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untanglingwebs
El Supremo
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January 5 2012
What Constitutes a Lawful Use of Public Funds?
It is not uncommon for a local government to be asked to donate something for charitable or related purposes. These requests can be varied, ranging from requests for outright cash donations, to sponsorship of tables at award banquets or speaking events, or perhaps for the sponsorship of display booths at local events.
In considering these types of requests, it is often asked whether a local government may lawfully use its funds for these types of purposes, or whether such use of public funds might be prohibited. The answer is usually that such donations are unlawful, but there are exceptions in appropriate circumstances.
Provided below is a discussion of the basic legal principles that govern expenditures of public monies, and some guidelines that can be applied whenever a local government considers a request for a donation, contribution or sponsorship.
A. Constitutional Prohibition Against �??Donation�?� of Public Funds
When considering the permissible use of public funds under Michigan law, the analysis always begins with Article 9, Section 18 of our State Constitution, which provides as follows:
The credit of the state shall not be granted to, nor in aid of any person, association or corporation, public or private, except as authorized in this constitution. Const 1963, art 9, Sec. 18.
The provision has been interpreted as prohibiting the state, as well as any of its political subdivisions (e.g., a county, city, village or township), from giving anything away without consideration, that is, without receiving something of value in return. Alan v Wayne County, 388 Mich 210 (1972). In other words, outright donations of public funds for charitable or similar purposes is not permitted, no matter how worthy the cause may be.
That is not to say, however, that every expenditure made by a political subdivision is subject to a rigorous test, where there must be a one-for-one exchange of value. To the contrary, the courts afford a great deal of discretion to executive and legislative judgment in this regard, and generally will not disturb an expenditure or appropriation unless there has been a clear abuse of discretion. Under the “abuse of discretion” standard, a variety of expenditures of public funds have been upheld in situations where the value received in return was a very generalized public benefit. For example, in formal opinions, the Attorney General has approved the following expenditures of public funds or property:
An expenditure of $5,000 for preservation of a historical landmark. 1978 OAG No. 5402.
The sale of public land for only $1.00, on the condition that the grantee hold the land open for public recreational purposes. 1981 OAG No. 5860.
A township�??s appropriation to a public library, if done pursuant to a contract providing that the library will provide service to township residents. 2002 OAG No. 7111.
An appropriation of state funds to a private non-profit organization that maintained Canadian habitat for waterfowl that migrate through Michigan. 1980 OAG No. 5664.
In addition, the courts have upheld other types of expenditures of public funds for generalized purposes, such as the use of municipal funds to pay membership dues in educational associations like the Michigan Municipal League (Hays v City of Kalamazoo, 316 Mich 443 (1947)) and the below-market value sale of public land for use as a National Guard armory (Sommers v Flint, 355 Mich 655 (1959)).
Thus, although public funds or property may be appropriated only in exchange for some recognizable benefit in return, the requisite amount of the return benefit is principally a matter of executive and legislative discretion, and will not be overturned in the absence of an abuse of discretion.
B. Public Purpose Only
As the above-noted authorities suggest, appropriations of public money are also subject to the additional requirement that they be made only for a public purpose. City of Gaylord v Gaylord City Clerk, 378 Mich 273 (1966). This requirement is, in part, a product of Const 1963, art 4, Sec. 51, which, when considered in conjunction with the traditional public policy of the state, limits the power of the Legislature, and of government generally, to only such acts and such governmental powers as exhibit a public purpose. Id. Accordingly, not only must a public body receive something of value in return for all appropriations, that �??something�?� must provide a recognizable public benefit or otherwise serve a public purpose.
C. Statutory Authority for Expenditures
Most political subdivisions of the state have no inherent powers, and thus can exercise only such powers as have been expressly granted to them by the constitution or by statute. Therefore, when considering the validity of an expenditure made by a political subdivision, there must be, not only the receipt of consideration and a valid public purpose to be served by the expenditure, but there must also be underlying statutory authority for the expenditure.
Accordingly, provided that an expenditure by a political subdivision otherwise satisfies the requirement of being made in exchange for something of value, the next step is to evaluate the various Michigan statutes governing the type of political subdivision at issue. It should be determined whether there is a statutory enactment that expressly authorizes or at least reasonably contemplates the type of expenditure being considered. If so, the expenditure may be made; if not, the expenditure is probably unlawful.
