STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6225

May 7, 1984

APPROPRIATIONS:

Restrictions upon appropriations

AUDITOR GENERAL:

Duty to audit a city, its agency or private nonprofit organizations

CONSTITUTIONAL LAW:

Const 1963, art 4, Sec. 24--more than one object in a law

Const 1963, art 4, Sec. 24--notice of contents of bill in title to legislators and public

Const 1963, art 4, Sec. 25--reenactment and republication of altered or amended law

Const 1963, art 4, Sec. 30--appropriation of public money for local or private purpose

Const 1963, art 4, Sec. 53--imposition of duties upon Auditor General to audit a city, its agency or private nonprofit organizations

Const 1963, art 9, Sec. 18--utilization of state grant to purchase services as a pledge of credit

In the event the City of Detroit elects to purchase services from a private nonprofit organization for the benefit of its art institute and utilizes the state grant provided by 1983 PA 166, Sec. 1 to pay for the same, the legislative restrictions on such grant contained in 1983 PA 166, Sec. 31(4), requiring the execution of a written contract between the city and the private nonprofit organization specifying the services to be rendered and the amount of payment therefor do not add a second object to 1983 PA 166 contrary to Const 1963, art 4, Sec. 24.

1983 PA 166, Sec. 31(4), does not alter or amend any other statute contrary to Const 1963, art 4, Sec. 25.

The appropriation of a state grant which may be utilized by a city to purchase, in behalf of its art institute, services from a private nonprofit organization is not for a local or private purpose requiring a two-thirds vote of the members elected to and serving in each house as provided in Const 1963, art 4, Sec. 30.

The title to 1983 PA 166 satisfies the requirements of Const 1963, art 4, Sec. 24.

The duties assigned to the Auditor General in 1983 PA 166, Sec. 31(2), and the last sentence of Sec. 31(4), violate Const 1963, art 4, Sec. 53.

Const 1963, art 9, Sec. 18 does not bar a city from contracting, in behalf of its art institute, for services to be rendered by a private nonprofit organization and utilizing a state grant to pay for the same.

Honorable John M. Engler

State Senator

The Capitol

Lansing, Michigan

Honorable Jack Faxon

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion relating to the appropriation to the Department of Commerce for the grant to the City of Detroit contained in 1983 PA 166, Secs. 1 and 31.

1983 PA 166 is the appropriation act for the Departments of Commerce, Labor, and Licensing and Regulation for fiscal year 1983-1984.

1983 PA 166, Sec. 1, in pertinent part, provides:

'GRANTS TO CITIES

Fire protection ...................... $ 4,000,000

Grants to Detroit ..................... 21,964,200

Grant to city of Flint ................. 1,833,300

------------

GROSS APPROPRIATION .................. $27,797,500

Appropriated from:

State general fund/general purpose .. $27,797,500'

In 1983 PA 166, Sec. 31, the Legislature has provided:

In order of receipt of requests for opinion, Senator Faxon has asked the following question:

Addressing the first question, Const 1963, art 4, Sec. 24, provides:

The people, in Const 1963, art 4, Sec. 25, have provided:

The title to 1983 PA 166 states:

A fair reading of 1983 PA 161, Sec. 31(1) and (4), indicates a legislative intent to place restrictions upon the grant of $16,048,000.00 to the City of Detroit to be allocated to the Detroit Institute of Arts, an agency of the City of Detroit. In examining the placement of these restrictions against Const 1963, art 4, Secs. 24 and 25, it must first be observed that the Michigan Supreme Court has dealt with the practice of the Legislature in setting limitations upon appropriations by Const 1908, art 5, Sec. 21, the predecessor provision to Const 1963, art 4, Sec. 24, in Lewis v State, 352 Mich 422, 429-430; 90 NW2d 856 (1958), where the court held:

The restrictions contained in 1983 PA 166, Sec. 31(4), apply only if the City of Detroit elects to purchase services for the Detroit Institute of Arts from a private nonprofit organization. There is nothing in this provision which evinces a legislative intent that the city must purchase services for the institute of arts. In the event the city chooses to purchase services from such an organization, it must do so pursuant to written contract specifying the services to be provided and the amount of moneys contained in the allocated grant which are to be expended for those services.

It is observed that Detroit Charter 6-306 authorizes such purchase of services subject to approval of the city council unless otherwise authorized by ordinance.

The tieing of the 1983 PA 166, Sec. 31(4) restrictions to the grant moneys allocated to the Detroit Institute of Arts does not, under Lewis v State, supra, add a second object to 1983 PA 166.

In order for a restriction upon an appropriation contained in an appropriations act to constitute a violation of Const 1963, art 4, Sec. 25, it must impact a statute or statutory provision which the restrictions purport to alter or amend. Alan v Wayne County, 388 Mich 210; 200 NW2d 628; 67 ALR3d 1079, reh den 338 Mich 626; 202 NW2d 277 (1972).

Research discloses no statute which 1983 Pa 166, Sec. 31(4), directly or indirectly, purports to alter or amend.

