project, the establishment of reserves to secure the bonds, the payment of principal of, premium, if any, and interest on the bonds and the payment of incidental expenses in connection therewith. The aggregate principal amount of such bonds, notes or other obligations shall not exceed fifty million dollars ($50,000,000), excluding bonds, notes or other obligations issued to refund or repay bonds, notes or other obligations therefore issued for such purposes." Section 2665.1 "Any resolution or resolutions authorizing bonds or any issue of bonds by the authority may contain provisions which may be a part of the contract with the holders of the bonds thereby authorized as to: (a) Pledging all or part of the revenues, together with any other monies or property of the authority to secure the payment of the bonds, or any costs of issuance thereof, including but not limited to, any contracts, earnings or proceeds of any grant to the authority received from any private or public source subject to such agreements with bondholders as may then exist." Section 2665.5(a) "In addition to the powers herein conferred upon the authority to secure its bonds, the authority shall have the power in connection with the issuance of bonds to adopt resolutions and enter into such trust indentures, agreements or other instruments as the authority may deem necessary, convenient or desirable concerning the use or disposition of its revenues or other monies or property, including the mortgaging of any property and the entrusting, pledging or creation of any other security interest in any such revenues, monies or property and the doing of any act, including refraining from doing any act which the authority would have the right to do in the absence of such resolutions, trust indentures, agreements or other instruments. The authority shall have power to enter into amendments of any such resolutions, trust indentures, agreements or other instruments within the powers granted to the authority by this title and to perform such resolutions, trust indentures, agreements or other instruments. The provisions of any such resolutions, trust indentures, agreements or other instruments may be made a part of the contract with the holders of bones of the authority." Section 2665.6 "Such trustee may, and upon written request of the holders of twenty-five per centum in principal amount of such bonds outstanding shall, in its own name: (a) By action or proceeding in accordance with the civil practice law and rules, enforce all rights of the bondholders, including the right to require the authority to collect rents, rates, fees and charges adequate to carry out any agreement as to, or pledge of, such rents, rates, fees and charges and to require the authority to carry out any other agreements with the holders of such bonds to perform its duties under this title." Section 2668.2(a) "Neither the state, the county nor any municipality therein shall be liable on the bonds or notes of the authority and such bonds or notes shall not be a debt of the state, the county or of any municipality therein and such bonds and notes shall contain on the face thereof a statement to such effect." Section 2669 "Agreement with state. The state does hereby pledge to and agree with the holders of any bonds issued by the authority pursuant to this title and with those persons or public authorities who may enter into contracts with the authority pursuant to the provisions of this title that the state will not alter, limit or impair the rights hereby vested in the authority to purchase, construct, own and operate, maintain, repair, improve, reconstruct, renovate, rehabilitate, enlarge, increase and extend, or dispose of any project, or any part or parts thereof for which bonds of the authority shall have been issued, to establish and collect rates, rents, fees and other charges referred to in this title, to fulfill the terms of any contracts or agreements made with or for the benefit of the holders of bonds or with any person or public authority with reference to such project or part thereof, or in any way to impair the rights and remedies of the holders of bonds, until the bonds, together with interest thereon, including interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders of bonds, are fully met and discharged and such contracts are fully performed on the part of the authority. The authority is authorized to include this pledge and agreement of the state in any agreement with the holders of bonds. Nothing contained in the section shall be deemed to restrict the right of the state to amend, modify, repeal or otherwise alter statutes imposing or relating to the taxes payable to the authority. Nothing in this section shall be deemed to obligate the state to make additional payments or impose any taxes to satisfy the debt service obligations of the authority." (Plaintiffs’ emphasis). Section 2669-a "Agreement with county. The county is authorized to pledge to and agree with the holders of any bonds issued by the authority pursuant to this title and with those persons or public authorities who may enter into contracts with the authority pursuant to the provisions of this title that the county will not alter, limit or impair the rights hereby vested in the authority to purchase, construct, own and operate, maintain, repair, improve, reconstruct, renovate, rehabilitate, enlarge, increase and extend, or dispose of any project, or any part or parts thereof, for which bonds of the authority shall have been issued, to establish, collect and adjust rates, rents, fees and other charges referred to in this title, to fulfill the terms of any agreements made with the holders of the bonds or with any public authority or person with reference to such project or part thereof, or in any way impair the rights and remedies of the holders of bonds, until the bonds, together with interest thereon, including interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders of bonds, are fully met and discharged and such contracts are fully performed on the part of the authority. Nothing in this section shall be deemed to obligate the county to make additional payments or impose any taxes to satisfy the debt service obligations of the authority." (Plaintiffs’ emphasis). Section 2669-b "Dedication of taxes authorized for cities and counties. (a) Notwithstanding any other provision of law to the contrary, any authorization for a city or county to impose a tax pursuant to this article, may condition such authorization upon the dedication of such revenue derived from such tax imposed, to a public benefit corporation established as an industrial development agency or an area revitalization agency pursuant to article eighteen-A of the general municipal law or to a public authority established for economic development or transportation purposes pursuant to the public authorities law. (b) In the event that a city or a county imposes a tax pursuant to this article, in accordance with a conditional authorization as described in subdivision (a) of this section, such city or county shall dedicate the revenue from such tax so imposed to the designated public benefit corporation established as an industrial development agency or an area revitalization agency pursuant to article eighteen-A of the general municipal law or public authority established for economic development or transportation purposes pursuant to the public authorities law." ("Plaintiffs’ emphasis). Section 1201-d(a),(b) "Sales and compensating use tax for purposes of the Schenectady county metroplex development authority. (a) In addition to the taxes imposed by section twelve hundred ten of this article or any other provision of this article, the county of Schenectady is hereby authorized and empowered to adopt and amend a local law, ordinance or resolution imposing within the territorial limits of said county an additional sales and compensating use tax at the rate of one-half of one percent for the period beginning on or after September first, nineteen hundred ninety-eight and ending August thirty-first, two thousand twenty-eight, which tax shall be identical to the tax imposed by said county pursuant to section twelve hundred ten of this article. Except as hereinafter provided, all provisions of this article, including the definition and exemption provisions and the provisions relating to the administration, collection and distribution by the commissioner, shall apply for purposes of the tax imposed by this section in the same manner and with the same force and effect as if the language of this article had been incorporated in full in this section and had expressly referred to the tax imposed by this section; provided, however, that any provision of this article relating to a maximum rate shall be calculated without reference to the additional sales and compensating use tax herein authorized. For purposes of part IV of article twenty-nine of this chapter, relating to the disposition of revenues resulting from taxes collected and administered by the commissioner, the additional sales and compensating use tax herein provided shall be deemed to be imposed under the authority of section twelve hundred ten of this article and all provisions relating to the deposit, administration and disposition of taxes, penalties and interest relating to a tax imposed by a county under the authority of section twelve hundred ten of this article shall, except as otherwise specifically provided in this section, apply to the additional sales and compensating use tax imposed pursuant to this section." (Plaintiffs’ emphasis). Section 1210-C (a) "(b) Notwithstanding any other provision of this article to the contrary, the net collections from the tax imposed pursuant to subdivision (a) of this section for the period beginning on or after September first, nineteen hundred ninety-eight and ending August thirty-first, two thousand twenty-eight shall, upon payment to the county of Schenectady, be deposited in the Schenectady metroplex development authority support fund, pursuant to subdivision nine of section twenty-six hundred sixty-one of the public authorities law, with such fund to be designated as a special dedicated support fund, to be created by said county therefor separate and apart from any other funds and accounts of the county. Pending deposit from such Schenectady metroplex development authority support fund into the general fund of the Schenectady metroplex development authority, all moneys therein may be invested in the manner provided in section eleven of the general municipal law. Any interest earned or capital gain realized on the moneys so deposited or invested shall accrue to and become part of such Schenectady metroplex development authority support fund." (Plaintiffs’ emphasis). Section 1210-C (b) "(c) The county of Schenectady shall dedicate one-half of one percent county sales and compensating use tax on all sales and compensating uses taxable pursuant to this article, and shall annually deposit such net collections received therefrom in, the Schenectady metroplex development authority support fund. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county shall transfer seventy percent of all net collections received from the one-half of one percent sales and compensating use tax and deposited in the Schenectady metroplex development authority support fund to the authority for deposit in the authority’s general fund. The authority may use such dedicated sales tax revenue received for any lawful purpose or power of the authority [including Public Authorities Law 2663.2]. On January first, nineteen hundred ninety-nine, and then on January first annually thereafter, the director of finance of Schenectady county, after transferring seventy percent of all net collections received from the one-half of one percent sales and compensating use tax in the Schenectady metroplex development authority support fund to the authority for deposit in the authority’s general fund, shall transfer all remaining monies in the Schenectady metroplex development authority support fund to the Schenectady county real property tax abatement and economic development fund." Section 1210-C (c) Chapter 5 of the Laws of 1998 reads in relevant part: "35 (a) The dormitory authority is empowered and authorized to enter into a lease, sublease, lease purchase, or other agreement with the office of general services of the state of New York on behalf of the department of audit and control of the state of New York pursuant to which one or more facilities are to be designed, acquired, constructed, reconstructed, rehabilitated, improved or otherwise provided for the department of audit and control of the state of New York, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system and pursuant to which such facilities are to be furnished or equipped provided, however, that any contract or lease for construction, reconstruction or rehabilitation authorized by this subdivision shall be governed by article eight of the labor law. Such lease, sublease, lease purchase, or other agreement may provide for the payment of annual rentals and other payments by the department of audit and control of the state of New York to the dormitory authority from appropriations as provided in paragraph (c) of this subdivision or from payments made pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to paragraph (f) of this subdivision and contain such other terms and conditions as may be agreed upon by the parties thereto, including but not limited to, provisions relating to the maintenance and operation of the facilities, the establishment of reserve funds, indemnities and the disposition of a facility or the interest of the dormitory authority therein, if any, prior to or upon termination or expiration of such lease, sublease or other agreement. Such lease, sublease, lease purchase, or other agreement shall be subject to the approval of the director of the budget. (b) Any such lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision may provide that the provisions thereof shall remain in full force and effect until the issue of the bonds of the dormitory authority to which it relates, together with interest thereon, interest on any unpaid installments of interest and the fees and expenses of the dormitory authority, are fully met and