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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



Opinion No. 5842

January 19, 1981


Const 1963, art 9, Sec. 18 (credit of the state)


Contribution to programs for the aged

A township, as authorized by the Legislature, may make an appropriation of funds to a private, nonprofit corporation or organization for senior citizen activities or services pursuant to a contract entered into between the township and the private corporation or organization.

Honorable Mitch Irwin

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion on a matter which may be phrased as follows:

May a township or county make contributions from general funds and from revenue sharing funds to a private, nonprofit corporation, such as the Oscoda County Council on Aging?

Const 1963, art 9, Sec. 18, provides:

'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.'

This provision has been held applicable to political subdivisions and instrumentalities of the state, which include counties and townships. Drain Commissioner of Oakland County v City of Royal Oak, 306 Mich 124, 142; 10 NW2d 435, 441 (1943).

OAG, 1977-1978, No 5402, p 714 (December 13, 1978), considered whether Const 1963, art 9, Sec. 18, supra, was offended by a county appropriating county funds for the preservation of an historical landmark, where the appropriation of such funds was statutorily authorized. OAG, No 5402, supra, concluded that, pursuant to statutory authorization, it was a matter of judgment in the sound discretion of the county commissioners whether a county appropriation for restoring and preserving an historical landmark would 'result in a degree of public benefit so as to constitute adequate consideration' under Const 1963, art 9, Sec. 18, supra. In so concluding, OAG, No 5402, supra, quoted extensively from Alan v Wayne County, 388 Mich 210, 325-327; 200 NW2d 628, 684-685; reh den 388 Mich 626; 202 NW2d 277 (1972):

'Michigan case law interpreting Const 1963, art 9, Sec. 18 is neither ample nor precise. It is clear the state or its subdivision the county cannot give anything away without consideration. Detroit Museum of Art v Engel, 187 Mich 432 (1915) (salary of employee of private museum, no consideration, no public purpose); Younglas v Flint, 345 Mich 576 (1956) (transfer of city park to US reserve armory) but see contra Sommers v Flint, 355 Mich 655, 663 (1959). See generally 15 McQuillan Municipal Corporations (3rd ed), Sec. 39.30. Note that the constitution as far as the state and county are concerned makes no difference between a public and private purpose in this regard. When the state acquires or transfers something of value in return for value the state does not offend Const 1963, art 9, Sec. 18. Walinske v Detroit-Wayne Joint Building Authority, 325 Mich 562, 583 (1949) (lease of building); Jackson Broadcasting Television Corp v State Board of Agriculture, 360 Mich 481, 498 (1960) (time-sharing on rental basis of studio); Hays v Kalamazoo, 316 Mich 433 (1947) (Michigan Municipal League membership).

'Now the nub of the problem in all probability is the value received by the state in return for the value transferred. So our inquiry goes to what is the value and who determines it. While the cases definitely describing all the earmarks of the value to be received appear yet to be written, it is probably because any citizen would immediately prescribe full value, and this Court is not going to argue with so logical, reasonable and just a standard.

This Court will assume that the officers of the Legislative and Executive Branches will do their duty and exercise a proper judgment. The courts will respect that judgment unless there has been a clear abuse of discretion. Obviously, if the state or county were to make a valuable grant for next to no consideration, the courts would be forced to regard that not as an exercise of discretion, but an abuse of discretion.'

Accordingly, OAG, No 5402, supra, held that it was necessary that an agreement between the county and the nonprofit historical landmark corporation be entered into providing how the funds would be utilized by the private, nonprofit organization, embracing such purposes as, but not limited to, the continued existence of the historical landmark and its availability to the public. See also, OAG, 1977-1978, No 5212, p 199 (August 17, 1977).

OAG, 1979-1980, No 5664, p 630 (February 20, 1980), held that under Const 1963, art 9, Sec. 18, supra, the Legislature may authorize the Department of Natural Resources to remit funds from the Fish and Game Protection Fund to private, nonprofit organizations for the maintenance of suitable habitat in Canada for migratory birds, pursuant to contract between the Department and such nonprofit organizations. OAG, No 5664, supra, concluded that such agreement may require that any funds appropriated be expended on fresh water waterfowl which breed or migrate through Michigan; the continued existence of the nonprofit organization; submission of annual reports on project expenditures; copies of annual audits and annual assurance of tax-exempt status, and if appropriate, the availability of the waterfowl propagation area to the public.

