Attorney explains how city may fund outside organizations

Published 6:07 pm Tuesday, February 16, 2016

Some taxpayers might wonder how outside agencies such as the Boys & Girls Club of Beaufort County or Eagle’s Wings are able to receive tax dollars from a town, city or county. North Carolina law allows it as long as the receiving agency meets a “public purpose.”

Before hearing funding requests from such organizations last week, an explanation of “public purpose” was provided to the Washington City Council by City Attorney Franz Holscher. City Manager Bobby Roberson arranged for Holscher to review the law with the council.

“I think it’s important for us, as a governing body, to understand when you want to spend taxpayers’ dollars, it’s got to be for a public purpose. … I’d like to call upon the city attorney to give you a little background about what constitutes a public purpose,” Roberson said.

Holscher said local governments are allowed to make contributions to private entities, but it’s better to characterize them as grants.

“We often think of that as being nonprofits, but it’s not limited to nonprofits,” Holscher said. “A local government can make a grant to any private entity, a for-profit or nonprofit, as long as two things occur — the contribution is expended by that third party for public purpose that the local government is authorized by statute to engage in.”

Those purposes include recreation, libraries, the arts and similar activities, programs and services, he noted.

“The second thing is the expenditure must benefit the citizens of the local government, generally. It’s not to be expended for the sole benefit of particular persons or particular interests,” Holscher said. “So, in other words, a private entity must expend the funds it receives on projects, services or activities that the local government could have supported directly.”

Holscher said state law and case law do not provide a definition of public purpose. “Cases that have tried to establish what a public purpose is generally have two guiding principles. One is the activity must involve a reasonable connection with the convenience and necessity of the unit of government and, two, it must benefit the public generally as opposed to special interests or persons,” Holscher said. “Generally speaking, an activity that promotes the welfare of the city and the welfare of its citizens is a public purpose.”

Holscher said that, in his opinion, each of the organizations seeking money from the city satisfied the public-purpose requirement.

Thirteen organizations, including outside agencies and economic-development entities, have submitted requests for city funds totaling $218,150 during the upcoming fiscal year. In its current fiscal-year budget, the city allocated $159,075 for those agencies. For the most part, the city has reduced funding for the agencies each year in the past several years. The council took no action on the requests; its funding decision concerning the agencies will come later during budget work sessions.









About Mike Voss

Mike Voss is the contributing editor at the Washington Daily News. He has a daughter and four grandchildren. Except for nearly six years he worked at the Free Lance-Star in Fredericksburg, Va., in the early to mid-1990s, he has been at the Daily News since April 1986.
Journalism awards:
• Pulitzer Prize for Meritorious Public Service, 1990.
• Society of Professional Journalists: Sigma Delta Chi Award, Bronze Medallion.
• Associated Press Managing Editors’ Public Service Award.
• Investigative Reporters & Editors’ Award.
• North Carolina Press Association, First Place, Public Service Award, 1989.
• North Carolina Press Association, Second Place, Investigative Reporting, 1990.
All those were for the articles he and Betty Gray wrote about the city’s contaminated water system in 1989-1990.
• North Carolina Press Association, First Place, Investigative Reporting, 1991.
• North Carolina Press Association, Third Place, General News Reporting, 2005.
• North Carolina Press Association, Second Place, Lighter Columns, 2006.
Recently learned he will receive another award.
• North Carolina Press Association, First Place, Lighter Columns, 2010.
4. Lectured at or served on seminar panels at journalism schools at UNC-Chapel Hill, University of Maryland, Columbia University, Mary Washington University and Francis Marion University.

email author More by Mike