The New York Bailout Rules

New York, notorious as one of the most overbloated and wasteful bureaucracies, has been getting things right of late.

Firstly, we had that "photo-op flight" of Air Force One over the Statue of Liberty, which threw a significant percentage of the people in Lower Manhattan into panic, and caused the financial markets to take a little plunge. The White House looks like a smacked toochas with Louis Caldera proffering an official tail-between-the-legs apology, and our senior Senator, Chuck Schumer, vehemently and appropriately denounced the lamebrained secrecy tactics of the White House Military Office. This time, it wasn't Schumer who was the putzhead!


And then, there is Walter E. Carver. Mr. Carver's financial misfortunes drove him to seek public assistance, which he received for approximately two and one-half years, from September 1997 to March 2000. The terms of his public assistance required him to w-o-r-k at subsidized employment. After receiving the bailout from the New York taxpayers (myself among them), Mr. Carver got back onto his feet, and his financial luck markedly improved.

In fact, he hit a $10,000 prize in the New York Lottery.

And so, pursuant to New York's Social Services Law § 131-R, the State of New York claimed one-half of that $10,000 lottery prize as reimbursement for the public assistance provided to Mr. Carver.

Walter E. Carver brought a lawsuit against New York, claiming that the reimbursement requirement effectively brought his pay, for the w-o-r-k he did, below the minimum wage. Judge Schneier, of the Kings County Supreme Court, banged his gavel on his bench, and sent Carver right out of the courthouse. Three weeks earlier and three blocks away, Judge Sifton, of the U.S. District Court for the Eastern District of New York, did similar with Carver in his Federal Class Action suite on the same issues. That case is reported at 2009 U.S. Dist. LEXIS 27496. Thus far, Carver is a double loser (as is his attorney, Richard D. Lamborn, Esq.).

Carver's legal misadventures might not be complete. The wages he received, and the entire $10,000 lottery prize, are considered income for Federal and New York State taxation purposes. Wouldn't surprise me one bit if Carver gets Lamborn to tilt at the IRS windmill as well.

Meanwhile, New York would do well to (A) better enforce its policy of reclaiming lottery winnings from public assistance bailout recipients; (B) publicize the fact that such is done, so as to take much of the glamour attraction from that welfare magnet that is New York City; and (C) legislate similar statutes to facilitate the reclamation of lottery winnings from current and former prison inmates.