Can a Tennessee county use taxpayer money to run ads supporting a local sales tax increase on the ballot?

Subject

Opinion No. 12-31, Use of County Funds to Support Referendum to Increase Local Option Sales Tax, March 8, 2012

Plain-English summary

In Tennessee, a county or city can raise its local option sales tax only if the voters approve the increase in a referendum. The mechanics live in Tenn. Code Ann. §§ 67-6-702 and 67-6-706. Senator Ken Yager and Representative Dennis Powers asked the AG whether, while such a referendum was pending, a county commission or a county mayor could spend county money on ads supporting passage. The AG concluded they could not.

The reasoning came from two directions. First, Tennessee local governments only have the powers their charters and statutes give them, and there was no statute on the books that specifically authorized county funds for referendum advocacy. Second, when courts in other states have faced this question, the consistent answer has been that absent express legislative authority, a local government cannot spend public money to take sides on a ballot measure. The taxpayers funding the speech include opponents and proponents alike; using their pooled money to push only one side gives the losing side just cause for complaint. Tennessee's AG adopted that approach.

The opinion did not say a county is barred from doing anything related to a pending referendum. The Florida case it cited, Palm Beach County v. Hudspeth, draws the line at "fairly educating" the public versus "picking up the gauntlet and entering the fray." Neutral voter education is one thing; campaigning is another.

Currency note

This opinion was issued in 2012. 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.

Historical background and statutory framework

Tennessee's local option sales tax

Tenn. Code Ann. § 67-6-702 lets a county or city authorize the levy of a local option sales tax. Section 67-6-706 requires approval by referendum of the county or city voters. The statutes are silent on whether the local government can spend money supporting or opposing the measure during the campaign.

Local government's limited authority

Tennessee adheres to a strict view of local government authority. Allmand v. Pavletic, 292 S.W.3d 618, 625 (Tenn. 2009), restated the rule: municipalities have only those powers expressly or necessarily implied in their charters or statutes. Southern Constructors, Inc. v. Loudon County Bd. of Educ., 58 S.W.3d 706, 710 (Tenn. 2001), added the tie-breaker: if there is any fair doubt about whether a local government possesses a particular authority, courts resolve that doubt against the existence of the authority.

Tenn. Code Ann. § 5-1-118(a) gives counties the same powers granted to cities under various Title 6 provisions, including § 6-2-201(7), which authorizes municipalities to "[e]xpend the money of the municipality for all lawful purposes." But "lawful purposes" is not a magic phrase that unlocks any expenditure. Article II, Section 29 of the Tennessee Constitution requires county taxes to be imposed and expended for a "legitimate county purpose." Davidson County v. Kirkpatrick, 150 Tenn. 546, 548, 266 S.W. 107, 108 (1924). Whether a particular expenditure qualifies depends on the facts. Edmondson v. Bd. of Educ., 108 Tenn. 557, 563-64 (1902).

The out-of-state cases

Tennessee had no case law squarely on the issue, so the AG looked at how other states had ruled. The pattern was consistent.

Mines v. Del Valle, 201 Cal. 273 (1927), overruled in part by Stanson v. Mott (1976), said a city could not spend public money to support a bond issue.

Elsenau v. City of Chicago, 334 Ill. 78, 165 N.E. 129, 131 (1929), explained the rationale: "The conduct of a campaign, before an election, for the purpose of exerting an influence upon the voters, is not the exercise of an authorized municipal function and hence is not a corporate purpose of the municipality."

Citizens to Protect Public Funds v. Bd. of Educ. of Parsippany-Troy Hills, 13 N.J. 172, 98 A.2d 673, 677 (1953), captured the fairness concern: "The public funds entrusted to the [school] board belong equally to the proponents and opponents of the proposition, and the use of the funds to finance not the presentation of facts merely but also arguments to persuade the voters that only one side has merit, gives the dissenters just cause for complaint."

Porter v. Tiffany, 11 Or. App. 542 (1972), and Palm Beach County v. Hudspeth, 540 So.2d 147, 154 (Fla. Ct. App. 1989), reached the same place. Hudspeth added the useful distinction between fair education and advocacy: a county "can only use tax dollars to fairly educate the public on a referendum, and cannot use such funds to 'pick up the gauntlet and enter the fray.'"