discharged, and any payments to be made by the state, the New York state and local employees’ retirement system and the New York state and local policy and fire retirement system pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to paragraph (f) of this subdivision may be pledged by the dormitory authority to secure such bonds. (c) Any agreement entered into pursuant to this subdivision by and between the dormitory authority and the office of general services on behalf of the department of audit and control shall provide for state commitments to provide annually to the department of audit and control an amount equal to the aggregate amount of all annual rentals due to the dormitory authority from the department of audit and control on account of such facilities for the department of audit and control, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system pursuant to any such lease, sublease, lease purchase, or other agreement. Any such lease, sublease, lease purchase or other agreement shall further provide that the obligation of the state to appropriate amounts to the department of audit and control to pay annual rentals due to the dormitory authority from the department of audit and control on account of facilities for the department of audit and control, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system pursuant to any such lease, sublease, lease purchase or other agreement shall not constitute a debt of the state within the meaning of any constitutional and/or statutory provisions and shall be deemed executory only to the extent state moneys are appropriated and that no liability shall be incurred by the state beyond the moneys appropriated for that purpose and that such obligation is subject to annual appropriations by the legislature. (d) On or before November fifteenth of each year, the dormitory authority shall submit and thereafter may resubmit to the commissioner of general services, the director of the budget, the comptroller, the chairperson of the senate finance committee and the chairperson of the assembly ways and means committee, a report setting forth the amounts, if any, of all annual rentals and other payments estimated to be due in the succeeding state fiscal year to the dormitory authority from the department of audit and control pursuant to any lease, sublease, lease purchase, or other agreement between the dormitory authority and the office of general services on behalf of the department of audit and control entered into on or after July first, nineteen hundred ninety-seven to provide facilities for the department of audit and control, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system. (e) Notwithstanding any provision of law to the contrary, any lease, sublease, lease purchase or other agreement, including any contract for construction, reconstruction, rehabilitation or improvement entered into pursuant to this subdivision shall not be subject to public auction or bidding or any restriction as to the term of such lease, sublease, lease purchase or other agreement; provided however, that, with respect to any lease, sublease, lease purchase, or other agreement for facilities for the department of audit and control, the New York state and local employees’ retirement system and the New York state and local police and fire retirement system, the dormitory authority shall determine that there has been a competitive process sufficient to comply with the authority’s procurement contract guidelines as required pursuant to section twenty-eight hundred seventy-nine of this chapter. (f) Nothing herein shall be construed to diminish the authority of the comptroller, in his capacity as trustee of the New York state and local employees’ retirement system and the New York state and local police and fire retirement system, to be a party to any agreement authorized pursuant to paragraph (a) of this subdivision or, in accordance with the provisions of this title to enter into separate leases, subleases, lease purchases or other agreements with the dormitory authority pursuant to which one or more facilities are to be designed, acquired, constructed, reconstructed, rehabilitated, improved or otherwise provided for the New York state and local employee’s retirement system and the New York state and local police and fire retirement system. (Plaintiffs’ emphasis). 36. (a) The dormitory authority is empowered and authorized to enter into a lease, sublease, lease purchase, or other agreement with the office of general services of the state of New York pursuant to which one or more facilities are to be acquired, designed, constructed, reconstructed, rehabilitated, improved or otherwise made available for the provision of parking facilities for the state of New York in the city of Albany, New York and pursuant to which such facilities are to be furnished or equipped an in furtherance of such authorization, the commissioner of general services is hereby empowered to grant or convey to the dormitory authority, such lands as may be necessary for such purposes upon such terms and conditions as the commissioner of general services may fix and determine provided, however, that any contract or lease for construction, reconstruction or rehabilitation authorized by this subdivision shall be governed by article eight of the labor law. Such lease, sublease, lease purchase, or other agreement may provide for the payment of annual rentals and other payments by the state of New York on behalf of the departments or agencies having occupancy of use thereof to the dormitory authority from appropriations as provided in paragraph (c) of this subdivision and may contain such other terms and conditions as may be agreed upon by the parties thereto, including but not limited to, provisions relating to the maintenance and operation of the facilities, the establishment of reserve funds, indemnities and the disposition of a facility or the interest of the dormitory authority therein, if any, prior to or upon termination or expiration of such lease, sublease, lease purchase or other agreement. Such lease, sublease, lease purchase, or other agreement shall be subject to the approval of the director of the budget. (b) Any such lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision may provide that the provisions thereof shall remain in full force and effect until the issue of the bonds of the dormitory authority to which it relates, together with interest thereon, interest on any unpaid installments of interest and the fees and expenses of the dormitory authority, are fully met and discharged, and any payments to be made by the state, pursuant to any lease, sublease, lease purchase, or other agreement authorized pursuant to this subdivision may be pledged by the dormitory authority to secure such bonds. (c) Any lease, sublease, lease purchase, or other agreement entered into pursuant to this subdivision by and between the dormitory authority and the state of New York by the office of general services with respect to such parking facilities shall provide for state commitments to provide annually an amount equal to the aggregate amount of all annual rental due to the dormitory authority from the state on behalf of the state departments and agencies having occupancy or use of such facilities. Any such lease, sublease, lease purchase, or other agreement shall further provide that the obligation of the state to appropriate amounts to pay annual rentals due to the dormitory authority pursuant to any such lease, sublease, lease purchase, or other agreement shall not constitute a debt of the state within the meaning of any constitutional and/or statutory provisions and shall be deemed executory only to the extent state moneys are appropriated and that no liability shall be incurred by the state beyond the moneys appropriated for that purpose and that such obligation is subject to annual appropriations by the legislature. (d) On or before November fifteenth of each year, the dormitory authority shall submit to the commissioner of general services, the director of the budget, the comptroller, the chairperson of the senate finance committee and the chairperson of the assembly ways and means committee, a report setting forth the amounts, if any, of all annual rentals and other payments estimated to be due in the succeeding state fiscal year to the dormitory authority pursuant to any lease, sublease, lease purchase, or other agreement between the dormitory authority and the office of general services on behalf of the state entered into hereafter to provide for parking facilities for the state of New York in the city of Albany." (Plaintiffs’ emphasis). In contravention of Article VII, VIII and X of the N.Y. Constitution, Chapters 124 and 5 authorize the Metro Authority and DASNY to issue long-term bonds to pay for project capital costs incurred on behalf of the State and the County of Schenectady, and to contract with the County and the State for the application of tax revenues to the Authorities to secure Authority bonds, and to assign its contracts with the County and the State to its bondholders, thereby transferring to the bondholders the County’s and the State’s commitment to provide tax revenues to the Authorities. The Acts direct that the County and State tax revenues to be paid to the Authority shall be applied by the Authorities in the following order of priority: first, to service the bonds of the Authority, then to pay the Authority’s operating expenses. Under the Acts, the County and the State have contracted directly with the holders of bonds of the Authorities, bonds already secured by the "assigned" pledge of the County and the State to pay tax revenues to the Authorities for the priority purpose of servicing the bonds of the Authority, not to limit or alter the rights of the bondholders vested in the Authorities to fulfill the terms of its contracts with the County and the State, which contracts are assigned to the trustee of the bondholders. Even if this language, or anything close to these provisions, could be found in the acts under constitutional challenge in Wein v City of New York, 36 NY2d 610 and in Schulz v State of New York, 84 NY2d 231, that would not mean Chapters 5 and 124 L98 are constitutional, only that plaintiffs, there, did not argue well enough that the bonds of Stabilization Reserve Corporation (SRC), the Thruway Authority and the Metropolitan Transit Authority, were legally enforceable debt within the meaning of the Constitution. The Court is respectfully requested to also note Table 1 (attached), which were included in plaintiffs’ Complaint. They detail the features of the Acts which distinguish the Acts from the Acts which were the focus of Wein I and Schulz I. As but one example of the misapprehension of material facts, plaintiffs’ constitutional claims are not premised, as defendants assert, upon a belief that any debt incurred by the Authorities pursuant to the Acts are necessarily debts of the State and the County. Rather, plaintiffs’ constitutional claims are premised on the fact that the Acts place both the County and the State into debt to the Authorities, by virtue of various provisions of Chapters 5 and 124, including those quoted above.
B. DEFENDANTS WOULD HAVE THE COURT MISAPPREHEND In Schulz I the Court of Appeals declared the debt of the N.Y.S. Thruway Authority and the Metropolitan Transit Authority, issued pursuant to Chapter 56 of the Laws of 1993, to be constitutional for two reasons: 1) the disclaimer that was in the Act, itself, which declared that payments by the Comptroller to these two public corporations, from State funds, would be "subject to appropriation by the Legislature;" and 2) repayment of the debt was not legally enforceable. In the instant case, the disclaimer is not included in Chapter 124 of the Laws of 1998 and the debt to be incurred under Chapters 5 and 124 is legally enforceable. The Court’s attention is directed to the following facts. In Schulz I the courts ruled, in effect, that due to the disclaimers, the State was only "morally obligated" to make the payments to the two public corporations (i.e., that the debt was not "legally enforceable") and, therefore, the debt of the public corporations was not the debt of the State. However, as the argument above and the Complaint show, this case is distinguishable from Schulz I, extinguishing any stare decisis defense. Debt incurred under the authority of Chapters 5 and 124 would, in fact, be legally enforceable. Any bonds issued under Chapter 124 would not be State "appropriation risk" bonds as was the case of Chapter 56 L93. Chapter 124 does not include the disclaimer that payment of debt service would be "subject to the annual appropriation of the Legislature." This alone distinguishes the instant case from Schulz I and should bar any dismissal on the basis of stare decisis. A holder of a bond issued by the Metroplex Authority could legally force the State to make good on the terms of the Authority’s bonds, which provide, in effect, that:
NY Constitution Article VII, Section 7 reads in relevant part: "No money shall ever be paid out of the State treasury or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law...." NY Constitution, Article VII, Section 16 reads in relevant part: "The Legislature shall annually provide by appropriation for the payment of the interest upon and installments of principal of all debts or refunding debts created on behalf of the State...If at any time the Legislature shall fail to make any such appropriation, the Comptroller shall set apart from the first revenues thereafter received, applicable to the general fund of the State, a sum sufficient to pay such interest, installments of principal...and shall so apply the moneys thus set apart." A holder of a Metroplex Authority bond who did not receive payment when due would only have to sue for a writ of mandamus to compel the Legislature and the Comptroller to perform their duty as provided in the NY Constitution and Chapter 124 L98. Based on the above, the bonds of the Authority will be legally enforceable public debt, making Chapter 124 L98 subject to the debt limiting provisions of the NY Constitution. Chapter 124 L98 is repugnant to the NY Constitution Article VIII, Sections 1, 2, and 12, Article VII, Sections 7, 8 and 11 and Article X, Section 5.
