Schulz v. New York State Executive

• Decision Date: 09 June 1998
• Citation: 677 N.Y.S.2d 1,699 N.E.2d 360,92 N.Y.2d 1
• Parties: , 699 N.E.2d 360, 1998 N.Y. Slip Op. 5432 In the Matter of Robert L. SCHULZ et al., Appellants, v. NEW YORK STATE EXECUTIVE et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 1

677 N.Y.S.2d 1

92 N.Y.2d 1, 699 N.E.2d 360, 1998

N.Y. Slip Op. 5432

In the Matter of Robert L. SCHULZ et al., Appellants, v. NEW YORK STATE EXECUTIVE et al., Respondents.

Court of Appeals of New York.

June 9, 1998.

Robert L. Schulz and John Salvador, Jr., appellants pro se.

Dennis C. Vacco, Attorney-General, Albany (Denise A. Hartman, Barbara G. Billet and Peter H. Schiff, of counsel), for George Pataki and others, respondents.

Cravath, Swaine & Moore, New York City (Frederick A.O. Schwarz, Jr., and Justin J. Daniels, of counsel), for Michael Finnegan and another, respondents.

OPINION OF THE COURT

KAYE, Chief Judge.

The Clean Water/Clean Air Bond Act of 1996 (the "Bond Act")--passed by the Legislature, signed by the Governor and approved by referendum at the November 1996 general election--authorized the creation of a State general obligation debt of $1,750,000,000 to be used "for the single purpose of preserving, enhancing, restoring, and improving the quality of the state's environment" (L.1996, ch. 412, § 2). At the same time, the Legislature amended the Environmental Conservation Law, adding a new article 56 to implement the Bond Act (L.1996, ch. 413).

The Bond Act specified that the moneys received from the sale of the bonds would be expended to create a safe drinking water program ($355 million); to fund projects related to the improvement and enhancement of water quality--including programs focused on open space land conservation, parks, historic preservation and heritage areas ($790 million); to improve solid waste facilities ($175 million); to restore contaminated properties ($200 million); and to improve and enhance air quality ($230 million) (L.1996, ch. 412, § 4). The implementing legislation particularized how the bond proceeds would be allocated and expended, including funding for the Hudson River estuary plan, the Department of Environmental Conservation's "great lakes program," landfill closure efforts in New York City, municipal recycling projects, environmental restoration projects, and comprehensive conservation and management plans for the Long Island Sound, Lake Champlain, Onondaga Lake, the New York/New Jersey Harbor and the Peconic Estuary.

In October 1996, petitioners commenced this combined declaratory judgment action and CPLR article 78 proceeding for a determination that the Bond Act and its related implementing provisions violate article VII, § 11 and article III, § 16 of the New York State Constitution. Petitioners subsequently sought both summary judgment and a preliminary injunction to remove the referendum from the ballot. Respondents, in turn, moved to dismiss on a number of threshold grounds.

Supreme Court, after a hearing, denied petitioners' request for an injunction, determined that petitioners lacked standing and concluded that the Bond Act did not violate the cited constitutional provisions. After we transferred petitioners' direct appeal to the Appellate Division (89 N.Y.2d 933, 654 N.Y.S.2d 712, 677 N.E.2d 284), that court--while finding standing to assert a challenge under article VII, § 11 of the State Constitution--affirmed. Petitioners appealed as of right pursuant to CPLR 5601(b)(1). ¹ Agreeing with the Appellate Division, we now affirm.

Single Work or Purpose Requirement

We first consider the threshold issue of standing to challenge the Bond Act as violative of the "single work or purpose" requirement set forth in article VII, § 11 of the State Constitution. ²

As a general principle, citizen-taxpayer status does not confer standing to challenge the issuance of State bond acts. That principle is grounded on a recognition that such lawsuits "increase the cost of raising the revenue by creating uncertainty in the minds of potential investors" (see, Wein v. Comptroller of State of New York, 46 N.Y.2d 394, 400, 413 N.Y.S.2d 633, 386 N.E.2d 242; State Finance Law § 123-b[1] ). As we held in Matter of Schulz v. State of New York, 81 N.Y.2d 336, 344-347, 599 N.Y.S.2d 469, 615 N.E.2d 953, however, there are limited instances when a voter may challenge a bond issue on the basis that it infringes upon explicit voter protections provided by article VII, § 11 of the State Constitution. Such an instance is presented by petitioners' first challenge.

