Untitled Texas Attorney General Opinion

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

February 15, 2018

The Honorable James M. Tirey Opinion No. KP-0181
Hale County Attorney
500 Broadway, Suite 340 Re: Authority under article III, section 52(a)
Plainview, Texas 79072 of the Texas Constitution of a Type-A general:-
law municipality to expend funds or resources
on ;various tasks related to events sponsored by
the area chamber of commerce, such as
Christmas on the Plaza and Petersburg Days
(RQ-0174-KP)

Dear Mr. Tirey:

On behalf of the City of Petersburg, you ask several questions about the authority of a
Type-A general-law municipality to allow the use of city resources for various tasks related to
events sponsored by the chamber of commerce. 1 You tell us the City ofPetersburg (the "City") is
a Type-A general-law city with a population of 1,202. See Request Letter at 2, Exhibit A at 1.
You also tell us that the Petersburg Area Chamber of Commerce (the "Chamber") is a nonprofit
organization that promotes the Petersburg community, including sponsoring ·events such as
"Christmas on the Plaza" and "Petersburg Days." Request Letter at 2. You tell us that the Chamber
describes the Christmas on the Plaza event as "an evening of holiday fun and shopping" in the
storefronts and on Main Street, and includes a visit from Santa. 2 Id. You also tell us that
Petersburg Day "involves a parade, vendors, a barbeque cook-off, and a motorcycle 'fun run"' and
according to the Cha~ber, draws former residents back to the community for class and family
reunions and constitutes "one of the best ways to promote our community." Id. In connection
with these events, the Chamber asks the City for the use of its employees, equipment, and supplies,
as well as facilities and property. See Exhibit A at 1. You question whether article III, section
52(a) of the Texas Constitution authorizes the City to allow the use of its employees, equipment
and supplies, and facilities and property for this private purpose. See Request Letter at 1-2.

1
See Letter and attached Exhibit A from Honorable James M. Tirey, Hale Cty. Att'y, to Honorable Ken
Paxton, Tex. Att'y Gen. at 1-2 (Aug. 10, 2017), https://texasattomeygeneral.gov/opinion/requests-for-opinion-rqs
("Request Letter" & "Exhibit A" respectively).
2
In the event the City provides funds for a Christmas display, if the display includes a religious aspect we
refer the City to Attorney General Opinion KP-0116, addressing a display's compliance with the United States
Supreme Court's Establishment Clause jurisprudence. See Tex. Att'y Gen. Op. No. KP-0116(2016) at 3-4 (discussing
Supreme Court jurisprudence regarding Christmas displays and decorations).
The Honorable James M. Tirey- Page 2 (KP-0181)

Article III, section 52(a) of the Texas Constitution provides:

Except as otherwise provided by this section, the Legislature shall
have no power to authorize any county, city, town or other political
corporation or subdivision of the State to lend its credit or to grant
public money or thing of value in aid of, or to any individual,
· association or corporation whatsoever ....

TEX. CONST. art. III. § 52(a). The purpose of this provision is "to prevent the gratuitous grant of
[public] funds to any individual, corporation, or purpose whatsoever." Byrd v. City of Dallas, 6
S.W.2d 738, 740 (Tex. 1928). Spending public funds for a legitimate public purpose to obtain a
clear public benefit is not an unconstitutional grant of public funds. See Edgewood Indep. Sch.
Dist. v. Meno, 917 S.W.2d 717, 740 (Tex. 1995). Further, an expenditure to directly accomplish
a legitimate public purpose is constitutional even though it may incidentally benefit a private
interest. See id.

The Texas Supreme Court articulated a three-part test to determine whether an expenditure
of public funds or use of other public resources satisfies article III, section 52(a). See Tex. Mun.
League Intergov 'ti Risk Pool v. Tex. Workers' Comp. Comm 'n, 74 S.W.3d 377, 384 (Tex. 2002);
see also Tex. Att'y Gen. Op. Nos. JC-0113 (1999) (considering a school district's use of school
district funds, personnel, and property to raise funds for charitable organization); JM-431 (1986)
(considering whether the use of county personnel for private purposes violated article III, section
52(a)); MW-89 (1979) (determining that school district policy allowing teachers to work for
professional associations while receiving salaries from school district is unconstitutional). The
public entity making the expenditure or authorizing the use of its other resources must: ( 1) ensure
that the transfer is to "accomplish a public purpose, not to benefit private parties; (2) retain public
control over the funds to ensure that the public purpose is accomplished and to protect the public's
investment; and (3) ensure that the political subdivision receives a return benefit." Tex. Mun.
League Intergov 'ti Risk Pool, 74 S.W.3d at 384.