C. A CONTROLLING PRINCIPLE OF LAW ESTABLISHED It is the responsibility of the Court to apply and enforce the will of the people as expressed in the Constitution even if this results in considerable practical difficulty, and any law which purports to restrict the judicial authority to fashion relief, constitutes a patently unconstitutional infringement on the powers of the Judiciary. Bethlehem Steel Corp. v Bd. Of Ed., 44 NY2d 831. Defendants would have the Court misapply this controlling principle of law. Any act of the Legislature, "which purports to restrict the judicial authority to fashion remedies, constitutes a patently unconstitutional infringement on the powers of the judiciary." Bethlehem at 834. SFL 123-b(1), in effect, directs the Judiciary to dismiss any lawsuit which seeks to challenge the power of the State or local governments to borrow money, even if the complaint is deeply rooted in the Constitution. Defendants would have the Court (while misapprehending the facts related to prior Schulz and Wein cases), enforce SFL 123-b(1), thereby accepting the legislatively imposed restriction on its (the Court’s) power to review Chapters 5 and 124 L98. In his affidavit, sworn to on November 3, 1998, John Pasicznik pleads with the Court. He refers to a fiscal crisis in New York State as the justification for circumventing the Constitution’s debt limiting provisions. In his affidavit, John Pasicznik says, "The Authority’s bonds and notes include both special obligations and general obligations of the Authority. The Authority’s special obligations are payable solely from payments required to be made by or for the account of the institution for which the particular special obligations were issued...Such payments are pledged or assigned to the trustees for the holders of respective, special obligations...The Authority’s general obligations are payable from any moneys of the Authority legally available for the payment of such obligations. However, the payments required to be made by or for the account of the institution for which general obligations were issued generally have been pledged or assigned by the Authority to the trustees for the holders of such general obligations (paragraph 6)...The Authority is presently implementing two projects which are part of the ‘Albany Plan’...in doing so, the Authority is relying on the financing authority provided under Chapter 5 of the Laws of 1998...Authority bonds will be issued for the capital necessary to acquire the land and complete construction...debt service on the bonds will be payable from annual appropriations by the State Legislature of amounts necessary (paragraph 11)...An adverse ruling in favor of plaintiffs would harm and prejudice the Authority in several ways...were such debt instruments already issued and outstanding, the invalidity cloud would render the value of such instruments in the public securities markets highly uncertain. Finally, such marketplace impacts would not be limited to Albany Plan debt, but would likely impair other debt of the Authority (not to mention the similar ‘appropriation risk’ debt of other New York State authorities) to such a degree as to disadvantageously disrupt secondary trading for all such New York State Authority debt. In short, all of the Authority’s State related capital programs would be seriously impaired and harmed...." (paragraph 13). However, fiscal crises encountered by the State or its municipalities "does not constitute an emergency justifying suspension of constitutional limitations." Bethlehem at 834. Such fiscal crises, grave as they may be, "cannot seriously be equated with the emergencies contemplated in the Constitution: that is, enemy attack or other forms of disaster." Bethlehem at 834. The consequences of legislation such as SFL 123-b(1) and Chapters 5 and 124 L98, purportedly designed to address one fiscal crisis or another "cannot be justified by fugitive recourse to the police power of the State or to any other constitutional power to displace inconvenient but intentionally protective constitutional limitations." Bethlehem at 834, 835 quoting Flushing Nat. Bank v Municipal Assistance Corp. for City of N.Y., 40 NY2d at 736. Alternatively, and in response to Mr. Pasicznik’s concern about the impact of a ruling favorable to plaintiffs on the tens of billions of dollars of outstanding appropriation risk debt, plaintiffs argue that the Court’s relief could be prospective in effect only.
POINT II SFL 123-b(1) CANNOT PROHIBIT THE JUDICIARY A. ARTICLE 7-A, WHICH INCLUDES SFL 123-B(1), WAS NAMED "THE Plaintiffs offer the following argument in response to defendants’ attempt to have the Court dismiss most of the claims against Chapters 5 and 124 for lack of standing under SFL 123-b(1). The following argument is based on a close analysis of Wein v Comptroller, 46 NY2d 394. This argument was not presented or raised in any case which followed Wein v Comptroller, 46 NY2d 394, including any of the Schulz cases, cases in which numerous causes of action were dismissed for "lack of standing under SFL 123-b(1)." In Wein, the Court of Appeals held, "Under prior law it was held that the courts lacked the power to ‘interfere’ with the ‘acts of another department of government’ except to determine ‘the individual rights of the parties’ and that a taxpayer’s interest in the expenditure of State moneys was not sufficiently direct or immediate for him to be considered an aggrieved party." (Plaintiffs’ emphasis). Wein v Comptroller, 46 NY2d 394, 397, quoting Schieffelin v Komfort, 212 NY 520, 530. NOTE: Plaintiffs in the instant case are clearly identified as citizens, quite apart from their status as taxpayers and quite apart from their status as voters. Plaintiffs are clearly suing as citizens, seeking a declaration of their individual rights under the fundamental law. In Wein, the Court of Appeals went on to say, "In the Boryszewski case we held that a citizen and a taxpayer can maintain an action ‘to test the constitutionality of a State statute authorizing the expenditure of State moneys...Thus, the recognition in Boryszewski of the taxpayer’s legitimate and significant interest in State expenditures did not call for the recognition of a new constitutional right of standing but rather the abandonment of an old constitutional impediment to standing in these cases...Boryszewski v Brydges, supra at 364." (Plaintiffs’ emphasis). Wein v Comptroller, 46 NY2d 394, 397. NOTE: To the extent Chapters 5 and 124 of the Laws of 1998 authorize the State comptroller to make payments to DASNY and to the Metro Authority, plaintiffs, as citizens, and, separately, as taxpayers, are challenging the expenditure of funds of the state. In Wein, the Court of Appeals went on to say, "Within two months of the Boryszewski decision, the Legislature added Article 7-A to the State Finance Law which permits a citizen taxpayer to ‘maintain an action for equitable or declaratory relief, or both, against an officer or employee of the State who in the course of his or her duties has caused, is now causing, or is about to cause a wrongful expenditure, misappropriation, misapplication, or any other illegal, or unconstitutional disbursement of state funds or state property, except that the provisions of this subdivision shall not apply to the authorization, sale, execution or delivery of a bond issue, or notes issued in anticipation thereof by the State or any agency, instrumentality or subdivision thereof or by any public corporation, or public benefit corporation’...Subsequent to the effective date of Article 7-A...Boryszewski was extended to permit a taxpayer to challenge the constitutionality of a revenue raising, as distinguished from an expenditure, measure. In Wein v Carey (41 NY2d 498, 500, 501, supra) it was held that a taxpayer had standing to contest the issuance of tax and revenue anticipation notes issued by the State. This was viewed as a logical consequence of Wein v State of New York, 39 NY2d 136, supra), an earlier taxpayer’s suit, which involved a claimed unconstitutional lending of the State’s credit in connection with the issuance of tax and revenue anticipation notes. In no case however have we held that a taxpayer has standing to challenge the issuance of State bonds or bond anticipation notes." (Plaintiffs’ emphasis). Wein v Comptroller, 46 NY2d at 398. NOTE: The complaint in the instant case (para. 3, 4, 5 and 6) has clearly identified plaintiffs: a) as citizens, rather than taxpayers, seeking a declaration of their individual constitutional rights, under the fundamental law, in a challenge to the issuance of bonds by public corporations/instrumentalities of the State; and b) as citizens and also as taxpayers seeking a declaration of their rights in relation to the payment (expenditure) from State funds, by the State comptroller, to DASNY and to the Metro Authority. In Wein, the Court concluded that SFL 123-b(1) "does ‘not apply’ to taxpayer suits involving revenue raising through State bonds and bond anticipation notes...the statutory ‘exception’ does indicate a reasonably clear legislative intent to prevent taxpayer challenges with respect to a State ‘bond issue or notes issued in anticipation thereof.’ (State Finance Law, Section 123-b, subd 1)...Thus we have concluded that whether the taxpayer relies on the statute or the case law, he lacks standing to challenge the issuance of State bonds or bond anticipation notes." (Plaintiffs’ emphasis). Wein v Comptroller, 46 NY2d at 399. NOTE: To repeat, plaintiffs are suing, inter alia, as citizens rather than taxpayers. Plaintiffs, as citizens, have a right to seek a declaration of their individual, constitutional rights under the fundamental law, in a challenge to actions alleged to have violated Article VII, Article VIII and Article X of the N.Y. Constitution. Otherwise, what would be the purpose of the Constitution? Of the Judiciary? A construction of SFL 123-b(1) which would allow the Judiciary to dismiss such a constitutional challenge by citizens to the "authorization, sale, execution or delivery of a bond issue or notes issued in anticipation thereof by the State or any agency, instrumentality or subdivision thereof, or by any public corporation" would mean SFL 123-b(1) would be abrogated. It would be unconstitutional, null and void because it would be violative of fundamental republican principles and of the citizens right to petition the government for a redress of grievances.
B. THE STATE’S ARGUMENT REGARDING SFL123-B(1) Under Point I in its Memo of Law, the State argues, "the exception in subdivision (1) of section 123-b of the State Finance Law does not deprive citizens of generalized standing with respect to certain bonding issues or deprive them of anything – it simply does not of itself confer taxpayer standing with respect to bonding. Thus all plaintiffs must do with respect to a challenge to the authorization, sale, execution or delivery of bond issues or notes issued in anticipation thereof by the State or any State agency is point to a justiciable basis for standing independent of Section 123-b with respect to same, like the right to vote upon State bonding under section 11 of article VII of the State Constitution." The State knows that standing rises to a constitutional right on matters of constitutionality and that the courthouse door cannot be closed to citizens seeking judicial review of legislative acts on constitutional grounds, as in the case at bar, without violating numerous controlling principles of law. Under Point I in its Memo of Law, the State goes on to argue, "Nothing in this record that indicates that section 123-b of the State Finance Law in any way prohibits plaintiffs from suing, speaking, assembling, grieving, voting, and enjoying all the privileges, immunities and constitutional protections they otherwise have. Plaintiffs retain the right to assert any other statutory or constitutional right they may have to challenge bond-related enactments, provided only that they present a justiciable controversy in doing so. For these reasons, challenges to the constitutionality of section 123-b(1) of the State Finance Law have been repeatedly rebuffed." The grammar of the first sentence is not correct, so the meaning is a bit blurred. However, the State seems to be saying that SFL 123-b(1) has not been used by the judiciary to prevent plaintiffs from seeking the protections of any constitution in any of the Wein or Schulz cases, so, therefore, SFL 123-b(1) is not unconstitutional. This is utter nonsense. Plaintiffs Schulz, Wein and others have had numerous constitutional claims, against numerous acts of the Legislature authorizing the incurrence of public debt, brought in numerous lawsuits, dismissed for lack of standing, citing SFL 123-b(1). See Point __ below. See, for instance, Wein v Comptroller, 46 NY2d 394; Coalition v Coughlin, 64 NY2d 660 (the UDC prison construction case); Schulz v State, 185 AD2d 596, 81 NY2d 336 (the UDC Attica case); Schulz v State, 193 AD2d 171, 84 NY2d 231 (the Thruway Authority $6 billion case); Schulz v NYS Executive, 233 AD2d 43, __ NY2d __ (the Clean Water/Clean Air Bond Act case); and Schulz v NYS Legislature, __ AD2d __ (July 30, 1998), app dismissed __ NY2d __ (October 22, 1998), lv to appeal pending (the NYC Transition Finance Authority case). The final sentence in the quote in paragraph 14 above is a non-sequitur and avoids plaintiffs’ primary argument against SFL 123-b(1) -- that it cannot be used to dismiss constitutional claims without violating the petition clause of the 1st Amendment, the guarantee clause of Article IV and the privileges and immunities clause of the 14th Amendment, all of the US Constitution. SFL 123-b(1) is unconstitutional. Defendants would have the Court ignore controlling principles of law. See arguments below.