The AG's conclusion

Putting these pieces together, the AG concluded Tennessee law did not authorize a county commission or a county mayor to use county funds to advocate for or against a local sales tax referendum. The lack of express statutory authority, combined with the "resolve doubt against" canon of Southern Constructors, plus the consistent out-of-state precedent, settled the question.

Common questions

What can a Tennessee county do in connection with a pending referendum?

The opinion implicitly endorsed the "fair education" line. A county can provide factual information about what a sales tax increase would mean (rate change, revenue projection, what the funds would be used for if the local resolution dedicates them) without crossing into advocacy. The closer to "vote yes" or "vote no" messaging, the closer to the forbidden zone.

Could a county mayor speak in favor of the referendum personally?

The opinion addressed the spending of county funds, not the personal speech of elected officials. A county mayor speaking at a town hall on personal time, with no expenditure of public resources, would be a separate question. Use of office staff, equipment, mailing lists, or county-funded advertising on the other hand would implicate the rule.

What about a city council that wants to fund a "Vote Yes" campaign for a tax increase that would help city schools?

Same answer. The opinion's reasoning applied to cities (the Title 6 powers granted to counties under § 5-1-118 are city powers in the first instance) and to school bond referenda alike (most of the out-of-state cases involved school bonds or school district elections). Without an express statutory authorization, the public funds cannot be deployed for advocacy.

Has the Tennessee Supreme Court ever ruled on this?

As of the 2012 opinion, the AG noted no Tennessee authority directly on point. The conclusion rested on Tennessee's general municipal-powers framework combined with persuasive out-of-state precedent. A future Tennessee Supreme Court case could rule differently, but the AG's reading was the conservative one consistent with the limited-authority rule.

Could the legislature change this rule?

In theory, yes. The AG's reasoning was that no statute "specifically authorize[d]" referendum advocacy. The General Assembly could enact such a statute. Whether that would survive other legal challenges (state constitution, First Amendment) is a separate question.

Citations

• Tenn. Code Ann. § 67-6-702 (authorization for local option sales tax)
• Tenn. Code Ann. § 67-6-706 (referendum requirement)
• Tenn. Code Ann. § 5-1-118(a) (county powers parallel to city powers)
• Tenn. Code Ann. § 6-2-201(7) (municipal authority to expend funds for lawful purposes)
• Tenn. Const. art. II, § 29 (county taxes for legitimate county purpose)
• Allmand v. Pavletic, 292 S.W.3d 618 (Tenn. 2009)
• Southern Constructors, Inc. v. Loudon Cnty. Bd. of Educ., 58 S.W.3d 706 (Tenn. 2001)
• Davidson Cnty. v. Kirkpatrick, 150 Tenn. 546, 266 S.W. 107 (1924)
• Edmondson v. Bd. of Educ., 108 Tenn. 557, 69 S.W. 274 (1902)
• Mines v. Del Valle, 201 Cal. 273, 257 P. 530 (1927)
• Stanson v. Mott, 130 Cal. Rptr. 697, 551 P.2d 1 (Cal. 1976)
• Elsenau v. City of Chicago, 334 Ill. 78, 165 N.E. 129 (1929)
• Citizens to Protect Pub. Funds v. Bd. of Educ. of Parsippany-Troy Hills, 13 N.J. 172, 98 A.2d 673 (1953)
• Porter v. Tiffany, 11 Or. App. 542, 502 P.2d 1385 (1972)
• Palm Beach Cnty. v. Hudspeth, 540 So.2d 147 (Fla. Ct. App. 1989)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2012/op12-031.pdf

Original opinion text

Use of County Funds to Support Referendum to Increase Local Option Sales Tax

QUESTION

Is a county commission or a county mayor authorized to spend county funds to advertise support for a referendum on whether to increase the local option sales tax?

OPINION

No state statute specifically authorizes the use of funds for this purpose. Absent such specific authorization, neither a county commission nor a county mayor may use county funds to pay for communications that advocate for or against adoption of a measure in a local referendum.

ANALYSIS

This opinion concerns whether a county commission or county mayor is authorized to spend county funds to advertise their support for a proposed local option sales tax increase. Under Tenn. Code Ann. § 67-6-702, a county or city may authorize the levy of a local option sales tax. The tax must be approved in a referendum of the county or city voters. Tenn. Code Ann. § 67-6-706.