D. Guidance for Evaluating Lawfulness of Requests for Contributions
Based on the above-stated principles, the following constitutes general guidance that can be applied to assist in evaluating the lawfulness of requests for donations or contributions of municipal funds or property:
1. Donations for Strictly Charitable Purposes. A local government should not make any outright �??donations�?� (i.e., an outright gift �?? made without any expectation of tangible value being returned) of public funds or property to be used strictly for charitable or similar purposes. For example, a local government should not make donations to an association that raises funds to fight a particular disease; to a church; or to any organization that exists only for eleemosynary purposes. This is true, no matter how worthy the cause might be.
2. Other Quasi-Charitable Contributions. Other types of contributions might be valid, even if bearing some quasi-charitable purposes, as long as the particular local government (not the public generally) receives a tangible benefit in return. There is a broad range of contributions of this type that could fall somewhere on the spectrum of lawful-to-unlawful. However, to provide some practical guidance, the following are some contrasting examples:
Lawful: Contributing funds to sponsor a high school �??career day,�?� at which a local government can, in return, install a display booth to advertise employment opportunities with the local government.
Unlawful: Contributing funds to a local high school, so that the football team can buy new uniforms.
Lawful: Sponsoring a dinner table at a banquet where local government employees or officials can hear a speech or presentation that would be helpful in performing their official duties.
Unlawful: Sponsoring a dinner table at a banquet where local government officials or business people are honored for their achievements.
3. Contributions for a Generalized Public Purpose. As explained above, the opportunities for a local government to make a contribution that would serve only a generalized public-wide purpose are very limited. A local government should not make any expenditures of this type, unless it first consults with legal counsel to determine whether specific statutory authority exists. In most cases, there will be no statutory authority, such that the contribution usually will not be allowed.
We encourage you to contact one of the lawyers in our firm�??s Local Government Law Practice Group, if you have a question regarding the lawfulness of any particular expenditure of public funds. |
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Wed Dec 07, 2016 6:22 pm |
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untanglingwebs
El Supremo
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It appears that Assistant Prosecutor Randall Petrides believed several issues were valid for proceeding for prosecution. In a handwritten summary page he identified at least five areas that were valid for prosecution. What happened after that is merely conjecture.
The township had enjoyed a lot of construction and a great deal of growth. Would the constituents attribute that growth to Delaney and overlook his transgressions?
Because the three main players, Delaney, Riopelle and Hobson were obviously orchestrating their responses, could the prosecution prove their case in a county where political transgressions by popular politicians are just overlooked?
In there interviews there was a great deal of dialogue to the effect that helping Delaney was what they would do for any constituent. That was shown as untrue, but would it sway a jury?
Last edited by untanglingwebs on Thu Dec 08, 2016 8:34 am; edited 1 time in total |
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Thu Dec 08, 2016 8:24 am |
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untanglingwebs
El Supremo
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But most telling was the fact that Delaney was re-elected despite the knowledge he was under investigations. He lost the next election, but that might have been influenced by other factors.
Also, the township appears to have been neglectful of protecting the resources of the township by ensuring that the proper procedures and policies were in place.
When I pulled up the profile of Marilyn "Mikki" Hoffman, I was pleased to see that she specified her role in developing policies and procedures for the township. |
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Thu Dec 08, 2016 8:30 am |
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untanglingwebs
El Supremo
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In the same time frame as the alleged crimes of Delaney, July 1, 1998, The Macomb County Prosecutor's office charged a Warren City Councilwoman with solicitation of a bribe of a public official, a 2 year misdemeanor. He alleged crime was that she told three salaried department heads that she would vote to give them compensatory time if they sold tickets to her fundraiser. The argument was that the offer for comp time was a solicitation.