C. DEFENDANTS WOULD HAVE THE COURT MISAPPREHEND Defendants point the Court’s attention to page 4 of the Opinion and Order of the Appellate Division in Schulz v NYS Legislature: "We have no quarrel with the proposition, that plaintiffs indeed possess standing as voters to assert that the public referendum requirement of N.Y. Constitution, Article VII, Section 11 (See, e.g., Matter of Schulz v New York State Executive, 233 AD2d 43, 48, aff’d __ NY2d __ [June 9, 1998] [finding that the Court of Appeals’ decision in Matter of Schulz v State of New York (81 NY2d 336) evidenced ‘an intent to permit voter standing in an action or proceeding predicated upon an alleged violation of any of the fundamental requirements of N.Y. Constitution, Article VII, Section 11’])...Such standing does not, however, extend to plaintiffs’ claims that the Act violates N.Y. Constitution, Article VII, Section 8 (gift or loan of State money or credit), N.Y. Constitution, Article VIII, Section 12 (limits upon local indebtedness) or N.Y. Constitution, Article X, Section 5 (restriction on assumption of obligations of a public corporation), as such provisions are not linked to any voting rights (see, e.g., Matter of Schulz v State of New York, 193 AD2d 171, affd 84 NY2d 231, cert denied 513 AD2d 1127)." Implied in this opinion is the belief that in one or more of the constitutional law cases brought by Robert L. Schulz against the incurrence of public debt, between 1990 and 1998, or one or more of the constitutional law cases brought by Professor Wein between 1975 and 1982 against the incurrence of public debt, that State Finance Law Section 123-b(1) was, itself, compared with the fundamental law and found to be constitutional. To believe this would be to misapprehend this most material fact. In fact, no court has ever compared State Finance Law Section 123-b(1) with the fundamental law, including the right to petition clause of the U.S. Constitution (1st Amendment) and the N.Y. Constitution (Article I, Section 9.1), or the right to a government republican in form and substance clause (Article IV, Section 4) of the U.S. Constitution, or the freedom from State laws which abridge our privileges and immunities (Section 1, cl 2, 14th Amendment). Plaintiff Schulz challenged the constitutionality of SFL 123-b(1) in the so-called "Attica case" (Schulz v State of N.Y., 185 AD2d 596, 81 NY2d 336, and in numerous cases since then. In 185 AD2d 596 the appellate Division said that based on Wein v Comptroller 46 NY2d 394, SFL 123-b(1) was not unconstitutional. However, the constitutionality of SFL 123-b(1) was not addressed or determined in Wein v Comptroller. The Unified Court System has continued to misapprehend this material fact.
D. A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN When an act of government properly comes before the Court to be compared by it with the fundamental law, it is the duty of the Court to declare the invalidity of the act if it violates any provision of that law. People v Gillson (1888), 109 NY 389. In their complaint plaintiffs have asked the Court to compare Chapters 5 and 124 of the N.Y. Laws of 1998 with the following provisions of the fundamental law of New York State and to declare the act invalid because it violates these provisions: Article VII, Sections 7, 8 and 11, Article VIII, Sections 1,2 and 12 and Article X, Section 5. Instead of comparing the act with these provisions of the fundamental law, to determine its validity, defendants would have the Court dismiss all but plaintiffs’ Article VII, Section 11 claims saying, in effect, that plaintiffs are not allowed to seek the protection of those provisions of the fundamental law, by fiat of the Legislative and Executive branches expressed in State Finance Law Section 123-b(1). Defendants refer the Court to page 4 at footnote 1 of the Decision and Order of the Appellate Division in Schulz v NYS Legislature, July 30, 1998 (Exhibit 4B of Defendants’ memorandum of Law), where that Court held, "standing does not, however, extend to plaintiffs’ claims that the Act violates N.Y. Constitution, Article VII, Section 8 (gift or loan of state money or credit), N.Y. Constitution Article VIII, Section 12 (limits on local indebtedness) or N.Y. Constitution, Article X, Section 5 (restriction on assumption of obligations of a public corporation), as such provisions are not limited to any voting rights (see, e.g., Matter of Schulz v State of New York, 193 AD2d 171, 177, aff’d 84 NY2d 231, cert. denied 513 AD2 1127 [sic])." Defendants would have this Court also misapply the controlling principle of law established in People v Gillson, 109 NY 389. It is the duty of the Court to compare Chapters 5 and 124 L98 with the fundamental law and to declare the invalidity of the Act if it violated any provision of that law. Also, in their complaint, plaintiffs have asked the Court to compare State Finance Law Section 123-b(1) with the fundamental law (U.S. Constitution, First and Fourteenth Amendments and Article IV; N.Y. Constitution, Article I, Section 9.1) and to declare the act invalid because it violates those provisions. Instead of comparing SFL 123-b(1) with the fundamental law, to determine its validity, defendants would have the Court dismiss plaintiffs’ cause of action saying, in effect, that the government is not limited by any written Constitution. Defendants refer the Court to page 5 at footnote 2 of the July 30, 1998, decision by the Appellate Division in Schulz v NYS Legislature, where that Court held, "The plain language of State Finance Law Section 123-b(1) precludes standing under such circumstances, and the constitutionality of such provision has long since been resolved (see, e.g., Schulz v State of New York, 185 AD2d 596, 597, appeal dismissed 81 NY2d 336. In fact, SFL 123-b(1) was never compared with the fundamental law to determine the validity of the act. It didn’t happen in Schulz v State of N.Y., 185 AD2d 596, 597, in 81 NY2d 336, in Wein v Comptroller (1979) 46 NY2d 394, or in relation to any other lawsuit. Relying on the principle established in Gillson (supra), it is quite clear that fundamental rights are invaded, weakened, limited or destroyed by the legislative acts under challenge. They are evidently of that kind which has been so frequent of late, a kind which is meant to protect some class in the community against the fair, free and full competition of some other class (the ordinary, non-aligned citizen-taxpayer-voter), the members of the former class thinking it impossible to hold their own against such competition, and therefore flying to the Legislature to secure some enactment which shall operate favorably to them or unfavorably to their competitors in the socio-political and socio-economic fields. The acts under challenge restrain the ordinary, non-aligned citizen-taxpayer-voter in the free enjoyment of his faculties, which he ought to have and use in the pursuit of his happiness. These laws interfere with his right not to have the fruits of his labor taken from him except by constitutional due process. If these laws and others like it are valid, the fact of their existence is a complete answer to the complaints of the citizen-taxpayers-voters as plaintiffs, that their liberty and freedom from oppressive debt and taxation are greatly impaired. "The power of the government is not above the Constitution, but it is bounded by its provisions; and if any liberty or franchise is expressly protected by any constitutional provision it cannot be destroyed by any valid exercise by the legislative or executive [power]...the legislature cannot, without reason and arbitrarily, infringe upon the liberty or the property rights of any person within the protection of the Constitution of this state; and that if the legislature shall determine what is a proper exercise of its [power] its decision is subject to the scrutiny of the courts." Gillson at 400, 401. The Court is respectfully requested to apply the controlling principle of law established in Gillson (supra). It is the duty of the Court to compare SFL 123-b(1) and Chapters 5 and 124 L98 with the fundamental law and to declare the invalidity of the Act if it violated any provision of that law.
E. A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN "No inference is warranted that other powers have been conferred by the people upon their legislative body than those which are mentioned in the Constitution, or which are necessary to carry into effect those which are expressly given." Rathbone v Wirth (1896), 150 NY 459, 467. The rights of the people, which are an accompaniment of our political institutions; which are expressly recognized as such by our Constitution, and the permanency of which is guaranteed therein, have been deliberately trenched upon by the legislative and executive bodies. What becomes of the right of the majority of the people to control the incurrence of public debt and the overburdensome level of taxation that results when a law is enacted which closes the door to judicial review of other laws which authorize the seemingly unconstitutional incurrence of public debt? It is not to much to say of SFL 123-b(1) and Chapters 5 and 124 L98 that they are an attack upon fundamental forms of personal liberty against which the specific constitutional provisions involved herein were intended to act as safeguards. These legislative acts are as opposed to a safe state policy as to the very letter of the Constitution. It doesn’t take much of an argument to show the importance of the debt limiting clauses in our Constitution, or what their presence means for our political institutions. Their very presence in the Constitution of the State beginning in 1846 evidences the importance which the people attach to the preservation of these rights in the management of their state and local affairs. They mean the right to control the level of public debt or they mean nothing. The theory of the Constitutions is that the people are, of right, entitled to petition the courts to compare acts of the legislature with the fundamental law and to have those laws invalidated if they are repugnant to any provision of the N.Y. Constitution or the Constitution of the United States, and that this right cannot be taken from them and the people, in effect, spat upon by any act of the legislature, or of any or all the departments of the state government combined. This right of "republicanism" lies at the foundation of our institutions, and cannot be disturbed or interfered with without weakening the entire foundation. The fundamental law is to be "carefully guarded by every department of government, but every infraction or evasion of it to be promptly met and condemned; especially by the courts, when such acts become the subject of judicial investigation." People ex rel. Bolton v Albertson, 55 NY 50. The acts under challenge here appear as legislation, hostile to freedoms meant to be protected by the "petition clauses" of the N.Y. and U.S. Constitutions and by Articles VII, VIII and X of the N.Y. Constitution, which plaintiffs have a right to claim, under the Constitution, in the management of the State’s fiscal affairs. It cannot be denied that legislation SFL 123-b(1) and Chapter 5 and 124 L98 are examples of legislation that have an inimical tendency. "The judicial power was intended to stand as a bulwark against all legislation which impairs any of the constitutional guarantees. The legislative power of the state is vested in the legislature and it is plenary with respect to the state at large, or to any portion thereof, in matters of government, except as restricted by the Constitution...We must not forget that a Constitution is the measure of the rights delegated by the people to their governmental agents and not of the rights of the people. It apportions the powers of government, with such limitations as are appropriate to keep their exercise clearly defined. The Judicial power can, and should, pronounce null all laws which contravene its provisions...." Rathbone at 470.