Article VII, § 11, which sets forth the prerequisite of a public referendum for all proposed long-term public debt, also mandates that proposed public financing schemes must be "for some single work or purpose, to be distinctly specified therein." That requirement prevents the Executive and Legislative branches of our State government from embracing in one bond act several distinct and unrelated purposes, none or some of which could singly obtain referendum approval (see, Problems Relating to Taxation and Finance, 1938 Report of N.Y. Constitutional Convention Comm., vol. 10, at 87 [the Poletti Report] ). By restricting each bond act to a single work or purpose, referendum approval cannot be procured by combining the votes of several different groups, each with an interest in one of the bond act's multiple purposes, and thereby creating a majority that will approve them all (see, New York Pub. Interest Research Group v. Carey, 59 A.D.2d 172, 176, 398 N.Y.S.2d 968, revd. on other grounds 42 N.Y.2d 527, 399 N.Y.S.2d 621, 369 N.E.2d 1155).

The requirement also assures that several different purposes--some of which are not independently worthy of referendum approval--will not be combined in a single bond act in the hopes that the voters will not separately evaluate the relative merit and strength of each purpose. If voters could not bring a claim for violation of that clause, the Executive and Legislative branches could safely ignore it altogether, and referendum approval--garnered from voters unable to cast an intelligent ballot--would be reduced to a "meaningless charade" (233 A.D.2d 43, 48, 660 N.Y.S.2d 881).

While petitioners may have standing to assert this particular claim, their argument nonetheless fails on the merits. Petitioners argue that the Bond Act, when read in conjunction with its implementing legislation, impermissibly authorizes the use of bond proceeds for a multitude of unrelated projects, rendering voters at the November 1996 referendum unable to "intelligently evaluate and appraise the single purpose" of the proposed public debt.

Petitioners' primary support for this argument is People ex rel. Hopkins v. Board of Supervisors, 52 N.Y. 556, 561, an 1873 case in which this Court concluded that a bond act was unconstitutional, and therefore invalid, because its "appropriations [were] in fact many, and their objects many and diverse." When Hopkins was decided, article VII, § 12 of the State Constitution restricted the acquisition of public debt in a number of ways: requiring voter approval of bond issuances, directing that only one bond act at a time could be submitted for such approval and limiting the subject matter of each bond act to a "single work or object." Originally adopted in 1846, these constitutional mandates were intended to stem the extensive, unwise government borrowing practices that had caused serious financial problems in the 1840s.

By the early 1900s, however, it was apparent that the "single work or object" clause was too restrictive and unwieldy. Interpreted as only permitting bond issuances for a single physical structure, the requirement severely hampered the State's ability to build roads, develop parks and supply other desperately needed public works (see, 1915 Revised Record of N.Y. Constitutional Convention, vol. 2, at 1295-1299 [remarks of Delegate Alfred E. Smith, et al.]; Poletti Report, op. cit., vol. 10, at 90-96). Accordingly, at the Constitutional Convention of 1938, the "single work or object " language was replaced with the current "single work or purpose." " That revision was intended to create a more flexible standard and "remove any doubt that may exist as to the power of the State to contract a debt for some single objective that may relate to more than one physical structure or, indeed, as in the case of relief bonds, may not include a physical structure" (see, Journal of 1938 N.Y. Constitutional Convention, Doc. No. 3, at 6-7).

While broader than its predecessor, the clause still precludes the Legislative and Executive branches from proposing bond issues aimed at "purposes" that are so imprecise as to be essentially generic, thereby allowing funding of a host of projects having no discernible common theme (see, e.g., New York Pub. Interest Research Group v. Carey, 59 A.D.2d at 173-174, 176-177, 398 N.Y.S.2d 968, supra [bond issue for "comprehensive economic development" where the funding was earmarked for four different areas of "development"--including industrial development, environmental projects, tourism and transportation--was struck down because the areas were "not so naturally and necessarily related to each other as to constitute a single purpose within the meaning of the Constitution"] ). Indeed, application of the more flexible "single work or purpose" standard of article VII, § 11 has produced results that are profoundly different from those ensuing from the more rigid requirement in effect when Hopkins was decided. It is now possible, for example, to fund a number of different projects through a single issue, so long as those projects have a common goal (New York Pub. Interest Research Group v. Carey, 59 A.D.2d at 175-176, 398 N.Y.S.2d 968, supra). Petitioners' reliance...