Public Funds for Public Purposes

By Temple Ligon

Columbia attorney Danny Crowe presented to city council Tuesday night his analysis of just what exactly is public money and what is private money and for what purposes can public money be distributed by the city.

He cited 11 bullet points:

1. All city funds are “public funds” regardless of source.
2. Public officers who have charge of public funds (such as municipal council members) occupy the status of trustees or agents with respect to those public funds.
3. Public officers who intentionally or carelessly misappropriate public funds may be personally liable.
4. Public funds should only be appropriated for public purposes and not for private purposes.
5. A public purpose has the objectives of “the promotion of the public health, safety, morals, general welfare, security, prosperity, and contentment of all the inhabitants or residents, or at least a substantial part thereof.” The public purpose also should be consistent with a governmental purpose or function of the city.
6. The benefit to the public must be primary and direct and not remote or incidental or indirect. Benefit to the public, rather than benefit to the organization or its members, should predominate. State Constitutional provisions prohibit the use of public funds for the direct benefit of individuals, companies, associations, corporations, religious institutions, or private educational institutions.
7. There must be a reasonable relationship between the public purpose to be served and the means used to achieve that purpose.
8. The four-part test: (1) What is the intended or ultimate goal or benefit to the public? (2) Are public parties or private parties the primary beneficiaries? (3) Is the benefit to the public speculative? (4) Is it probable that the public interest will be served?
9. Avoid grants or “donations” without restrictions (unrestricted grants).
10. Consider performance-based contracts for specific services as the appropriate vehicle for any funding.
11. Develop adequate controls for any expenditures (such as the specifications, conditions, and controls used in the Accommodations Tax Grants and Hospitality Tax Grants programs).