F. A CONTROLLING PRINCIPLE OF LAW ESTABLISHED "The Fourteenth amendment did not radically change the whole theory of the relations of the State and Federal governments to each other, and of both governments to the people. The same person may be at the same time a citizen of the United States and a citizen of a state. Protection of life, liberty and property rests primarily with the states, and the amendment furnishes an additional guaranty against any encroachment by the states upon those fundamental rights which belong to citizenship, and which the state governments were created to secure. The privileges and immunities of citizens of the United States, as distinguished from the privileges and immunities of citizens of the states, are indeed protected by it; but those are privileges and immunities arising out of the nature and essential character of the national government, and granted and secured by the Constitution of the United States." In Re Kemmler at 934, citing United States v Cruikshank 92 U.S. 542 and Slaughterhouse Cases, 16 Wall. 36. The Court below misapplied this principle of law. The Fourteenth Amendment protects the privileges and immunities of plaintiffs, including the right to petition the government for a redress of grievances, a right transgressed by SFL 123-b(1).
G. A CONTROLLING PRINCIPLE OF LAW ESTABLISHED "By the Constitution, a republican form of government is guaranteed to every State in the Union, and the distinguishing feature of that form is the right of the people to choose their own officers for governmental administration, and pass their own laws in virtue of the legislative power reposed in representative bodies, whose legitimate acts may be said to be those of the people themselves; but, while the people are thus the source of political power, their governments, national and state, have been limited by written constitutions, and they have themselves thereby set bounds to their own power, as against the sudden impulses of mere majorities." In re Duncan, Tex. 1891, 11 S. Ct. 573, 577. (Plaintiffs’ emphasis). Defendants would have the Court misapply this basic principle of law by not comparing SFL 123-b(1) and Chapters 5 and 124 of the New York Laws of 1998 with all the provisions of the constitutions of the United States and New York that plaintiffs have alleged the acts have violated. The legislative and executive need to be reminded that they are limited by written constitutions. The passage of time produces corruption of principles. It is the duty of good citizens to be ever on the watch against this, and if the gangrene is eventually to prevail, let the day be kept off as long as possible. The primary role of the court, we believe, is to protect the people from the unrestrained acts of the government --i.e., to keep the Legislature and Executive harnessed to the will of the people as expressed in their constitutions. Plaintiffs, together with other ordinary, non-aligned citizens, have been degraded from the prime rank, which they ought to hold in human affairs, by a willfully wayward state government that is behaving as if the NY Constitution belongs to it rather than to the people and, therefore, may be disregarded at will. Plaintiffs’ cause portrays the Legislative and Executive branches of their state government as cooperating in the making and enforcing of laws which abridge plaintiffs’ privileges and immunities as both explicitly and implicitly expressed in the United States and New York State Constitutions. Sovereignty is the right to govern; a nation or state-sovereign is the person or persons in whom that resides. In New York, despite massive misunderstanding, it rests with the people. However, in the practice and even in the science of politics, there has been frequently a strong current in New York against the natural order of things. In New York, which has been denominated free, the state has assumed a supercilious pre-eminence above the people who have formed it. The state, rather than the people, for whose sakes the state exists, is frequently the object which attracts and arrests the principal attention. This has produced much of the confusion and perplexity, which have appeared in several proceedings and several publications on state politics. Sentiments and expressions of this inaccurate kind prevail in our common, even in our convivial language. Since the very beginning, the acts of the early national congresses and the acts of the early conventions, including the congress and committees of New York, are replete with expressions with respect to "republicanism" and to the "sovereignty of the people," and the servant nature of governments at all levels. It is to the honor of the United States that in no other country are subjects of this kind better -- or even so well -- understood. One fact stands out: the attention and attachment of the Constitution of the United States and of the New York Constitution to the rights of the sovereign people are discernible, as hard copy, in almost every provision of these documents. It is to be deeply regretted that the constitutional principles which are the cause of action in our lawsuit has not yet received its merited acquiescence and approval as basic principles of governance -- at least, not from New York State’s Legislative and Executive branches. The United States and New York have, in their constitutional language, advocated both the form and substance of constitutional republicanism, with its emphasis on individual rights and governmental responsibility for protecting and enhancing them. Operationally, however, these principles are honored more in the breach than in the observance. There still may be reason to hope that the government of New York, in all three of its branches, may yet perceive the wrongness of actions it has taken, such as interdicting the right of the people to petition their government for a redress of grievances, incurring public debt in spite of constitutional restrictions and attempting to exempt the government that represents the body of her citizens from that "suability" which alone enables her citizens to assert their individual, fundamental rights and to seek and obtain the protections of their Federal and State constitutions. It is with this hope in mind that we petition this Court. The people have good reason to be thankful for their valuable liberties and privileges. Nothing but forthright insistence upon the perpetuation of constitutional law and government can insure the continuance and enhancement of their liberties and privileges. Under the circumstances, in New York, the people cannot do this without actions that would threaten their peace and tranquillity. It becomes necessary for the Court to apply the rule of law.
H. A CONTROLLING PRINCIPLE OF LAW ESTABLISHED No branch of government may avoid the mandate of the Constitution. Matter of Greene, 166 NY 485. Defendants would have the Court misapply this basic principle of law by not comparing SFL 123-b(1) and Chapters 5 and 124 of the New York Laws of 1998 with all the provisions of the constitutions of the United States and New York that plaintiffs have alleged the acts have violated.
I. A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN Citizen-taxpayers have "standing to challenge enactments of our State Legislature as contrary to the mandates of our State Constitution." Boryszewski v Brydges, 37 NY2d 361. Defendants would have the Court misapply this basic principle of law by not comparing SFL 123-b(1) and Chapters 5 and 124 of the New York Laws of 1998 with all the provisions of the constitutions of the United States and New York that plaintiffs have alleged the acts have violated.
J. BASIC RIGHTS HAVE BEEN TAKEN WAY BY THE STATE. Plaintiffs’ First Amendment right to petition the government for a redress of grievances, involving unconstitutionally incurred public debt, has been taken away by the New York State Legislature and Executive. The Court can restore that right. The Legislature and the Executive enacted the exception language SFL 123-b(1) which declares, in essence, that the courthouse door is closed to citizen-petitioners in cases where they are seeking to obtain compliance with debt-limiting restrictions of the N.Y. Constitution. It is now necessary for the Court of to declare SFL 123-b(1) to be unconstitutional. Plaintiffs’ fundamental right to a "separation of powers" has been infringed by the State. The Court can restore that right. Plaintiffs’ right to a State government republican in form and substance and their guarantee of freedom from the making and enforcement of State laws that abridge their fundamental privileges and immunities have been taken away. The Court can restore those rights.
POINT III "APPROPRIATION FREE" BONDS AUTHORIZED BY The N.Y. Constitution reads: "No money shall ever be paid out of the state treasury or any of its funds, or any of the funds under its management; except in pursuance of an appropriation by law...." Article VII, Section 7, NY Constitution Chapter 124 authorizes the State Comptroller to make payments out of funds under his care and management to the Schenectady County Metroplex Development Fund, without appropriation by law. Defendants argue that Saratoga Harness Racing Assn. v Agriculture and N.Y.S. Horse Breeding Dev. Fund, 22 NY2d 119 (1968) is dispositive of plaintiffs’ Article VII, Section 7 claim. Defendants rely on Justice Terisi’s decision issued November 25, 1997 in Schulz v N.Y.S. Legislature (copy included in defendants’ Memorandum of Law at Exhibit 4A). Justice Terisi’s decision on this point was affirmed on other grounds by the Appellate Division on July 30, 1998 (failure to present the Article VII, Section 7 claim in the complaint itself). See Exhibit 4B in defendants’ Memorandum of Law. Defendants argue that the moneys in question are not State funds that come within the provisions of Section 7 of Article VII. This is a fallacy. Defendants argue that while the Metro Authority Act does, indeed, direct the State Comptroller to make the required payments without legislative appropriations the Act does not violate Article VII, Section 7 of the State Constitution which prohibits the Comptroller from paying money "out of the State treasury or any of its (the State’s) funds, or any of the funds under its (the State’s) management except in pursuance of an appropriation by law." Defendants argue that the Act does not violate this constitutional prohibition because the money the Comptroller is to pay is not State money or money in any fund under his care and management. Defendants argue that the structure and process being employed under the Metro Authority Act is similar to the structure and process employed in Saratoga Harness Racing Assn. v Agriculture and N.Y.S. Horse Breeding Development Fund, 22 NY2d 119 (1968) which was determined to be constitutional. This is not true, however. This case is distinguishable from Saratoga. In Saratoga, the Horse Breeding Development Fund derived its revenues from private parties (Racing Associations) who were required to pay fees (not general tax revenues) directly to it (the Development Fund). Under the Metro Authority Act, on the other hand, revenues are derived from general taxpayers who are required to pay the money to the State Department of Taxation and Finance, who deposits the money in State accounts under the care and management of the State Comptroller -- the principal State fiscal officer whose office is created by the terms and provisions of the New York Constitution itself -- which State Comptroller is to draw checks on those accounts made payable to the Schenectady Metroplex Development Authority. Unlike the process being employed under the Metro Authority Act, the money in the Horse Breeding Development Fund is not derived from general sales taxes and it is not directly held or managed by the State but is money paid directly to that public benefit corporation, much the same way tolls are paid to the Thruway Authority. Notwithstanding the strong opinion of three dissenting judges (Judge Breitel voted to reverse the lower Court in an opinion in which Chief Judge Fuld and Judge Jasen concurred) the majority in Saratoga opined that the money in question was held in a "fund, not directly held or managed by the State but by a public benefit corporation." Saratoga at 123, 124. In the case at bar, it cannot fairly be argued that the money in question is to be held in a fund not directly held or managed by the State. In fact, the revenues are to be derived from the most basic and widespread tax programs -- the "sales and compensating use" tax. In fact, those revenues are to be paid to the State Agency to which all taxes are paid -- the N.Y.S. Department of Taxation and Finance. In fact, the Department deposits those revenues in accounts under the care and management of the State’s chief fiscal officer -- the State Comptroller. No money shall ever be paid "out of the State treasury or any of its (the State’s) funds, or any of the funds under its (the State’s) management" except upon legislative appropriation. See Matter of Roosevelt Raceway v Monaghan, 9 NY2d 293, 313; Switzer v Commissioners for Loaning Certain Moneys, 134 A.D. 487, 490; 1917 Opns. Atty-Gen. 175, 181-186. Control by the Legislature through regular appropriation, restrictions on the Legislature to make current appropriations only on a two-year basis at the outside, the public visibility of legislative control over the raising of revenues and their disbursement and the executive – legislative balancing of the budget are objectives of the highest importance in State government. Saratoga at 130, n2. Defendants in the instant case admit to the source of payment by the State Comptroller to the Metro Authority (which payment the Act requires is to be used, first, to service the Authority’s debt) and that payment will be made by the State Comptroller from an account under the care and management of the State: the State sales and compensating use tax fund account. Chapter 124 of the Laws of 1998 directs the State Comptroller to make said payments, year after year, as long as the Metro Authority bonds are outstanding (30 years), without requiring the State legislature to appropriate the funds by law. This "appropriation free" feature of Chapter 124 is repugnant to Article VII, Section 7 of the New York Constitution and "is unique in New York State, if not in the country." Bond Buyer, September 4, 1997. The money in the funds established by the Tax Law are in fact and in law funds under the management of the State within the meaning of Section 7 of Article VII. The funds are, indeed, an integral part of the State and by law under the care and management of the State Comptroller. The funds are used as a source of public expenditure. Since Chapter 124 envisions disbursement of these funds without appropriation, it represents an unlawful attempt to evade the constitutional controls upon State finances.
