Request By:
Mr. Walter Dunlevy
Executive Director
Northern Kentucky Chamber of Commerce
223 Scott Street
Covington, Kentucky 41011
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in response to your letter stating that your organization is involved in raising emergency funds to keep the Transit Authority of Northern Kentucky in operation. The formula devised to raise the funds is based on the percentages used in the original bond issue to initiate the public transit operation and the population of the communities served by T.A.N.K. Funds are to be provided "unencumbered," apparently on a temporary basis until permanent financing becomes available.
Some of the cities involved have asked if they may legally provide funds to the transit authority in order that its operations may continue. You have referred us to KRS 96A.370.
A transit authority created and existing pursuant to KRS Chapter 96A is a political subdivision and a public body corporate with power to contract and be contracted with, KRS 96A.020. Cities of all classes are limited to those powers specifically granted or implied from some specific grant. See
Juett v. Town of Williamstown, 248 Ky. 235, 58 S.W.2d 411 (1933). Cities may appropriate money to provide for the payment of debts and expenses of the city but there must be a legal obligation or debt against the city in order for public money to be appropriated.
Under Section 179 of the Kentucky Constitution it is provided generally that the General Assembly shall not authorize any city to appropriate money for, or to loan its credit to, any corporation, association or individual, except for certain specific purposes which are not applicable to the situation you have presented. See
Board of Education v. City of Corbin, 301 Ky. 686, 192 S.W.2d 951 (1946) and OAG 68-533, copy enclosed.
However, if the cities involved and the residents thereof receive or will receive the benefits of a public transit system, and if the actions of the cities in providing access to and use of a public transit system satisfy a "public purpose, " then the cities, under their general powers to provide for the public welfare, may enact appropriating ordinances whereby funds are provided to the transit system in return for public transportation services. Thus, there must be benefits to the city and its residents before the city appropriates funds and the benefits must be commensurate to the effort and expenditure put forth by the city. In absence of any benefits to the city and without accomplishing a "public purpose, " the city could not appropriate funds to the transit authority for public transportation services.
In regard to the "public purpose" concept we direct your attention to McQuillin Mun. Corp. (3rd Ed.), Vol. 15, § 39.19, where the following appears:
"All appropriations or expenditures of public money by municipalities and indebtedness created by them, must be for a public and corporate purpose, as distinguished from private purpose, at least, unless the powers of the particular municipality in regard thereto have been enlarged by the legislature, which is itself limited in its power to authorize expenditures or indebtedness for other than public purposes. . . ."
". . . Moreover the public purposes for which cities may incur liabilities are not restricted to those for which precedent can be found, but the test is whether the work is required for the general good of all the inhabitants of the city. But it is not essential that the entire community, or even a considerable portion of it, should directly enjoy or participate in an improvement in order to make it a public one. Otherwise stated, the test of a public purpose should be whether the expenditure confers a direct benefit of reasonably general character to a significant part of the public, as distinguished from a remote or theoretical benefit. . . ."
For a few of the Kentucky cases dealing with public expenditures and the "public purpose" concept, see
Industrial Development Authority v. Eastern Kentucky Regional Planning Commission, Ky., 332 S.W.2d 274 (1960);
Butler v. United Cerebral Palsy of Northern Kentucky, Inc., Ky., 352 S.W.2d 203 (1961); Valla v. Preston Street Road Water District # 1, Ky., 395 S.W.2d 772 (1965);
Dyche v. City of London, Ky., 288 S.W.2d 648 (1956); and
Carman v. Hickman County, 185 Ky. 630, 215 S.W. 408 (1919).
KRS 96A.370(1) states as follows:
"In addition to all other powers and rights granted by KRS Chapter 96A, public bodies are expressly authorized and empowered to enter into joint agreements and multi-municipal compacts with transit authorities, and all other units of government, both federal and state, for the acquisition, maintenance and operation of mass transportation facilities. Any such agreements may provide for proportionate payments by such public bodies for transit purposes based upon any reasonable criteria, including, but not by way of limitation, population and actual mass transit services rendered, or percentage of funding."
The above quoted provision would also appear to authorize a city to appropriate funds to the transit authority whereby the city provides proportionate payments for transit purposes based in part upon actual transit services rendered. In absence of any applicable court decisions you may wish to consider a declaration of rights suit to resolve the matter of the statute's applicability to your specific situation.
In conclusion, it would be our opinion that a city, under its general powers to provide for the public welfare, may appropriate funds to the public transit authority so long as the city and the residents thereof receive benefits in the public interest as a result of such appropriation.