Regarding the first prong, general-law municipalities may exercise only that power
specifically conferred on them by statute or the constitution. Town of Lakewood Vil!. v. Bizios,
493 S. W.3d 527, 531 (Tex. 2016). Generally, all municipalities may govern "for the good
government, peace, or order of the municipality or for the trade and commerce of the
municipality." TEX. Loe. Gov'TCODE § 51.001(1); see also id. § 51.015(b)("The governing body
of the municipality may manage and control the property belonging to the municipality.").
Additionally, a Type-A general-law municipality has that governance power "necessary for the
government, interest, welfare, or good order of the municipality." Id. § 51.012. To the extent a
municipal expenditure or use ofresources serves one of the municipality's powers or functions, it
serves the public purpose of the municipality. See State ex rel. Grimes Cty. Taxpayers Ass 'n v.
Tex. Mun. Power Agency, 565 S.W.2d 258, 265 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ
dism'd) (stating that to satisfy the public purpose test for a particular governmental entity, "[t]he
purpose for which the ... payment .. 1 was made must be within the powers of the entity ...
making the payment"); Tex. Att'y Gen. Op. No. KP-0035 (2015) at 3 ("[M]unicipalities may
expend or transfer municipal funds or property only to serve public purposes that are within the
municipality's powers, not merely to benefit the public in general."). Community events such as
The Honorable James M. Tirey - Page 3 (KP-0181)

the ones you raise may arguably serve the public purpose of improving the trade and commerce of
the municipality.

With regard to the second prong, a public entity may retain public control over the use of
its resources by entering into an agreement or contract that imposes an obligation on the recipient
to perform a function benefitting the public. See Tex. Att'y Gen. Op. No. KP-0104 (2016) at 2.
The same contract can also serve to satisfy the third prong by imposing safeguards to ensure the
public entity receives a return benefit. See id

Determining whether a particular expenditure or use of public resources satisfies the three-
part test is for the city council in the first instance and subject to judicial review for abuse of
discretion. See Tex. Att'y Gen. Op. Nos. KP-0104 (2016) at 2, GA-0078 (2003) at 4, JM-1255
(1990) at 3. Accordingly, we cannot conclude as a matter of law that the use of City employees,
equipment and supplies, and facilities and property by the Chamber for the community events is
unconstitutional. Yet, should the city council find that the use of city resources for the Chamber's
events serve a public purpose of the municipality, article III, section 52( a) authorizes the use of
resources in this way. See Tex. Att'y Gen. Op. No. KP-0007 (2015) at 3.

You also ask whether article III, section 52(a) is the controlling law for your questions or
whether there are other relevant constitutional provisions that apply. See Request Letter at 2.
Aside from article III, section 51, which provides that "[t]he legislature shall have no power to
make any grant or authorize the making of any grant of public moneys to any individual,
association of individuals, municipal or other corporations whats_oever," and for which compliance
is determined by the same three-part test, we are unaware of other constitutional provisions that
would apply to the use of public resources about which you ask. TEX. CONST. art. III, § 51; see
Edgewood Indep. Sch. Dist., 917 S.W.2d at 739--40.
The Honorable James M. Tirey - Page 4 (KP-0181)

SUMMARY

Article III, section 52(a) of the Texas Constitution prohibits
the gratuitous payment of public funds for a private purpose.
Because the determination whether a particular expenditure or use
of public resources is gratuitous is, in the first instance, for the city
council subject to judicial review for abuse of discretion, we cannot
determine as a matter of law that the use of city resources in these
circumstances is constitutional.

Upon a finding by the city council that the Chamber's use of
city resources serves a public purpose of the municipality and that
sufficient controls exist to ensure the public purpose is carried out
and a return benefit is received, article III, section 52(a) authorizes
the use of city resources for these purposes.

Very truly yours,

KEN PAXTON
Attorney General of Texas

JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy First Assistant Attorney General

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

CHARLOTTE M. HARPER
Assistant Attorney General, Opinion Committee