CONCLUSION Plaintiffs respectfully request an order denying defendants’ motions to dismiss and granting plaintiffs’ motion for injunctive relief. DATED: November 16, 1998 ROBERT L. SCHULZ Pro Se
STATE OF NEW YORK ROBERT L. SCHULZ, CATHERINE M.J. WAJDA, Plaintiffs, VERIFIED COMPLAINT - against - Index No. 5544-98 THE NEW YORK STATE LEGISLATURE, SHELDON SILVER, Robert L. Schulz, Catherine M.J. Wajda, Elmer F. Bertsch and Burr V. Deitz, allege: 1. This is a declaratory judgment action pursuant to CPLR 3001 and an action pursuant to Article 7A of the State Finance Law. 2. The relief requested herein is a final order: a) declaring the exception in State Finance Law Section 123-b(1) to be unconstitutional, null and void, b) declaring Chapter 124 of the New York Laws of 1998, the "Schenectady Metroplex Development Authority Act," to be unconstitutional, null and void, and c) declaring Chapter 5 of the New York Laws of 1998, the "Albany Plan," to be unconstitutional, null and void, and d) for such other relief as to the Court may seem just and proper.
PARTIES 3. Robert L. Schulz is a citizen of New York State. He resides in the Town of Fort Ann, Washington County. His mailing address is 2458 Ridge Road, Queensbury, New York 12804. He is an individual taxpayer and property owner liable to pay taxes upon an assessment of more than $1,000 in the Town of Fort Ann, Washington County, and in Queensbury, Warren County, New York. He pays State income, sales and compensating use taxes. He pays federal taxes. He is a registered voter registered to vote in the Town of Fort Ann, Washington County, New York. He voted in the last general election in New York State. He is eligible to vote in the next general election in New York State. 4. Catherine M.J. Wajda is a citizen of New York State. She resides in the Town of Niskayuna, Schenectady County. Her mailing address is 2165 The Plaza, Schenectady, New York 12309-5831. She is an individual taxpayer and property owner liable to pay taxes upon an assessment of more than $1,000 in the Town of Niskayuna, Schenectady County, New York. She pays State income, sales and compensating use taxes. She pays federal taxes. She is a registered voter registered to vote in the Town of Niskayuna, Schenectady County, New York. She voted in the last general election in New York State. She is eligible to vote in the next general election in New York State. 5. Elmer F. Bertsch is a citizen of New York State. He resides in the Town of Niskayuna, Schenectady County. His mailing address is 2097 Orchard Park Drive, Schenectady, New York 12309-2207. He is an individual taxpayer and property owner liable to pay taxes upon an assessment of more than $1,000 in the Town of Niskayuna, Schenectady County, New York. He pays State income, sales and compensating use taxes. He pays federal taxes. He is a registered voter registered to vote in the Town of Niskayuna, Schenectady County, New York. He voted in the last general election in New York State. He is eligible to vote in the next general election in New York State. 6. Burr V. Deitz is a citizen of New York State. He resides in the City of Albany, Albany County. His mailing address is 444 Whitehall Road, Albany, New York 12208. He is an individual taxpayer and property owner liable to pay taxes upon an assessment of more than $1,000 in the City of Albany, Albany County, New York. He pays State income, sales and compensating use taxes. He pays federal taxes. He is a registered voter registered to vote in the City of Albany, Albany County, New York. He voted in the last general election in New York State. He is eligible to vote in the next general election in New York State. 7. The New York Legislature is the Legislative Branch of the State of New York, created by Article III of the New York State Constitution, Joseph L. Bruno is a member of the Legislature and is the Majority Leader of the Senate, Sheldon Silver is a member of the Legislature and is the Speaker of the Assembly. 8. The New York State Executive is the Executive Branch of the State of New York, created by Article IV of the New York State Constitution. George Pataki is the duly elected Governor of New York State. H. Carl McCall is the Comptroller of the State of New York.
PRELIMINARY STATEMENT 9. The Court is asked to declare New York State Finance Law Section 123-b(1) unconstitutional null and void because it is violative of the United States Constitution: the right to petition clause of the First Amendment and, therefore, the guarantee clause of Article IV, Section 4 and the privileges and immunities clause of the Fourteenth Amendment. 10. Assuming the Court will declare SFL 123 b(1) to be unconstitutional, the Court is respectfully requested to then declare Chapters 5 and 124 of the New York Laws of 1996 to be unconstitutional, null and void because they were adopted in violation of various provisions of the New York State Constitution, and are, therefore, violative of plaintiffs’ fundamental right to a government republican in form and substance under Article IV, Section 4 of the U.S. Constitution, and plaintiffs’ civil right to freedom from state laws that abridge their fundamental privileges and immunities as guaranteed by Clause 2 of the Fourteenth amendment to the U.S. Constitution. 11. This is not a typical taxpayer action, i.e., a petition for judicial review of the power of the Legislature and Executive branches to tax and spend. Rather this is a petition by citizens for judicial review, under, inter-alia, the U.S. Constitution’s First Amendment and the "guarantee" and "privileges and immunities" clauses, of the power of the NY’s governmental leaders: a) to make and enforce a "door closing" law that disallows persons a forum in which to assert their constitutional rights (if the matter involves the incurrence of public debt), even if the complaint is deeply rooted in the Constitutions of New York and of the United States; and b) to adopt laws that authorize the incurrence of public debt in spite of constitutional restrictions. 12. This is but the latest in a series of actions challenging public borrowing by the State. Lest anyone argue res judicata or collateral estoppel or stare decisis based upon some holding that earlier court decisions have been decisive of the questions presented here, plaintiffs have detailed some of the constitutional provisions that have been violated by Chapters 5 and 124 and how this case is distinguishable from two of those earlier decisions. See Table 1 which follows page 15, and Table 2 which follows page 16. 13. Plaintiffs have alleged that New York State Finance Law Section 123-b(1) is violative of the First Amendment because on its face, and in its application, it strips plaintiffs of their right to petition the government for a redress of constitutional grievances. All decisions by the New York Court of Appeals relating to public borrowing, since the enactment of SFL 123-b(1), have failed to consider the First Amendment infirmity of SFL 123-b(1). Instead, the Court has merely restated the purpose of SFL 123-b(1): "minimizing the uncertainty of potential investors." The Court has then used SFL 123-b(1) to dismiss principal constitutional claims against Legislative acts authorizing the incurrence of public debt. 14. Plaintiffs have also alleged that SFL 123-b(1) and Chapters 5 and 124 should be declared unconstitutional, because, inter alia, each is violative of Section 1, Clause 2 of the Fourteenth Amendment of the US Constitution -- the so-called "privileges and immunities ("P&I") clause," which prohibits the State from making and enforcing laws which abridge plaintiffs’ constitutional rights and freedoms. 15. Plaintiffs have also alleged that each of the three laws should be declared unconstitutional because each is violative of Article IV, Section 4 -- the so-called "guarantee clause" -- under which plaintiffs are guaranteed "a republican form of government" in any state in which they choose to reside, including New York State. In agreeing to join the union in 1787, New Yorkers were guaranteed under Article IV, Section 4, that the United States government would guarantee that the citizens of New York would always enjoy a government republican in form and substance, which includes: popular sovereignty; self-government; a government that derives its powers from the consent of the governed; and a government limited by written Constitutions. 16. Article VI of the Constitution of the United States provides: "The judges in every state shall be bound by this Constitution."
QUESTIONS PRESENTED 17. Whether SFL 123-b(1) is unconstitutional, null and void. 18. Whether Chapter 5 of the N.Y. Laws of 1998 is unconstitutional, null and void. 19. Whether Chapter 124 of the N.Y. Laws of 1998 is unconstitutional, null and void.
STATEMENT OF THE FACTS 20. In 1975, defendants enacted SFL 123-b(1) , an act in relation to the citizen’s lack of standing to maintain an action in court if the matter involves public borrowing. 21. On May 13, 1998, defendants enacted Chapter 5 of the Laws of 1998, an act in relation to the use of the New York State Dormitory Authority for the financing and construction of two State office buildings and a State parking garage in the City of Albany (the "Albany Act"). 22. On June 30, 1998, defendants enacted Chapter 124 of the Laws of 1998, an act in relation to the establishment of the Schenectady Metroplex Development Authority and in relation to authorizing a ½ of 1 percent increase in the sales and compensating use tax for the purpose of servicing the debt obligations of the newly created Schenectady Metroplex Development Authority (the "Schenectady Act").
