Legal authority of town to contribute money to nonprofit organizations

MAINE STATE LEGISLATURE The following document is provided by the LAW AND LEGISLATIVE DIGITAL LIBRARY at the Maine State Law and Legislative Reference Library http://legislature.maine.gov/lawlib Reproduced from scanned originals with text recognition applied (searchable text may contain some errors and/or omissions) RICHARDS. COHEN ATTORNEY GENERAL . -'u-"-?tJ- ~"'."l'llp .. -~ -~ ·1;: ~ STATE OF MAINE DEPARTMENT OF THE ATTORNEY GENERAL AUGUSTA, MAINE 04333 March 1, 1979 Representative Walter L- Bunker House of Representatives Augusta, Maine 04333 Dear Representative Bunker: JOHN MR PATERSON DEPUTY ATTOi=lNEY GENERAL Your request for an opinion dated February 12, 1979 has been referred to me for response. In your letter you ask whether a town has legal authority to contribute money to nonprofit organizations such as Action Opportunities, Inc., counseling center for the Homemaker Program, Maine Health Systems Agency, and Northeast Combat, Inc. Unfortunately, we are unable to give you a specific answer regarding each of the named entities because we do not know the purpose for which the public funds will be used. In the expenditure of public funds, municipalities have only the authority expressly or impliedly delegated to them by the Legislature, either by statute or by charter as amended pursuant to the provisions on Home Rule, 30 M.R.S.A. § 1911 et seq. sguires v. Inhabitants of city of Augusta 153 A2d80,86 (Me. 1959). The purposes for which a municipality may raise or appropriate money are set forth in Title 30 M.R.S.A. Sections 5102 to 5108. I have attached copies of these sections for your convenience. In applying these statutory provisions to the facts of a specific case, it must be remembered that a municipality may only use public money for a public purpose, not a private purpose, and that even the Legislature is itself limited in its power to authorize municipal expenditures for other than a public purpose. Opinion of the Justices 131A2d904 (Me., 1957). To determine whether the purpose for which town money is to be Representative Walter L. Bunker March 2, 1979 Page 2 used is a public one, the following principals should be applied. The purpose must be for the benefit of the general public, not individuals, so that everyone, if the need·. arises, has the right to use or take advantage 0£ the benefit. In addition, the benefit cannot be remote but must directly benefit the public generally. Paine v. Savage, 136 A 664, 666 {Me., 1927). Because I am unfamiliar with the functions of most of the nonprofit organizations named in your letter and do not know how each entity intends to use the town's contrlbutions, I cannot determine whether the attached legislation either expressly or impliedly authorizes the town involved to donate public money to these nonprofit organizations and whether the organizations intend to use the contribution for a public purpose. consequently, I cannot answer your questions regarding each entity. The Department of the Attorney General has issued opinions previously on municipal contributions to nonprofit organizations such as Northeast combat, Inc. which may be helpful to you. I am enclosing copies of our opinions dated March 2, 1977 and November 14, 1977 for your information. RAF/sjn Enc. Ver;t./t:ru'iy)you;t;-_!?, , ., .. }f'AE ANN FRENCH Assistant Attorney General consumer and Antitrust Division ( ri ....-l.f( c.1('" I, 7,,.J t > 0 1-r. ,✓-c. J /t' 5J /.,-:'"' C...,.,._J 7. ftv 7 f I"' r~,1., '-J" qc.. 74",_, ty >-10/ JOSEPH E. BltENNAN · ATJORNEY GENERAL S7 f ( 5-<'co~,J \:) / ~, .,:-- ,'; ::;/ii A, l~tf~tt, @ RICHARD S. COHEN JOHN M. R. PATERSON DONALD G. ALEXA:-;DER STATE OF MAINE DEPARTMENT OF THE ATTORNEY GENERAL AUGUSTA, :MAINE 04333 .V.iarch 2, 1977 Honorable Philip c. Jackson Senate Chamb2rs state House Augusta, Hain3 Dear Senator Jackson: DEPUTY ATTORNEYS GENERAL This letter responds to your request for an opinion 0£ our office on two questions concerning municipal fiscal matters. The questions and our answers are stated individually be low. Your first question is: "Piay municipalities raise or appropriate money to contribute to a nonprofit corpora- tion that provides consumer action services, including processing, investigating and redressing consumer co~plaints and educ~t- ing consumers in business practices?" The answer to your question is generally negative with a qualification. How':!ver, it must be emphasized that our conclusion is a matter of statutory interpretation and should not be interpreted to preclude adoption of legislation to permit such expenditures. It has been decided by the Supreme Judicial court that a municipality is a body politic and has only that authority to act which is given to it by the Legislature, as evidenced by its charter or by statute. sc,_1ires, et al. v. city of Augusta, 155 M~. 