Could customers add donations to a Louisiana city utility bill to help neighbors pay theirs?

Plain-English summary

Ruston asked whether utility customers could voluntarily add donations to their bills to help people in need pay for service. The Attorney General said the city utility could receive the donations, with a charitable organization disbursing them, if the city helped establish objective criteria for identifying needy recipients. He applied the social welfare exception to the constitutional restriction on donations of public funds because the contributions would pass through city utility payments.

The AG also addressed the utility's bonds. He said money designated for charity upon receipt was not a utility service fee and therefore was not part of the utility revenue pledged to pay its bonds.

Currency note

This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could Ruston customers choose to add a gift to their utility bills?
Yes. The request described a voluntary amount added by customers, and the AG said the utility could receive it for the stated assistance program.

How did the AG say need should be determined?
He said the city should assist in establishing objective and consistent criteria for determining who qualified as needy under the constitutional social welfare exception.

Did the charitable gifts become revenue pledged for utility bonds?
The AG said no. They were designated for charity when received, rather than paid as fees for utility services.

Background and statutory framework

The opinion applied Article 7, Section 14(B) of the Louisiana Constitution to assistance for needy people. It also discussed La. R.S. 33:4253 on pledged utility revenue and La. R.S. 9:2271 on designated charitable donations. The proposed arrangement placed the donated money in a separate account for disbursement by a charitable organization.

Citations and references

• Article 7, Section 14(B) of the Louisiana Constitution
• La. R.S. 33:4253
• La. R.S. 9:2271

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/01-0022

Original opinion text

March 14, 2001
Opinion No. 01-22

71
Municipalities
90 – A – 1 Public Funds & Contracts 167 – B Utilities – Public
Mayor Dan Hollingsworth
City of Ruston
City of Ruston’s public utility company may receive donations
from its customers to be used to assists in paying the utility
Post Office Box 2069
bills of the needy provided that, because the donations are
Ruston, Louisiana 71273-2069 included in the utility payments to the city, the city assist in establishing some type of objective criteria to determine those who are truly needy so as to fall within the exception of Article
Dear Mayor Hollingsworth: 7, Section 14 B of the Louisiana Constitution.

We received your request for an opinion regarding the authority of the city’s public utility company to receive donations from consumers to assist those “needy” persons with their utility bills in times of distress or need. As we appreciate the situation, the consumer would simply add a donation of whatever amount he chooses to his utility bill. The donation is made purely at the discretion of the consumer. The city will set up a separate account for the donated funds which will be disbursed by a charitable organization.

Your request raises several issues and certainly must be addressed in light of Article 7, Section 14 of the Louisiana Constitution of 1974 which prohibits the donation of public funds. Article 7, Section 14 B specifically authorizes the use of public funds for programs of social welfare for the aid and support of the needy. Our office has opined on numerous occasions that in order to fall within this exception, one must establish objective and consistent criteria to determine those who are truly needy.

La. R.S. 33:4253 provides that bonds issued in connection with a municipal corporation which operates a public utility shall be payable from and be secured by the pledge of the revenues derived from the operation of the utility. However, since the donations received by the city are designated upon receipt for charitable purposes rather than fees for utility services, they do not become subject to the pledge for payment of bonds issued on behalf of the city’s public utility company.

La. R.S. 9:2271 allows for any person to make a donation, during one’s life or at one’s death, for the benefit of educational, charitable, or literary purposes. It further allows the donor to designate a particular use for the donation.

In light of the above, it is our opinion that the City of Ruston’s public utility system may receive donations from its customers to be used to assist in paying the utility bills of the needy provided that, because the donations are included in the utility

Page 2

Mayor Dan Holllingsworth
Opinion No. 01-22
Page 2

payments to the city, the city assists in establishing some type of objective criteria to determine those who are truly needy so as to fall within the exception of Article 7, Section 14 B of the Louisiana Constitution.

We trust that this adequately responds to your request, but should you have any further questions, please contact our office.

With kindest regards,

Very truly yours,

RICHARD P. IEYOUB
ATTORNEY GENERAL

BY:
TINA VICARI GRANT
Assistant Attorney General

RPI:TVG:crt

Page 3

OPINION NUMBER 01-22

SYLLABUS

71
Municipalities
90 – A – 1 Public Funds & Contracts
167 – B Utilities – Public

Art. 7, Section 14 of La. Constitution of 1974
La. R.S. 33:4253
La. R.S. 9:2271

City of Ruston’s public utility company may receive donations from its customers to be used to assists in paying the utility bills of the needy provided that, because the donations are included in the utility payments to the city, the city assist in establishing some type of objective criteria to determine those who are truly needy so as to fall within the exception of Article 7, Section 14 B of the Louisiana Constitution.

Mayor Dan Hollingsworth
City of Ruston
Post Office Box 2069
Ruston, Louisiana 71273-2069

DATE RECEIVED: 01/18/01

DATE RELEASED: March 14, 2001

AUTHOR: TINA VICARI GRANT
Assistant Attorney General