FIRST CLAIM SFL 123-b(1) IS VIOLATIVE OF THE "PETITION" CLAUSES 23. The United States and N.Y. Constitutions read in part: "Congress shall make no law...abridging...the right of the people…to petition the Government for a redress of grievances." First Amendment, U.S. Constitution "No law shall be passed abridging the rights of the people peaceably to assemble and to petition the government or any department thereof...." Article I, Section 9.1, N.Y. Constitution 24. Obviously, the exception in SFL 123-b(1) was designed by the Legislative and Executive to bar citizens from challenging the state’s borrowing practices, even those that violate the people’s primary protection from overburdensome debt and the taxes required to retire that debt as found under articles VII, VIII and X of the New York Constitution. 25. The exception in SFL 123-b(1) is designed to bar plaintiffs from exercising their fundamental right to petition the government for a redress of their grievances by accessing the courts. (See NY Constitution, Article I and US Constitution, First Amendment). The First Amendment right to petition the government for a redress of grievances has been incorporated into the Fourteenth Amendment and is therefore applicable to the States. Nicholson v Moran, D.R.I 1993, 835 F. Supp. 692. 26. The filing of a lawsuit carries significant constitutional protection, implicating the First Amendment right to petition the government for redress of grievances and the right of access to the courts. Hoeber for and on Behalf of N.L.R.B. v Local 30, United States, Tile & Composition Roofers et al (Pa) 1991, 939 F.2d 118. SFL 123-b(1) abridges these rights and is unconstitutional. 27. The petition clause of the First Amendment is of paramount importance. It was inspired by the same ideals of liberty and democracy that resulted in the First Amendment freedoms to speak, publish and assemble. McDonald v Smith, N.C. 1985, 105 S. Ct. 2787. 28. Due process right to access to the courts and the right to petition officials and courts for redress of grievances are fundamental rights which cannot be invaded without justification by a compelling state interest. Morales v Turman, D.C. Tex, 1971, 326 F. Supp. 677. There is no justification much less a compelling justification for the exception in SFL 123-b(1). 29. Right of access to courts is but one aspect of the right to petition. California Motor Transport Co. v. Trucking Unlimited Cal. 1972, 92 S. Ct. 609. SFL 123-b(1) abridges that right. 30. Plaintiffs have early and expressly challenged the exception in SFL 123-b(1) on its face, as violative of plaintiffs’ fundamental, constitutional right to petition their government for a redress of grievances as expressly provided by Article I, Section 9.1 of the New York Constitution and as expressly provided by the First Amendment of the United States Constitution. 31. In addition, plaintiffs have early and expressly challenged the exception in SFL 123-b(1) as unconstitutional in its application because it was being used by the Legislature, Executive and Judiciary to bar citizens from seeking the protections and guarantees provided by the New York Constitution and under Article IV and the 5th and 14th Amendments to the U.S. Constitution, if the matter involves public borrowing. 32. In a manifest act of injustice, the Appellate Division, Third Department recently dismissed most of the claims in a recent case for lack of standing under SFL 123-b(1), after ruling that the plaintiffs’ constitutional challenge to SFL 123-b(1) was barred by the doctrines of res judicata and stare decises. See Schulz v NYS Executive, ___ AD2d ___, decided July 30, 1998. Yet, there has been no court decision which responded to, fully encompassed and was decisive of the question. Instead, there is a daisy chain of decisions which, by reference, appear to rely on Wein v Comptroller, 46 NY2d 394 (1979), a case in which the question of the constitutionality of SFL 123-b(1) was neither presented, raised nor determined. In support of its ruling in the referenced case, the Third Department cited Wein v Comptroller, 46 NY2d 394 (1979) and other cases that in turn cited Wein v Comptroller: Schulz v State of New York, 185 AD2d 596 aff’d 81 NY2d 336 (1993); Schulz v State of New York, 193 AD2d 171, 177, aff’d 84 NY2d 231, cert denial 513 US 1127; and Schulz v N.Y.S. Executive, 233 AD2d 43, aff’d __ NY2d __ [June 9, 1998]. 33. Again, the question of the constitutionality of SFL 123-b(1) was not presented, raised or determined in Wein v Comptroller, 46 NY2d 394 (1979). The continuing dismissal of the claim that SFL 123-b(1) is unconstitutional on the basis of res judicata and stare decisis and the continual (20 year) case-to-case practice of applying SFL 123-b(1) to dismiss causes of action involving public borrowing appears to be one of the greatest calamities in the history of the N.Y.S. court system. It is obvious, prima facie, that the courts’ practice has reflected its cooperation with the general government’s desire for the funds involved in the bond issues, irrespective of their source. In effect, it appears that the courts have enforced an act of the legislative and executive branches which countermands constitutional guarantees. That is, it closes the courts’ doors to citizens who need to assert their constitutional rights and who need to seek the protection of certain constitutional provisions. 34. While the Wein court denied standing to Professor Wein, citing SFL 123-b(1), the Wein court was not asked to consider the constitutionality of such a door closing statute -- a statute written to prevent citizens from asserting their constitutional rights in any forum -- and so, to its discredit, it chose to turn a blind eye toward the written Constitutions of New York State and the United States. It appears that the NYS court system has been using SFL 123-b(1) as a convenient crutch to frustrate legitimate taxpayer questions about the propriety of bond issues, ostensibly to "minimize the uncertainty in the minds of potential investors in New York bonds." 35. It cannot be fairly argued that the decisions in Schulz v State of New York, 185 Ad2d 596, or in Schulz v State of New York, 193 AD2d 171 responded to, fully encompassed and were decisive of the question of the constitutionality of SFL 123-b(1) which was properly before the courts in both cases. In dismissing the constitutional attacks on SFL 123-b(1) the Third Department merely cited Wein v Comptroller, 46 NY2d 394 (1979) which, as argued in the preceding paragraph, was a case in which the question of the constitutionality of SFL 123-b(1) was never raised, presented or determined. Nor can it be fairly argued that the Court of Appeals in Schulz v State of New York, 81 NY2d 336 (1993) or in Schulz v State of New York, 84 NY2d 231 (1994), responded to and fully encompassed the question of the constitutionality of SFL 123-b(1), which was properly before that Court in both cases. Unlike Wein v Comptroller, the question of the constitutionality of SFL 123-b(1) was properly before the Court of Appeals but the Court simply did not address the question. 36. Nor can it be fairly argued that the courts’ decisions in Schulz v N.Y.S. Executive, 233 AD2d 43, __ NY2d __ [June 9, 1998] responded to, fully encompassed and was decisive of the question of the constitutionality of SFL 123-b(1). In dismissing the constitutional attack on SFL 123-b(1) the Third Department merely cited its decision in Schulz v State of New York, 185 AD2d 596 (1992) which, as argued above, merely cited Wein v Comptroller, 46 NY2d 394 which, as argued above, was a case in which the question of the constitutionality of SFL 123-b(1) was never raised, presented or determined. In sum, the Court of Appeals again failed to address the question of the constitutionality of SFL 123-b(1) before dismissing for lack of standing, citing SFL 123-b(1), plaintiffs’ attack against the Clean Water/Clean Air Bond Act (Chapter 412 L96), under Article III of the N.Y. Constitution. 37. Finally, in Schulz v State of New York, 960 F.Supp. 568 (N.D.N.Y. 1997) the federal court did not respond at all to the question of the constitutionality of SFL 123-b(1), much less fully encompass the question in its deliberations and decision. As argued on pages 16-19 of their Reply Brief to the Federal Court of Appeals for the Second Circuit, the District Court simply failed to address plaintiffs’ First Amendment "right to petition" claim against SFL 123-b(1) and applied the wrong "privileges and immunity" clause to the claim against SFL 123-b(1). Judge McAvoy’s decision itself demonstrates that the question of the constitutionality of SFL 123-b(1), while properly before that Court, was not addressed much less determined in Schulz v State of New York, 960 F.Supp. 568 (N.D.N.Y. 1997). 38. SFL 123-b(1) cannot be used to deny plaintiffs’ their fundamental right to assert their constitutional claims. To do so violates plaintiffs’ right to petition the government for a redress of (constitutional) grievances. Plaintiffs have a fundamental right to seek the protection of, and to defend in court, each and every provision of the New York Constitution against transgression/abuse by government officials whether or not the matter involves public borrowing. Plaintiffs have the fundamental right to maintain an action challenging the constitutionality of Chapters 5 and 124 of the Laws of 1998 in defense of the New York Constitution Article VII Section 7, Article VII Section 8, Article VIII Section 1, Article VIII Section 2, Article VIII Section 4, Article VIII Section 12 and Article X Section 5, as well as Article VIII Section 11, as they have done in this case. The legislative and executive branches cannot legally make a law that abridges plaintiffs’ privileges and immunities. Nor can the Judiciary legally enforce one. 39. Plaintiffs’ constitutional right, as citizens of this state, to defend each and every provision of the Constitution is not limited by their status as voters. 40. No State constitutional protection can be effectively nullified by an Act of the State Legislature, unless the Constitution enables it. No legislative Act can legally direct the Judiciary to close the door to any citizen seeking the protection of a provision of the Constitution from an Act of the Legislature which is in conflict with it, whether or not the matter involves public borrowing. 41. Under our system of governance the people are to enjoy the republican principles of popular sovereignty, self-government, a government which derives its powers from the consent of the governed as expressed in their Constitution, and separation of powers. 42. Chapters 5 and 124 of the Laws of 1998 violate these principles. Plaintiffs are injured [loss of sovereignty, erosion of liberty, annual payment from tax revenues without legislative appropriation, increased State and local indebtedness (possibly above constitutional limits) without pledging full faith and credit, use of public funds to pay debt obligations of a public corporation, etc.], and SFL 123-b(1) cannot be used to prevent citizens from seeking redress. These injuries lie within the zone-of-interest to be protected by the Constitution in general and specifically by said sections of Articles VII, VIII and X of the N.Y. Constitution and by Article IV, Section 4 of the U.S. Constitution and the First and Fourteenth Amendment thereto. 43. Plaintiffs have constitutional standing. Their standing rises to a constitutional right on matters constitutional. 44. Plaintiffs have standing because we are claiming injuries to plaintiffs’ interests that fall within the zones-of-interests to be protected by: 3. Article X, Section 5 (prohibits the use of public funds to pay the debt of any public corporation) 2. Article VIII, Section 2 (requires County to pledge its full faith and credit when incurring debt) 3. Article VIII, Section 12 (requires legislature to prevent abuses in taxation and borrowing) 4. Article VII, Section 7 (requires appropriation by law before any money can be paid out of funds under the care and management of the State Comptroller) 5. Article VII, Section 11 (requires voter approval before the State can contract indebtedness) 6. Article VII, Section 8 (prohibits the State from giving its credit to a public corporation) 7. Article VIII, Section 1 (prohibits the County from giving its credit to a public corporation) 45. These constitutional questions are substantial and directly involved. The Court is respectfully requested to discontinue the daisy chain of decisions regarding the constitutionality of SFL 123-b(1) by not dismissing this claim on the grounds of res judicata or stare decisis.
