Attorney general addresses board member’s tax query

Published 12:00 am Wednesday, April 7, 2010

BATON ROUGE – Funds legally paid by a public entity ceases to be public money, or “tax dollars,” when paid to private recipient in exchange for goods or services, according to an attorney general’s opinion provided to Albert Burl III of the St. John Parish School Board.

The opinion, authored by Assistant Atztorney General Lindsey K. Hunter, was in response to Burl’s inquiry, “When does a tax dollar stop being a tax dollar?”

Neither Burl nor Hunter specified any particular private recipient nor was any reason given for Burl’s inquiry.

“We understand the use of the term ‘tax dollar’ to refer to funds collected pursuant to a tax proposition that has been approved by the voters,” Hunter said. “These funds are public funds and as such become subject to certain restrictions on how they can be spent,” the opinion said.

Hunter referred to a 1977 legal opinion addressing a similar question about whether funds received by a private corporation in exchange for services rendered to a public agency remained subject to the limitations set forth in state statute. That opinion concluded that when public funds are paid pursuant to a contract in exchange for work or services, “no restrictions are placed on the contractor’s use of the funds received for his services.”

“Thus, money legally paid by the state (school boards are political subdivisions of the state) ceases to be public money, or ‘tax dollars,’ when delivered and received by the recipient in exchange for goods or services,” Hunter said.

At the same time, she cautioned “any money collected pursuant to a tax may only be spent in accordance with the tax proposition approved by voters.”