Ronorable Gary Garrison 

Ector County Attorney 

Courthouse, Room 218 

Odessa, Texas 79761 

Opinion No. JM-716 

Re: Whether a cotmissioners court 

may grant federal revenue sharing 

funds to a chamber of cormnerce for 

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title 31 of the United States Code, was repealed as part of the 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 government 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repealed provisions of the Revenue Sharing Act still govern the use of 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 -- 

p. 3328 
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 

p. 3329 
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 corporation such as a chamber of commerce for the provision of business and industrial development 

services if the county receives adequate consideration 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 

p. 3330