It is my opinion, therefore, that 1983 PA 166, Sec. 31(4) does not violate either Const 1963, art 4, Sec. 24 or Sec. 25.

Turning to the questions asked by Senator Engler, each will be individually set out and considered. The first question is:

Const 1963, art 4, Sec. 30 provides:

The grants to the City of Detroit for the fiscal year 1983-1984 are to be allocated to the following purposes:

Detroit Institute of Arts .. $16,048,000.00

Detroit Historical Museum .. $ 1,916,000.00

City of Detroit ............ $ 4,000,000.00

Both the Detroit Institute of Arts and the Detroit Historical Museum are public agencies of the City of Detroit. Appropriations allocated in 1983 PA 166, Sec. 31(1), are, on their face, appropriations for a public purpose. The appropriation of a grant of $4,000,000.00 to the City of Detroit is without restriction as to use, but there is no reason to assume that the grant will be used for other than public purposes. Only the grant for the Detroit Institute of Arts recognizes the right of the City of Detroit to contract for services from private nonprofit organizations for the benefit of the Detroit Institute of Arts and conditions payment of moneys from the allocation upon the execution of a contract with the private nonprofit organization specifying in writing the amount of money to be paid the private nonprofit organization and the services to be received from such organization, and it is to this aspect of the grant that your question is directed.

It is useful to reiterate that the appropriation of the grant to the City of Detroit to be allocated to the Detroit Institute of Arts, a city agency, is for a public purpose. 1983 PA 166, Sec. 31(4), places a restriction upon the payment of any of these funds for services to be rendered by a private nonprofit organization in the event the city of Detroit should choose to contract for such services.

OAG, 1977-1978, No 5212, p 199 (August 17, 1977), upheld the right of a city or village to enter into a contract with a private nonprofit organization for the performance of services on behalf of the city or village.

It is noted that what constitutes a public purpose for the expenditure of public money has been left to the determination of the Legislature, which may not be reversed by the courts except where the determination is palpably and manifestly arbitrary and incorrect. Gregory Marina, Inc v Detroit, 378 Mich 364, 396; 144 NW2d 503 (1977); Hays v City of Kalamazoo, 316 Mich 443, 454; 25 NW2d 787 (1947).

Turning to the 'local purposes' aspect of your question, at the outset it must be observed that 1983 HB 4526 was enacted as 1983 PA 166 without a two-thirds vote of either house of the Legislature. HJ No 72, p 1648 (1983); SJ No 76, p 1521 (1983).

The only Michigan appellate decision which has considered the term 'local purposes' contained in Const 1908, art 5, Sec. 24, the predecessor provisions to Const 1963, art 4, Sec. 30, is Moreton v Secretary of State, 240 Mich 584; 216 NW 450 (1927). It involved a tax upon gasoline and it appropriated the revenues collected for the building and maintaining of public highways without a two-thirds vote of members of each house. The court held that appropriation of such tax moneys was not for the benefit of any limited area of the state and, therefore, not for local purposes requiring the two-thirds vote for enactment.

A comparable provision of New York Const 1821, art 1, Sec. 9 requiring a two-thirds vote of the members elected to each house of the Legislature to appropriate money for 'local purposes' was defined to mean an appropriation to be expended in a particular locality for the direct benefit of the people of that locality. People v Allen, 42 NY 378 (1870). A local purpose has reference to the citizens or interest of a particular locality not to a large or extensive area so that the appropriation of public money to remove an obstruction and improve navigation in a river was held not an appropriation for a local purpose simply because it is expended in a particular locality. People v Allen, NY, 1 Lans 248, 251 (1869).

Unquestionably, and uniquely in Michigan, the Detroit Institute of Arts, as a widely acclaimed cultural facility, is utilized by the citizens of this state without regard to residency in the city. The facility is an outstanding tourist attraction utilized by tourists and their families. Its vast displays and cultural facilities are readily and regularly available to Michigan students. Both the Governor in his Executive Budget, and the Legislature in the enactment of appropriations for the support of the Detroit Institute of Arts, have recognized its place in the cultural life of this state.

In this connection, in the Executive Budget for 1978, among the grants to cities, grants were recommended to 'provide support for cultural centers and other programs in cities which promote and conduct activities of state importance. Special grants are for 'libraries, museums, art institutes, . . .' In explaining the change for the Detroit Institute of Arts from the current year to the recommended budget year,

The Legislature, in acting upon these recommendations, enacted 1978 PA 405, Sec. 32, which states:

The printed 1981 State of the State Message, pp 21-22, submitted to the Legislature by Governor Milliken, discussed the Detroit Institute of Arts under 'Cultural Affairs' and stated:

See also, the printed 1980 State of the State Message submitted to the Legislature by Governor Milliken, pp 17-18.

It follows that the allocation of moneys to the Detroit Institute of Arts from the grant to the City of Detroit contained in 1983 PA 166, Secs. 1 and 31, is for a state, and not for a local, purpose. There is no violation of Const 1963, art 4, Sec. 30 because 1983 PA 166, Secs. 1 and 31 were enacted without a two-thirds vote of the members elected to and serving in each house.