No statute explicitly authorizes the county mayor or county commission to use county funds to advertise their position on the referendum. Under Tenn. Code Ann. § 5-1-118(a), counties may exercise the same powers granted to cities under various provisions of Title 6 of the Tennessee Code Annotated. These sections include Tenn. Code Ann. § 6-2-201(7), which provides:

Every municipality incorporated under this charter may:

(7) Expend the money of the municipality for all lawful purposes;

Municipalities may exercise only those express or necessarily implied powers delegated to them by the Legislature in their charters or under statutes. Allmand v. Pavletic, 292 S.W.3d 618, 625 (Tenn. 2009). If there is any fair doubt as to whether a local governmental entity possesses a particular authority, courts should resolve that doubt against the existence of the authority. Southern Constructors, Inc. v. Loudon County Board of Education, 58 S.W.3d 706, 710 (Tenn. 2001) (school board's statutory authority to submit a construction contract to arbitration was implied by the express statutory authority to enter into construction contracts in Tenn. Code Ann. § 49-2-203). Further, under Article II, Section 29, of the Tennessee Constitution, county taxes must be imposed and expended for a legitimate county purpose. Davidson County v. Kirkpatrick, 150 Tenn. 546, 548, 266 S.W. 107, 108 (Tenn. 1924). What constitutes a legitimate county purpose must necessarily be decided in view of the facts of each particular case. See, e.g., Edmondson v. Board of Education, 108 Tenn. 557, 563-64, 69 S.W. 274, 275-76 (Tenn. 1902).

We have found no Tennessee authority that addresses this specific issue. Courts in other states have generally found that, absent explicit statutory authority, a local government is not authorized to spend public funds to advertise its position for or against an issue being presented to the voters in a referendum. See, e.g., Mines v. DelValle, 201 Cal. 273, 286-87, 257 P. 530, 536-37 (Cal. 1927), overruled in part on other grounds, Stanson v. Mott, 130 Cal. Rptr. 697, 551 P.2d 1 (Cal. 1976) (bond issue and local initiative); Elsenau v. City of Chicago, 334 Ill. 78, 81-2, 165 N.E. 129, 131 (1929) (municipal bond issue); Citizens to Protect Public Funds v. Board of Education of Parsipanny-Troy Hills TP, 13 N.J. 172, 180-81, 98 A.2d 673, 677-78 (1953) (school bond issue); Porter v. Tiffany, 11 Or. App. 542, 549-50, 502 P.2d 1385, 1388-89 (1972) (bond issue and initiative measure). The rationale for these decisions vary. In Elsenau, the Illinois Supreme Court found that "[t]he conduct of a campaign, before an election, for the purpose of exerting an influence upon the voters, is not the exercise of an authorized municipal function and hence is not a corporate purpose of the municipality." Elsenau 165 N.E. at 131. In Citizens to Protect Public Funds, the New Jersey Supreme Court concluded that the use of public funds to support one side in a local referendum was unfair to proponents of the other side. As the New Jersey Supreme Court stated:

The public funds entrusted to the [school] board belong equally to the proponents and opponents of the proposition, and the use of the funds to finance not the presentation of facts merely but also arguments to persuade the voters that only one side has merit, gives the dissenters just cause for complaint. The expenditure is then not within the implied power and is not lawful in the absence of express authority from the Legislature.

Citizens to Protect Public Funds, 98 A.2d at 677. Subsequent court decisions have expressed similar concerns. See, e.g., Palm Beach County v. Hudspeth, 540 So.2d 147, 154 (Fla. Ct. App. 1989) (stating a county can only use tax dollars to fairly educate the public on a referendum, and cannot use such funds to "pick up the gauntlet and enter the fray").

Accordingly, for the aforementioned reasons, this Office concludes that Tennessee law does not currently explicitly authorize a county commission or a county mayor to use county funds to pay for communications that advocate for or against adoption of a measure in a local referendum.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

ANN LOUISE VIX
Senior Counsel

Requested by:
The Honorable Ken Yager
State Senator
Suite 6, Legislative Plaza
Nashville, Tennessee 37243

The Honorable Dennis Powers
State Representative
202 War Memorial Building
Nashville, Tennessee 37243