151, 160 (1959). This principle extends to appropriation of municipal funds, as was the case in the Sauires decision. Statutory authority for municipal fund-raising and appropriation is found in 30 M.R.S.Aa § 5101 whichstates: "A municipality may raise or appropriate money for the purposes specified in sections 5102 to 5108." l ( Honorable Philip c. Jackson Page 2 J.VIarch 2 1 1977 We have reviewed these latter sections and find no authorizatim for the type of expenditures stated in your question, though these pro- visions do cover a broad range of permissible expenditure items. Therefore, the answer to your question is negative as a matter of statutory authority. The Squires decision states that the other source of authority for municipal expenditures may be the municipal charters. Charter provisions differ from municipality to municipality and, therefore, it is possible that the expenditures which your question contemplates may be permissible for an individual municipality. 0£ course, this would be a separate question for each municipality. It should be noted that under the municipal home rule provision of the Constitution of Maine {Article VIII, Part Second, Section 1) municipalities have the power to amend their charters in the manner set forth in 30 M.R.S.A. §§ 1912 1 et seq., without legislative approval. It should also be noted that any individual expenditure by a municipality is subject to the general rule that it must be for a public purpose. Cf. Art. I, § 21, Constitution of Haine. Your second question is: "If a municipality may raise or appropriate money for this purpose, may it also restrict or limit the use or expenditure of the con- tributions by the corporation receiving them?" Assuming that a given municipality has the charter authority to make the appropriations contemplated by your question, and that such expenditures are for a municipal purpose, it is our opinion that a municipality may place limitations or restrictions upon the use of such funds. Grants of this sort are essentially the same as any grant by a governmental body and often are made subject to con- tractual limitations, conditions and assurances. Please continue to call on us whenever we may assist you. S1<".S :mfe Sincerely, ! 11 I _,, ···-J. f. -- _-(.. -...:... _ ..J.. .,1,tz•vJ vt,1.,,.,1 \ S. KIRK STUDSTRUP Assistant Attorney General ( / • • ._,.. - ~ • - • / • • - < ' ✓ , /'✓ v { " 0 r • - I /vl v' /,,1 I'-'t ~ -;; ,.__) ' fl :.>c/-'- t. !, (..1., '-,) Ft- lOSEPH E. BRENNAN ATTORNEY GENERAL STATE OF MAINE DEPARTMENT OF THE ATTORNEY GENERAL AUGUSTA, MAINE 04333 November 14, 1977 Honorable Richard Davies 53 North Maine street Orono, Maine 04473 Dear Representative Davies: RICHARD S. COHEN JOHN M. R. PATERSON DONALD G. ALEXANDER DEPUTY ATTORNEYS GENERAL This responds to your request seeking clarification of our opinion of March 2, 1977, regarding capacity of municipalities to undertake expenditures for nonprofit corporations tlat provide consumer action services. In addition to the opinion of March 2, we have also had the ( opportunity· to address the question of municipal authorization , ·or expenditures in an opinion dated September 12 (copy enclosed), £elating to expenditures for advocacy in state referendum campaigns. Based on our analysis in these opinions, we believe the follow- ing general principles would apply to municipal expenditures relat- ir.g to consumer groups: 1. There is no provision of state law which generally prohibits expenditure of municipal funds for support of activities of certain private groups, including consumer action services. 2. As indicated in the opinion of ~arch 2, 1977, there is no provision of state law which generally authorizes such expenditures. 3. As such expenditures are neither specifically prohibited nor specifically authorized by state law, the legality of such expenditures would depend on whether there was c..uthorization for such expenditures in local charter or ordinance provisions. without such authorization, the exp~nditure would be improper. ·' ( ( ( • ,Hon. Richard Davies Page 2 November 14, 1977 4. The constitutional requirement that public expenditures must be for a public purpose would apply to any municipal expenditures. While the above provisions apply as a matter of general interpretation, any specific expenditure by a municipality could be subject to problems depending upon the manner in which the expenditure was authorized and tre uses to which the public funds given to the private group ~ere put. For that reason, any particular expenditure proposal would have to be examined by counsel. for the municipality to determine if the expenditure was properly authorized under lcx:al law, if the expenditure would be for a public purpose, and if contemplated uses of the funds would not be in violation of any state law. Because of the uniqueness of each municipal situation, this office is in no position to advise on whether any particular expenditure or use of funds contemplated by any particular mun- icipality would be consistent with the requirements of state law. DGA/ec Enclosure Sincerely, DONALD G. ALEXANDER Deputy Attorney General