It is my opinion, therefore, that the grant which may be utilized for the purchase of services from a private nonprofit organization by the City of Detroit for the benefit of the Detroit Institute of Arts is not for a private or local purpose requiring a two-thirds vote of the members elected to and serving in each house pursuant to Const 1963, art 4, Sec. 30.

The second question is:

1983 PA 166, Sec. 31(4), contains no appropriation or grant to a private nonprofit corporation. It does list restrictions in the event moneys contained in the grant as allocated are used at the election of the City of Detroit to purchase services from such an organization.

The restrictions contained in 1983 PA 166, Sec. 31(4), are not tantamount to an additional purpose. The act may contain all matters germane to its object consistent with the goal of the title-object clause requirement of notice to the legislators and the public. Const 1963, art 4, Sec. 24. Colombini v Dep't of Social Services, 93 Mich App 157, 162-163; 286 NW2d 77 (1979).

Thus, an act may contain any provisions which directly relate to the implementation of its principal object. Advisory Opinion re Constitutionality of 1972 PA 294, 389 Mich 441; 208 NW2d 469 (1973).

In answer to the second question, it is my opinion that the title of 1983 PA 166 satisfies the requirements of Const 1963, art 4, Sec. 24.

Your third question is:

This question raises the issue of the validity of the requirement that the Auditor General perform an audit of the accounts of the City of Detroit, its agency or private nonprofit organizations in the event such organization contracts to provide services to the Detroit Institute of Arts, which audit shall be with respect to the expenditure of funds received from the City of Detroit.

Const 1963, art 4, Sec. 53, in part, states:

1983 PA 166 seeks to have the Auditor General, where appropriate, perform an audit of the books and records of the contracting private nonprofit organization. The basic rule of constitutional construction is the rule of common understanding. Traverse City School Dist v Attorney General, 384 Mich 390; 185 NW2d 9 (1971); Council No 11, AFSCME v Civil Service Comm'n, 408 Mich 385; 292 NW2d 442 (1980).

Const 1963, art 4, Sec. 53 states that the Auditor General shall be assigned no other duties than those listed.

1983 PA 166, Sec. 31(2), requires the Auditor General to audit the books and records of the City of Detroit and its agencies. The last sentence of subsection (4) of section 31 of 1983 PA 166, imposes a duty upon the Auditor General to audit the records of any private nonprofit organization under contract with the City of Detroit. Neither the City of Detroit, nor any of its agencies, nor any private nonprofit organization is either the state or a component agency of the state within the provisions of Const 1963, art 4, Sec. 53. The Legislature may not require the Auditor General to perform post audits of a city, or of its agencies, or of private nonprofit organizations which contract with the city. The Legislature may, however, statutorily provide that another agency such as the Department of Treasury, Local Audits Division, shall perform such an audit.

Inasmuch as 1983 PA 163 makes appropriation for the Departments of Commerce, Labor, and Licensing and Regulation, it is clear that said Act would have been enacted without 1983 PA 166, Sec. 31(2), and the last sentence of Sec. 31(4). Since there is no indication that the Legislature intended 1983 PA 166 to be nonseverable, it is concluded that the remaining sections of 1983 PA 166 are valid. See, OAG, 1973-1974, No 4824, p 164 (July 24, 1974); OAG, 1965-1966, No 4575, p 389 (December 23, 1966); OAG, 1963-1964, No 4156, p 79 (April 11, 1963).

It is my opinion, in answer to your third question, that the duties assigned to the Auditor General in 1983 PA 166, Sec. 31(2) and the last sentence of Sec. 31(4), violate Const 1963, art 4, Sec. 53.

Your fourth question is:

This question inquires whether 1983 PA 166, Sec. 31(4), offends any other provision of Const 1963.

In Const 1963, art 9, Sec. 18, the people, in pertinent part, have provided that the credit of the state shall not be granted to, nor in aid of, any person, association or corporation, public or private, except as permitted by the constitution. As noted in the Address to the People, this provision is comparable to Const 1908, art 10, Sec. 12, save the exception which was added in Const 1963. 2 Official Record, Constitutional Convention 1961, p 3401. This limitation on the grant of credit has been held to apply with equal force to municipalities of the state. Black Marsh Drainage District v Rowe, 350 Mich 470; 87 NW2d 65 (1958); Connor v Herrick, 349 Mich 201, 211; 84 NW2d 427 (1957); Oakland County Drain Comm'r v City of Royal Oak, 306 Mich 124; 10 NW2d (1943).

This constitutional provision was not offended when a county or a township, pursuant to written contract, appropriated money to a private nonprofit corporation which provided services and activities to senior citizens. OAG, 1981-1982, No 5842, p 19 (January 19, 1981). See also, OAG 1977-1978, No 5402, p 714 (December 13, 1978); OAG, 1977-1978, No 5212, supra.

In answer to your last question, it is my opinion that use of grants made by the state to municipalities are subject to Const 1963, art 9, Sec. 18, but this provision does not bar a municipality from contracting for services from a private nonprofit organization and utilizing state grants to pay for the same.

Frank J. Kelley

Attorney General