Can a Mississippi city give federal flood-mitigation grant money directly to private homeowners?

Plain-English summary

Representative Tim Ladner asked the AG two questions about a fact pattern involving FEMA flood-mitigation grant funds passed through a city to private homeowners' residences:

1. Can FEMA give money directly to state, municipal, or county entities? The AG declined to answer. AG opinions are limited to questions of state law (§ 7-5-25). FEMA's authority is a question of federal law, outside the AG's scope. Ladner was directed to FEMA itself.

2. Does the Mississippi Constitution allow a state, city, or county to give taxpayer dollars to private individuals? Generally no. Section 66 of the Mississippi Constitution restricts donations: "No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the Legislature, nor by any vote for a sectarian purpose or use." The Mississippi Supreme Court in McAdams v. Perkins, 204 So. 3d 1257 (Miss. 2016), held that municipal donations to private citizens are unlawful and violate the Mississippi Constitution. The Court quoted the rule that a "municipal board cannot lawfully give away public money."

The defining feature of a "donation" under McAdams is the absence of consideration. If the city gives money or value in exchange for nothing of equivalent value back, that is a donation. Donations to private citizens by a city are not allowed unless specifically authorized by a law passed under Section 66's two-thirds vote.

The opinion did not analyze the specific FEMA program. It referred Representative Ladner to FEMA and the Office of the State Auditor for further guidance. The holding on the state-law question is the conditional one: a municipal payment to a private citizen is a donation barred by Section 66 unless the city "finds that there is some consideration in exchange for the city's funds" or the payment is "specifically authorized by law."

What this means for you

If you are a Mississippi city handling grant funds

The opinion holds that, "[u]nless specifically authorized by law, in the absence of consideration, municipal donations to private citizens violate the Mississippi Constitution." The test it states is whether the city receives consideration in exchange for its funds; if not, the payment "is a donation of public funds to a private individual" under § 66 and McAdams.

If you are a Mississippi homeowner expecting a flood-mitigation payment

The opinion holds that a city cannot give public money to a private individual without consideration unless a law specifically authorizes it. It does not decide whether any particular FEMA program supplies that authority; it points Representative Ladner to FEMA and the State Auditor for that question.

If you are a state legislator

Section 66 itself contemplates donation legislation, but only "by the concurrence of two-thirds of the members elect of each branch of the Legislature." The opinion restates that constitutional path; it does not propose any specific legislation.

If you are a city attorney

The opinion declined the federal-authority question under § 7-5-25 (state-law questions only) and resolved the state question on the consideration rule from McAdams: a transfer "without any consideration" is a prohibited donation. It recommends contacting the State Auditor and FEMA for the federal-program piece.

Common questions

Q: What is Section 66 of the Mississippi Constitution?
A: It provides: "No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the Legislature, nor by any vote for a sectarian purpose or use." It restricts both who can authorize donations (only the Legislature, by supermajority) and what can be subsidized (no sectarian purposes).

Q: What is "consideration" in this context?
A: It's a contract-law concept: something of value given in exchange for something else of value. If the city receives services, property, or some other benefit in exchange for its payment, that's consideration. If the city gives money for nothing back, that's a donation.

Q: How did the McAdams case define a donation?
A: The Mississippi Supreme Court said: a donation is "the transfer of money or other things of value from the owner to another without any consideration." (Internal citations omitted.) The absence of consideration is what makes a transfer a donation.

Q: Are there exceptions where a city can give money to a private party?
A: Per the opinion, yes in two situations: where there is consideration in exchange for the funds, or where the payment is "specifically authorized by law." Absent either, the payment is a prohibited donation.

Q: Why does the AG decline to answer the FEMA question?
A: The opinion explains that under § 7-5-25 the Attorney General issues official opinions "on prospective questions of state law only" and "cannot opine on questions that require interpretations of federal law." It directed the request to FEMA itself.

Background and statutory framework

Section 66 of the Mississippi Constitution provides that "[n]o law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the Legislature, nor by any vote for a sectarian purpose or use." It is a limit on the legislative process: donations or gratuities can be authorized only by a two-thirds vote of each chamber, and not for sectarian purposes.

The opinion applies the rule the Mississippi Supreme Court stated in McAdams v. Perkins, 204 So. 3d 1257, 1265 (Miss. 2016): "'[d]onations by a municipality are unlawful' and violate the Mississippi Constitution. Indeed, a 'municipal board cannot lawfully give away public money.' A donation or gratuity is characterized by an absence of consideration, i.e., 'the transfer of money or other things of value from the owner to another without any consideration.'" The determinative question is therefore whether the city receives consideration in return.

On the federal-funds piece, the opinion declined to opine. Under § 7-5-25 the Attorney General issues opinions on prospective questions of state law only and cannot interpret the authority of a federal agency. The opinion recommends contacting the Office of the State Auditor and FEMA for further guidance.

Citations and references

Constitution:

• Miss. Const. § 66 (donations or gratuities require two-thirds legislative vote; no sectarian purposes)

Statutes:

• Miss. Code Ann. § 7-5-25 (AG opinion authority limited to prospective state-law questions)

Cases:

• McAdams v. Perkins, 204 So. 3d 1257 (Miss. 2016) (municipal donations to private citizens are unlawful absent consideration)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2024/02/T.Ladner-February-20-2024-Municipal-Donations.pdf

Original opinion text

February 20, 2024

The Honorable Tim Ladner
Mississippi House of Representatives
MS House District 93
Poplarville, Mississippi 39470

Re: Municipal Donations

Dear Representative Ladner:

The Office of the Attorney General has received your request for an official opinion.

Questions Presented

1. Can the Federal Emergency Management Agency give monies directly to state, municipal, or county entities?

2. Does the Mississippi Constitution allow a state, municipal, or county government entity to give taxpayer dollars to private individuals?

Brief Response

1. Opinions of this office are limited to questions of state law and not federal law. This office cannot opine on the authority of federal agencies.

2. Unless specifically authorized by law, in the absence of consideration, municipal donations to private citizens violate the Mississippi Constitution.

Applicable Law and Discussion

We understand that your request relates to federal grant funds received by a municipality for flood mitigation to private citizens' residences. As an initial matter, pursuant to Mississippi Code Annotated Section 7-5-25, the Attorney General is authorized to issue official opinions on prospective questions of state law only. This office cannot opine on questions that require interpretations of federal law. Thus, we are unable to respond to your first question regarding the authority of the Federal Emergency Management Agency to give monies to state, municipal, or county entities.

In response to your second question, Section 66 of the Mississippi Constitution provides: "No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the Legislature, nor by any vote for a sectarian purpose or use." The Mississippi Supreme Court has stated that "'[d]onations by a municipality are unlawful' and violate the Mississippi Constitution. Indeed, a 'municipal board cannot lawfully give away public money.' A donation or gratuity is characterized by an absence of consideration, i.e., 'the transfer of money or other things of value from the owner to another without any consideration.'" McAdams v. Perkins, 204 So. 3d 1257, 1265 (Miss. 2016) (internal citations omitted). Therefore, unless the city finds that there is some consideration in exchange for the city's funds, "the payment of such . . . is a donation of public funds to a private individual." Id.

We recommend that you also contact the Office of the State Auditor and the Federal Emergency Management Agency for further guidance.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Beebe Garrard
Beebe Garrard
Special Assistant Attorney General