In Grand Blanc Township there were issues, yet no charges. Compeau and Shanlian were extremely thorough. In his FOIA's he detailed everything that could have been used at trial. However, Delaney refused to surrender his secretary's hard drive from her computer that had delivered into his possession. He had the secretary allegedly typing the work from the school. While other hard drives were reformatted and placed into the new computers, the IT tech said it was unusual to have Delaney take one. |
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Thu Dec 08, 2016 8:50 am |
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untanglingwebs
El Supremo
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Delaney paid overtime to employees for working on his school. The was no written intergovernmental policy, although I did not see any research on state regulations in the file. The individual who reaped the reward in both the water line repair and the construction projects was Delaney, as he was the property owner of the land and buildings in Warwick Pointe Academy and he and his associates owned the land and buildings in the Holly location. Also, the school was expected to reimburse the associates for the renovation project at the Holly School. The use of township employees on Saturday wages and township equipment to me is an abuse of the power of the Superintendent.
There appeared to be an entire culture of currying favor among employees by allowing them to use the resources of the township for their benefit like minor car repairs and overtime because they "needed the money". |
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Thu Dec 08, 2016 9:03 am |
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untanglingwebs
El Supremo
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The W. Maurice Young Centre for Applied Ethics is an ...
ethics.ubc.ca
The W. Maurice Young Centre for Applied Ethics (the Centre) is an interdisciplinary research unit within the School of Population and Public Health at the University ... |
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Thu Dec 08, 2016 10:16 am |
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untanglingwebs
El Supremo
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W. Maurice Young Centre for Applied Ethics, University of British Columbia
Ethics and Conflict of Interest
by Michael McDonald
You’ve seen the headlines, “Politician caught in conflict of interest ” or “professional denies conflict of interest allegations. ” You probably were thankful that you were not the subject of the newspaper story. But you also may have wondered what exactly is a conflict of interest, why such conflicts are ethically significant, and what you can do to avoid being in one.
Definition
I define a conflict of interest as “a situation in which a person, such as a public official, an employee, or a professional, has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties. ” There are three key elements in this definition. First, there is a private or personal interest. Often this is a financial interest, but it could also be another sort of interest, say, to provide a special advantage to a spouse or child. Taken by themselves, there is nothing wrong with pursuing private or personal interests, for instance, changing jobs for more pay or helping your daughter improve her golf stroke.
The problem comes when this private interest comes into conflict with the second feature of the definition, an “official duty” — quite literally the duty you have because you have an office or act in an official capacity. As a professional you take on certain official responsibilities, by which you acquire obligations to clients, employers, or others. These obligations are supposed to trump private or personal interests.
Third, conflicts of interest interfere with professional responsibilities in a specific way, namely, by interfering with objective professional judgment. A major reasons clients and employers value professionals is that they expect professionals to be objective and independent. Factors, like private and personal interests, that either interfere or appear likely to interfere with objectivity are then a matter of legitimate concern to those who rely on professionals — be they clients, employers, professional colleagues, or the general public. So it is also important to avoid apparent and potential as well as actual conflicts of interests. An apparent conflict of interest is one which a reasonable person would think that the professional’s judgment is likely to be compromised. A potential conflict of interest involves a situation that may develop into an actual conflict of interest.
Leading examples
With this in mind, consider the following types of typical conflicts of interest listed by Canadian political scientists Ken Kernaghan and John Langford in their book, The Responsible Public Servant. They list seven categories:
[1] Self-dealing. For example, you work for government and use your official position to secure a contract for a private consulting company you own. Another instance is using your government position to get a summer job for your daughter.
[2] Accepting benefits. Bribery is one example; substantial [non token] gifts are another. For example, you are the purchasing agent for your department and you accept a case of liquor from a major supplier.
[3] Influence peddling. Here, the professional solicits benefits in exchange for using her influence to unfairly advance the interests of a particular party.
[4] Using your employer’s property for private advantage. This could be as blatant as stealing office supplies for home use. Or it might be a bit more subtle, say, using software which is licensed to your employer for private consulting work of your own. In the first case, the employer’s permission eliminates the conflict; while in the second, it doesn’t.
[5] Using confidential information. While working for a private client, you learn that the client is planning to buy land in your region. You quickly rush out and buy the land in your wife’s name.
[6] Outside employment or moonlighting. An example would be setting up a business on the side that is in direct competition with your employer. Another case would be taking on so many outside clients that you don’t have the time and energy to devote to your regular employer. In combination with [3] influence peddling, it might be that a professional employed in the public service sells private consulting services to an individual with the assurance that they will secure benefits from government: “If you use my company, I am sure that you will pass the environmental review.”