SECOND CLAIM CHAPTER 124 OF THE N.Y. LAWS OF 1998 IS 46. The N.Y. Constitution reads in part: "Neither the state nor any political subdivision thereof shall at any time be liable for the payment of any obligations issued by such a public corporation heretofore or hereafter created, nor may the legislature accept, authorize acceptance of or impose such liability upon the state or any political subdivision thereof...." Article X, Section 5, New York Constitution "No money shall ever be paid out of the state treasury or any of its funds, or any of the funds under its management; except in pursuance of an appropriation by law...." Article VII, Section 7, NY Constitution "...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...." Article VII, Section 8, New York Constitution "no debt shall be hereinafter contracted by or in behalf of the state, unless such debt shall be authorized by law, for some single work or purpose, to be distinctly specified therein. No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election...."Article VII, Section 11, New York Constitution "...nor shall any county, city, town, village or school district give or loan its credit to or in aid of any individual, or public or private corporation or association, or private undertaking...." Article VIII, Section 1, New York Constitution "No indebtedness shall be contracted by any county, city, town, village or school district unless such county, city, town, village or school district shall have pledged its faith and credit for the payment of the principal thereof and the interest thereon...Provision shall be made annually by appropriation by every county, city, town, village and school district for the payment of interest on all indebtedness and for the amounts required for (a) the amortization and redemption of term bonds, sinking fund bonds and serial bonds...." Article VIII, Section 2, New York Constitution "It shall be the duty of the legislature, subject to the provisions of this constitution, to restrict the power of taxation, assessment, borrowing money, contracting indebtedness, and loaning the credit of counties, cities, towns and villages, so as to prevent abuses in taxation and assessments and in contracting of indebtedness by them...." Article VIII, Section 12, New York Constitution 47. Chapter 124 L98 is violative of the NY Constitution. See Table 1. (Tables have been omitted from the website). 48. The Legislature cannot suspend Article X, Section 5 of the Constitution and rule, instead, by Chapter 124 L98, a statute that is obnoxious to Article X, Section 5. 49. Nor can the Legislature suspend Article VII and Article VIII of the Constitution and rule, instead, by Chapter 124 L98, a statute that is obnoxious to Article VII and Article VIII.
THIRD CLAIM CHAPTER 5 OF THE N.Y. LAWS OF 1998 IS 50. The N.Y. Constitution reads in part: "Neither the state nor any political subdivision thereof shall at any time be liable for the payment of any obligations issued by such a public corporation heretofore or hereafter created, nor may the legislature accept, authorize acceptance of or impose such liability upon the state or any political subdivision thereof...." Article X, Section 5, New York Constitution "...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...." Article VII, Section 8, New York Constitution "no debt shall be hereinafter contracted by or in behalf of the state, unless such debt shall be authorized by law, for some single work or purpose, to be distinctly specified therein. No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election...." Article VII, Section 11, New York Constitution 51. Chapter 5 L98 is violative of the NY Constitution. See Table 2. (Tables have been omitted from the website). 52. The Legislature cannot suspend Article X, Section 5 of the Constitution and rule, instead, by Chapter 124 L98, a statute that is obnoxious to Article X, Section 5. 53. Nor can the Legislature suspend Article VII and Article VIII of the Constitution and rule, instead, by Chapter 124 L98, a statute that is obnoxious to Article VII and Article VIII.
FOURTH CLAIM SFL 123-b(1) AND CHAPTERS 5 AND 124 OF THE 54. The U.S. Constitution reads: "No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States...." Section 1, Clause 2, Fourteenth Amendment, U.S. Constitution 55. The purpose of the Fourteenth Amendment, Section 1, Clause 2 is to preserve and enforce, as against state action, those rights, privileges and immunities secured by the constitution. Golden v Biscayne Bay Yacht Club, C.A. Fla. 1976, 530 F.2d 16, certiorari denied 97 S. Ct. 186. 56. The adoption of section 1, clause 2 of the Fourteenth Amendment implied that there are matters of fundamental justice that the citizens consider so essentially an ingredient of human rights as to require restraint on action on behalf of any state that appears to ignore them. Orleans Parish School Bd. v Bush, C.A. La. 1957, 242 F.2d 156, Certiorari denied 77 S.Ct. 1380. 57. Section 1, Clause 2 of the Fourteenth Amendment is designed to protect plaintiffs from invasion of their rights, privileges and immunities by the federal and state governments respectively. Schatte v Int’l Alliance of Theatrical Stage Emp. et. al., D.C. Cal 1947 70 F. Supp. 1008, affirmed 165 F.2d 216 Certiorari denied 68 S.Ct. 1018. 58. In the constitution and laws of the United States the word "citizen" is generally, if not always used in a political sense to designate one who has the rights and privileges of a citizen of the State or of the United States and it is so used in Section 1, Clause 2 of the Fourteenth Amendment. Baldwin v Franks, Cal 1887, 7 S.Ct. 656. Plaintiffs are citizens of the United States and of New York State. 59. Section 1, Clause 2 of the Fourteenth Amendment prohibits New York State from denying or abridging privileges or rights of plaintiffs as citizens of the United States. State v Johnston, 1969, 456 P.2d 805, 51 Haw. 195, 259, appeal dismissed 90 S.Ct. 1152. Defendants have violated the Fourteenth Amendment by adopting Chapters 5 and 124 L98 and SFL 123-b(1). 60. The right to sue and defend in the courts is the alternative of force, and it is one of the highest and most essential privileges of citizenship. Chambers v Baltimore etc. R. Co. Ohio 1907, 28 S. St. 34. SFL 123-b(1) strips plaintiffs of that privilege and is, therefore, unconstitutional. 61. Section 1, Clause 2 of the Fourteenth Amendment furnishes an additional guarantee against any encroachment by the state upon fundamental rights which belong to every citizen as a member of society. U.S. v. Cruikshank, La. 1876, 92 U.S. 554. Chapters 5 and 124 L98 and SFL 123-b(1) are such an encroachment. 62. The Fourteenth amendment’s provision that no state shall make or enforce any law which shall abridge privileges or immunities of citizens of the United States, nor deprive any person of life, liberty or [money] property without due [constitutional] process of law are limitations on the power of the States. Peoples Cab Co. v Bloom, D.C. PA 1971, 330 F. Supp. 1235, affirmed 472 F.2d 163. Defendants acted outside of their power in making and enforcing Chapters 5 and 124 L98 and SFL 123-b(1). 63. Amendments 1 to 8 to the U.S. Constitution were intended as restrictions upon the federal government, but Section 1, Clause 2 of the Fourteenth Amendment constitutes a limitation upon the States. Beauregard v Wingard, D.C. Cal. 1964, 230 F. Supp. 167. 64. The right to petition the government for a redress of grievances and the other rights enumerated in the U.S. Constitution are the privileges and immunities of citizens of the United States; they are secured by the Constitution. U.S. v Hall, C.C. Ala. 1871, 3 Chicago Leg.N.260, 26 Fed.Cas. No.15, 282. Chapters 5 and 124 L98 and SFL 123-b(1) are unconstitutional. 65. Protection of life, liberty, and property rests primarily with the states, and Section 1, Clause 2 of the Fourteenth Amendment furnishes an additional guaranty against any encroachment by the States upon those fundamental rights which belong to citizenship, and which the State Governments were created to secure. The privileges and immunities of the citizens of the United States are indeed protected by it. In re Kemmler, ____ N.Y. 1890, 10 S.Ct. 930. Chapters 5 and 124 L98 and SFL 123-b(1) are abrogated.
FIFTH CLAIM SFL 123-b(1) AND CHAPTER 5 AND 124 OF 66. The U.S. Constitution reads: "The United States shall guarantee to every citizen in this Union a republican form of government." Article IV, Section 4, U.S. Constitution 67. The purpose of Section 4 of Article IV, which guarantees to every state a republican form of government, is to protect the people against aristocratic and monarchical innovations, and to prevent the States from abolishing a republican form of government, in which the government governs based only upon the consent of the governed, whose will is expressed. See Van Sickle v Sharrahan, 1973, 511 P.2d 223, 212 Kan. 426. 68. The term "state" in section 4 of article IV is used in the idea of a people or political community as distinguished from a government, and is used in its geographical sense. Texas v White, Tex. 1869, 74 U.S. 700. 69. By the constitution, a republican form of government is guaranteed to every state in the Union and the distinguishing feature of that form is the right of people to choose their own officers for governmental administration, and pass their own laws in virtue of the legislative powers reposed in representative bodies, whose legitimate acts may be said to be those of the people themselves; but, while the people are thus the source of political power, their governments, national and state, have been limited by written constitutions. In re Duncan, Tex. 1891. 11 S. Ct. 573. 70. The debt-limiting provisions of Articles VII, VIII, and X of the New York Constitution represent the will of the people, not established for light and transient causes but based on the hard lessons of history. The intent of the people is to tightly control the natural tendency of public officials to incur debt. 71. Section 4 of Article IV guarantees to every state in the Union a republican form of government, and every sentence and provision of the New York Constitution evidences principles of that form of government (including Articles VII, VIII, and X) declaring and guaranteeing liberties of the people.
SIXTH CLAIM CHAPTER 124 L98 VIOLATES THE VOTING RIGHTS ACT 72. Defendant Legislature twice passed (in 1994 and then in 1995) and placed on the statewide ballot in 1995, Proposition No. 3 which, if approved by the voters would have amended the Constitution to allow the Legislature and the Governor to create public corporations (such as the Schenectady Metroplex Development Authority) to borrow money on behalf of "distressed cities" and to use tax revenues to pay the principal of an interest on that debt. 73. The State’s voters said "no", overwhelmingly. Plaintiffs were included with those who voted no. 74. Now, our elected officials have the effrontery to do what the voters of this state specifically said they didn’t want them to do. Our elected officials have adopted a law that creates a public corporation to incur debt on behalf of a "distressed" City of New York. 75. Chapter 124 L98 violates plaintiffs’ First Amendment right to a meaningful vote and to petition the government for a redress of grievances. Chapter 124 L98 violates the Voting Rights Act. DATED: September 10, 1998 ROBERT L. SCHULZ, Pro Se, 2458 Ridge Road ,Queensbury, NY 12804 (518)656-3578 CATHERINE M.J. WAJDA, Pro Se, 2165 The Plaza, Schenectady, NY 12309-5831 (518) 377-2775 ELMER F. BERTSCH, Pro Se, 2097 Orchard Park Drive, Schenectady, NY 12309-2207 (518) 347-1418 BURR V. DEITZ, Pro Se, 444 Whitehall Road, Albany, NY 12208 (518) 489-0167 |