Ronorable Gary Garrison Opinion No. JM-716
Ector County Attorney
Courthouse, Room 218 Re: Whether a cotmissioners court
Odessa, Texas 79761 may grant federal revenue sharing
funds to a chamber of cormnercefor
use in recruiting new businesses
Dear Mr. Garrison:
You ask whether Ector County may donate federal revenue sharing
funds to the Greater Odessa Chamber of Commerce to be used to recruit
new business to the area.
The Revenue Sharing Act, which was codified as chapter 67 of
title 31 of the United States Code, was repealed as part of the
- Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. L. No..
99-272, 914001, 100 Stat. 327 (1986). The legislation repealing the
act provided in part:
Amounts paid to units of general local govern-
ment from the Trust Fund shall be used, obligated,
or appropriated by the units of general local
government before October 1, 1987, and shall
continue to be subject to the terms of the Revenue
Sharing Act.
Pub. L. 99-272, 014001(a)(5), 100 Stat. 327, 328 (1986). Thus, the
repealed provisions of the Revenue Sharing Act still govern the use of
any revenue sharing money available to Ector County.
The Revenue Sharing Act provided, at 31 U.S.C. section 6704, that
a county could not spend revenue sharing funds unless it was acting
within its authority under state law:
(a) Under regulations of the Secretary of the
Treasury, a State government or unit of general
local govermnent qualifies for payment under this
chapter for an entitlement period only after
establishing to the satisfaction of the Secretary
that --
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Honorable Gary Garrison - Page 2 ,(JM-716)
. . . .
(3) the government will expend the payments
received under the laws and procedures applicable
to the expenditure of revenues of the government.
Article III, section 52, of the Texas Constitution prohibits a
county from donating funds to a private association or corporation:
(a) Except as otherwise provided by this
section, the Legislature shall have no power to
authorize any county, city 9 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 whatso.zvrr, or to
become a stockholder in such corporation,
association or company.
That provision does not prevent counties from contracting with private
corporations. Attorney General Opinion JM-65 (1983). gather, it
requires that a county contract with a private corporation serve a
public purpose and that the county receive adequate consideration.
Attorney General Opinion MW-373 (1981). Furthermore, a county
contract with a private corporation eust provide sufficient assurance
that the public purposes will be accomplished. Id.; Attorney General
Opinion H-912 (1976). As indicated, article IIIzection 52, applies
to revenue sharing funds as well as other county funds. See Attorney
General Opinion Nos. MW-329 (1981) (county may not contribze federal
revenue sharing funds to a nonprofit corporation organized for the
purpose of training handicapped adults); E-1189 (1978) (county may not
make unconditional grant of federal revenue sharing funds to private
daycare); H-1010 (1977) (under certain circumstances, county may loan
federal revenue sharing funds to a medical student in exchange for
promise that student will provide certain services to county); H-127
(1973) (county nay use federal revenue sharing funds to contract with
a private entity to provide a recreation facility for the aged).
This office has stated that paying dues to a private corporation
such as a chamber of commerce in order to secure "general benefits
resulting from encouragement of private industry and business" is not
sufficiently "insulated from the abuses" that article III, section 52,
was designed to prevent. Attorney General Opinion H-397 (1974). In
contrast, this office has held that a county may contract with a
private corporation for specific business and industrial development
services as long as the county receives adequate consideration and the
contract provides adequate assurance that the public purpose will be
accomplished. Attorney General Opinion JM-516 (1986); see also
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Honorable Gary Garrison - Page 3 (JM-716)
Canales v. Laughlin, 214 S.W.Zd 451 (Tex. 1948) (county has only those
powers conferred upon it specifically or by necessary implication).
Some of the information you submitted to us suggests that Ector
County would simply be donating money to the Greater Odessa Chamber of
Commerce to support the chamber's current efforts to recruit business.
Such a donation, unaccompanied by specific contractual provisions to
insure that the county would receive adequate consideration and that
the public purpose would be met, would be impermissible. Attorney
General Opinion E-397 (1974).
SUMMARY
A county may contract with a private corpora-
tion such as a chamber of commerce for the pro-
vision of business and industrial development
services if the county receives adequate con-
sideration and if the contract provides adequate
assurance that the public purpose will be
accomplished. A county may not, ,however, simply
donate money to a chamber of commarce.
JIM MA'iTOX
Attorney General of Texas
JACK HIGHTOWER
First Assistant Attorney General
MART KELLER
Executive Assistant Attorney General
JUDGE ZOLLIE STEARLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Sarah Woelk
Assistant Attorney General
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