[7] Post-employment. Here a dicey situation can be one in which a person who resigns from public or private employment and goes into business in the same area. For example, a former public servant sets up a practice lobbying the former department in which she was employed. |
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Thu Dec 08, 2016 10:25 am |
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untanglingwebs
El Supremo
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A concerned resident of Tanglewood subdivision asked this question of the Sheriff:
Thank you for your concern for an investigation into the alleged illegal activities of Mr. William Delaney.
Some years ago, Mr. Delaney decided that he was the enforcement agency for the collection of subdivision dues in Tanglewood subdivision of Grand Blanc, where he resides. So he had the township put into each resident's tax bill amount of dues owed to the subdivision. This has been going on for years and for new residents, is an accepted occurance. However, for those of us who were here before this happened, I ask the question: Is it legal? If we were to miss a payment of dues to the subdivision, would the township be able to take legal action against the homeowner for nonpayment of taxes? |
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Fri Dec 09, 2016 6:08 am |
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untanglingwebs
El Supremo
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Our subdivision is an old one, with loose rules. I doubt if some of the more recent homeowners were even given a copy of the rules at all. We are not an incorporated entity. Is this enforceable? Is there any way to have this removed? Can the residents be told this is not part of their taxes?
If the money goes to the township, via residents' tax payment, how does it get redirected to the subdivision? Or does it stay with the township? Is this another one of William Delaney's "Nextel phone" situations where it benefits him directly?
The letter was signed "A concerned homeowner. |
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Fri Dec 09, 2016 6:18 am |
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untanglingwebs
El Supremo
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"When considering the permissible use of public funds under Michigan law, the analysis always begins with Article 9, Section 18 of our State Constitution, which provides as follows:
The credit of the state shall not be granted to, nor in aid of any person, association or corporation, public or private, except as authorized in this constitution. Const 1963, art 9, Sec. 18.
The provision has been interpreted as prohibiting the state, as well as any of its political subdivisions (e.g., a county, city, village or township), from giving anything away without consideration, that is, without receiving something of value in return. Alan v Wayne County, 388 Mich 210 (1972). In other words, outright donations of public funds for charitable or similar purposes is not permitted, no matter how worthy the cause may be."
Was this move by Delaney approved by the Board of Trustees? Was it Constitutional as the dues were being collected for a private entity and what benefit was it for the township? |
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Fri Dec 09, 2016 6:37 am |
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untanglingwebs
El Supremo
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How many residents lost faith in the township government as this letter writer appeared to have?
One issue of the current federal trash investigation is the Clinton Township official taking a bribe to place the private trash collectors bills on the water bills to aid the company.
How many other sweetheart deals went on in the township?
And has the Flint Journal developed a sense of ethics since their original editorial where they endorsed the use of township resources to aid in the enrichment of private corporate interests.
It was too bad that Busch hadn't explored the RICO statute at that time. I can't help but wonder if there was far more behind the scenes that screamed abuse.
Delaney was re-elected during the investigation, does that suggest an uniformed electorate or an electorate that is willing to accept corruption. |
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Fri Dec 09, 2016 6:50 am |
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untanglingwebs
El Supremo
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It seems like whenever I need inspiration, I find it in Detroit or Lansing newspaper. On 2-10-96 the Detroit Free Press printed an editorial on City corruption.
Key Points:
* There must be a committment to reveal and not hide issues from public scrutiny;
* There must be a willingness to acknowledge and examine all allegations of corruption.
* A community cannot allow employees and department heads to believe they are not accountable
* There is a need to validate (vindicate) how the community does business
* There is no place for cronyism and there can be no cozy relationships with vendors and contractors. There can be no sweetheart deals to employees, friends, and relatives. |
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Fri Dec 09, 2016 10:48 am |
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untanglingwebs
El Supremo
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| * money spent on contracts that are not bid is money that is not helping neighborhoods and residents. There needs to be credibility in our elected officials and that credibility sends a positive message to our community's neighbors, state and federal officials. Fundamental to our credibility is an honest and efficient government. |
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Fri Dec 09, 2016 11:03 am |
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