It is presumed, as it was in Alan, supra, that under Const 1963, art 9, Sec. 18, local government officials will perform their statutory duties and exercise proper judgment in the determination of consideration received for value transferred, pursuant to appropriate contractual terms, and that judgment shall be respected unless a clear abuse of discretion is demonstrated.

1976 PA 39, MCLA 400.571 et seq; MSA 5.3439(1) et seq, authorizes local units of the government to appropriate funds for purposes of providing activities or services to persons 60 years of age or older. 1976 PA 39, supra, Sec. 1, declares the Legislature's judgment that the provision of services to senior citizens is a valid public purpose. 1976 PA 39, supra, is legislation which effectuates the provisions of Const 1963, art 4, Sec. 51:

'The public health and general welfare of the people of the state are hereby declared to be matters of primary public concern. The legislature shall pass suitable laws for the protection and promotion of the public health.'

In City of Gaylord v Gaylord City Clerk, 378 Mich 273; 144 NW2d 460 (1966), our Supreme Court stated that Const 1963, art 4, Sec. 51, supra, when considered in conjunction with the traditional public policy of the state, limits powers of the Legislature, and of government generally, to such legislative acts and such governmental powers as exhibit a public purpose. Accordingly, the Legislature's finding that it is a valid public purpose to provide services to older persons, pursuant to 1976 PA 39, supra, is consistent with Const 1963, art 4, Sec. 51, supra.

1976 PA 39, supra, Sec. 2(b), pertinently provides that local governments, including counties and townships, are within the ambit of the act. The activities or services which may be furnished pursuant to the act are described as '. . . identifiable action directed toward the improvement of the social, legal, health, housing, educational, emotional, nutritional, recreational, or mobility status of older persons.' 1976 PA 39, supra, Sec. 3, providing for local government appropriations, states:

'A local unit of government may appropriate funds to public or private non-profit corporations or organizations for the purposes of planning, coordinating, evaluating, and providing services to older persons.'

In 1976 PA 39, supra, Sec. 2(e), the legislature has defined the term 'funds' as 'general tax revenues, federal revenue sharing funds, state revenue sharing funds, and other funds under the control of the governing body.' [Emphasis supplied.] Therefore, 1976 PA 39, supra, authorizes a county or township to make appropriation of funds, including general and revenue sharing funds, to a private nonprofit corporation such as a county council on aging.

1976 PA 39, supra, Sec. 4(1), requires that an appropriation must be approved by a majority of the members of the governing body of the local unit of government. 1976. PA 39, supra, Sec. 5, sets forth the mandatory terms of an appropriation made under the act, which terms are:

'(a) Name, address, and general purpose of the organization.

'(b) A description of the functions and responsibilities to be performed by the recipient of the appropriation.

'(c) The effective date and length of the grant.

'(d) Program and financial reporting requirements as established by the local unit of government.'

The statutorily-required terms for any appropriation made pursuant to 1976 PA 39, supra, are consistent with the reasoning of Alan v Wayne County, supra, and the opinions of this office, discussed above, which have construed Const 1963, art 9, Sec. 18, supra. (1)

It is, therefore, my opinion that a county or township may make an appropriation from general and revenue sharing funds to private, non-profit corporations or organizations, such as the Oscoda County Council on Aging, which undertake the provision of senior citizen activities or services, and where a contract is entered providing for the terms of the appropriation as authorized by 1976 PA 39, supra.

Frank J. Kelley

Attorney General

The Federal Revenue Sharing Act, entitled The State and Local Fiscal Assistance Act of 1972, Sec. 123; 86 Stat 919 (1972), as amended, 31 USC Sec. 1243, provides:

'In order to qualify for any [revenue sharing] payment, . . . a state government or unit of local government must establish . . . that--

'(4) It will provide for the expenditure of amounts received . . . only in accordance with the laws and procedures applicable to the expenditure of its own revenues; . . .' [Emphasis supplied.]

Accord, OAG, 1973-1974, No 4851, p 196 (November 4, 1974).


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