Could Louisiana's labor department use federal grant money to join local chambers of commerce?

Plain-English summary

The Louisiana Department of Labor asked about using federal Wagner-Peyser funds to buy memberships in local chambers of commerce. The Legislative Auditor had cited the practice and pointed to an earlier AG opinion against a hospital district buying chamber memberships with its funds. The AG distinguished the funding source. Federal money spent according to federal standards or guidelines was not state or local money under the Louisiana Constitution's prohibition on donating public funds. The opinion therefore found no violation of that state constitutional provision in the department's use of federal funds that the Legislative Auditor had cited.

The opinion did not decide whether a particular membership purchase satisfied every federal funding rule. Its conclusion expressly depended on use of the funds in accordance with federal standards or guidelines.

Currency note

This opinion was issued in 2004. 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 the department buy chamber memberships with federal Wagner-Peyser funds?

The AG said the state constitutional donation ban did not prohibit the department's use of federal funds for that purpose when the funds were used under federal standards or guidelines.

Why did the earlier hospital district opinion come out differently?

That opinion addressed a hospital service district's purchases. Here the AG treated money received from the federal government and used under federal law as funds of the United States, outside the cited ban on donations of state or local funds.

Did the opinion approve every use of a federal grant?

No. Its conclusion was framed around spending in accordance with federal law, standards, or guidelines. It did not evaluate a specific purchase against those federal requirements.

Background and statutory framework

The AG discussed La. Const. Art. VII, Sec. 14, which generally barred donation of state or political-subdivision funds. It quoted its earlier Opinion No. 02-0279 for the position that the state could use federal funds under federal law even if those funds, or property bought with them, were loaned, pledged, or donated.

Citations

• La. Const. Art. VII, Sec. 14 (state and local public-funds restriction).
• Attorney General's Opinion No. 92-204 (hospital district chamber memberships).
• Attorney General's Opinion No. 02-0279 (federal funds under federal law).

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/04-0005

Original opinion text

February 3, 2004
OPINION NUMBER 04-0005

90-A-2 PUBLIC FUNDS – Loan, Pledge or Grant
Mr. John Warner Smith, Secretary
La. Const. Art. VII, Sec. 14
Louisiana Department of Labor
Louisiana Department of Labor’s use of federal
P. O. Box 94094
funds in accordance with federal standards or
Baton Rouge, Louisiana 70804-9094
guidelines does not violate La. Const. Art. VII,
Sec. 14.

Dear Secretary Smith:

This correspondence is in response to your request for an opinion of this office regarding the Louisiana Department of Labor’s use of federal Wagner-Peyser funds to purchase memberships in local chambers of commerce.
According to your correspondence, the Legislative Auditor’s Office has cited your department for this practice, and has asserted that same is contrary to the legal principles asserted in Attorney General’s Opinion No. 92-204.

Opinion No. 92-204 determined that the hospital service district’s purchase of memberships in the local chamber of commerce, on behalf of the hospital and its contract physician, violated La. Const. Art. VII, Sec. 14. As I am sure you are aware, La. Const. Art. VII, Sec. 14 generally prohibits the loan, pledge or donation of “the funds, credit, property, or things of value of the state or of any political subdivision to or for any person, association, or corporation, public or private” (emphasis added).

Please be advised that it is the opinion of this office that the Louisiana Department of Labor’s use of federal funds, in accordance with federal standards or guidelines, does not violate La. Const. Art. VII, Sec. 14, for the reason that funds derived from the federal government (and used in accordance with federal law) are not “the funds…of the state or of any political subdivision”. Funds received from the federal government are the funds of the United States. In accord: Attorney General’s Opinions Nos. 02-0279; 02- 003; 00-141 and 92-659. Pertinently, Attorney General’s Opinion No. 02-0279 states:

La. Const. Art. VII, Sec. 14 does not prohibit the state from utilizing federal funds in accordance with federal law, regulation and guidelines, even if the funds (or property purchased with those funds) are loaned, pledged or donated to others.”

Page 2

Opinion Number 04-0005
Mr. John Warner Smith
Louisiana Department of Labor
Page -2-

We trust the foregoing adequately responds to your request. Should you require further assistance, please do not hesitate to contact this office.

Yours very truly,

CHARLES C. FOTI, JR.
Attorney General

BY: _________
JEANNE-MARIE ZERINGUE BARHAM
Assistant Attorney General

CCF, jr./JMZB/dam

xc: Grover C. Austin
Office of the Legislative Auditor

Page 3

Opinion Number 04-0005
Syllabus

90-A-2 PUBLIC FUNDS – Loan, Pledge or Grant
La. Const. Art. VII, Sec. 14

Louisiana Department of Labor’s use of federal funds in accordance with federal standards or guidelines does not violate La. Const. Art. VII, Sec. 14.

Mr. John Warner Smith, Secretary
Louisiana Department of Labor
P. O. Box 94094
Baton Rouge, Louisiana 70804-9094

Date Received:

Date Released: February 3, 2004

Jeanne-Marie Zeringue Barham
Assistant Attorney General