AGO Opinion 97020
LB 755; Constitutionality of Proposed Appropriation of Funds for the Women In Military Service For America Memorial
DATE: March 7, 1997
SUBJECT: LB 755; Constitutionality of Proposed Appropriation of Funds for the Women In Military Service For America Memorial
REQUESTED BY: Senator Chris Peterson
Nebraska State Legislature
WRITTEN BY: Don Stenberg, Attorney General
Lauren L. Hill, Assistant Attorney General
You have requested an opinion from this office regarding the
constitutionality of LB 755. Following the adoption of AM0533, the
legislation, in pertinent part, would appropriate "$30,000 from the
General Fund for FY1997-98 to the [Nebraska] Department of Veterans'
Affairs, for the Nebraska state donation for the Women In Military
Service For America Memorial."
Pursuant to the enactment of Pub. L. No. 99-610, 100 Stat.
3477, (November 6, 1986), the U.S. Congress authorized the Women in
Military Service For America Memorial Foundation, Inc. to establish
a memorial on federal land in the District of Columbia to honor women
who have served in the Armed Forces of the United States. The federal
law requires that the private foundation establish the memorial with
non-federal funds. Id. Although it is unclear to us from the
current language of LB 755, it appears that the legislation would
authorize a $30,000 grant to the private foundation, which grant is
to be paid by the Nebraska Department of Veterans' Affairs upon
appropriation of funds to that agency from the Legislature.
You have posed three specific questions for our review.
1. Is LB 755 in violation of the Nebraska Constitution,
Article III, §18; Article XIII, §3; or Article XV, §18?
In reviewing each of these three provisions, we note that,
because the Nebraska Constitution "is not a grant but, rather, a
restriction on legislative power, . . . the Legislature is free to act
on any subject not inhibited by the Constitution." State ex rel.
Stenberg v. Douglas Racing Corp., 246 Neb. 901, 905, 524 N.W.2d 61,
64 (1994); State ex rel. Creighton Univ. v. Smith, 217 Neb. 682, 353
N.W.2d 267 (1984). In so acting, however, the court has established
that "[t]he people of the state, by adopting a Constitution, have put
it beyond the power of the [L]egislature to pass laws in violation
thereof." State ex rel. Randall v. Hall, 125 Neb. 236, 243, 249 N.W.
756, 759 (1933); see also State ex rel. Stenberg v. Murphy, 247 Neb.
358, 527 N.W.2d 185 (1995) ("constitutional language controls
legislative language, not the other way around."); State ex rel.
Caldwell v. Peterson, 153 Neb. 402, 45 N.W.2d 122 (1950) (the
Legislature cannot lawfully act beyond limitations of Constitution).
Prohibition Against Local or Special Legislation.
Article III, Section 18 of the Nebraska Constitution
provides that "[t]he Legislature shall not pass local or special laws
in any of the following cases, that is to say: ... Granting to any
corporation, association, or individual any special or exclusive
privileges, immunity, or franchise whatever. ... In all other cases
where a general law can be made applicable, no special law shall be
In construing Article III, § 18, the Nebraska Supreme Court
has determined that "[b]y definition, a legislative act is general,
and not special, if it operates alike on all persons of a class or on
persons who are brought within the relations and circumstances
provided for...." Haman v. Marsh, 237 Neb. 699, 709, 467 N.W.2d 836,
844-45 (1991) (citations omitted); State ex rel. Rogers v. Swanson,
192 Neb. 125, 219 N.W. 2d 726 (1974). Thus, a legislative act can
violate Article III, § 18 as special legislation in one of two ways:
(1) by creating a totally arbitrary and unreasonable method of
classification, or (2) by creating a permanently closed class.
Swanson v. State, 249 Neb. 466, 544 N.W.2d 333 (1996); City of
Scottsbluff v. Tiemann, 185 Neb. 256, 175 N.W.2d 74 (1970); Haman v.
The Article III, §18 limitation is applicable to legislative
appropriation bills as well as to substantive legislative enactments.
See Henry v. Rockey, 246 Neb. 398, 518 N.W.2d 658 (1994). In fact,
the court has expressly determined that although the Legislature is
specifically empowered to make appropriations for the expenses of the
government, it "is not vested with unlimited power to make
appropriations. `The purpose ... of an appropriation bill is to make
provision for lawfully taking money out of the state treasury....'"
Id. at 405, 518 N.W.2d at 663 (quoting Rein v. Johnson, 149 Neb. 67,
78, 30 N.W.2d 548, 556 (1947), cert. denied 335 U.S. 814, 69 S.Ct. 31,
93 L.Ed. 369 (1948). Therefore, the court has concluded: "[t]he
Legislature is not empowered to make appropriations for purely
charitable purposes. ... The purse strings of this state are not
open for the purpose of simply giving money away." Id. (citing Haman
v. Marsh; Weaver v. Koehn, 120 Neb. 114, 231 N.W. 703 (1930)).
Based upon these principles, the court has found that
"[t]he test for statutes challenged under the special-laws
prohibitions is that they must bear a reasonable and substantial
relation to the object sought to be accomplished by the legislation."
Henry, 246 Neb. at 404, 518 N.W.2d at 662.
If LB 755 had proposed to appropriate funds directly to
individual Nebraska women veterans, then the Article III, § 18
prohibition would likely preclude such an appropriation. The
distinction, however, is that the proposed appropriation of taxpayer
funds will be used for construction of a national memorial to past and
future women veterans. The purpose stated within LB 755 for
expenditure of the funds is to memorialize and honor, "while providing
visibility and an educational experience about an important segment
of the nation's history, women's roles in national defense." LB 755,
as amended by AMO533, §1. Additionally, the proposed expenditure
would "be a tribute to Nebraska's [women veterans]." Id.
We find that, because the proposal incorporated within LB
755 is similar to other enactments of the Legislature which set aside
tributary memorials to reflect other individuals and aspects of
Nebraska history, it is not violative of Article III, § 18. See,
e.g., Neb. Rev. Stat. §72-724 - §72-729.01 (1996)(authorizing creation
of the Nebraska Hall of Fame Commission to "bring public attention and
to recognize officially those people who... have achieved prominence
and who were outstanding Nebraskans."); Neb. Rev. Stat. §82-120 - §82-
123 (1994)(authorizing the Nebraska State Historical Society to expend
public funds for the purchase of highway historical markers which
recognize historical events, personalities, and traditions);Neb. Rev.
Stat. §80-201 - §80-205 (1994)(authorizing political subdivisions to
erect statues, monuments, or other memorials commemorating the
services of veterans who served in specified conflicts and wars).
Prohibition Against Lending Credit of the State.
You have also asked that we address whether LB 755 violates
the provision of the state Constitution which mandates that "[t]he
credit of the state shall never be given or loaned in aid of any
individual, association, or corporation...." Neb. Const. art. XIII,
§3. In its Haman decision, the Nebraska Supreme Court interpreted
this provision. At issue in Haman was legislation which appropriated
state tax money to compensate depositors who had suffered losses due
to the failure of industrial loan and investment companies in
The court set out a three-prong test and found that, in
order to establish a law as invalid under Article XIII, § 3, each of
the following elements must exist: (1) The credit of the state (2) is
given or loaned; (3) in aid of any individual, association, or
corporation. 237 Neb. at 719, 467 N.W.2d at 850; Callan v. Balka, 248
Neb. 469, 536 N.W.2d 47 (1995). In addition, the court expressly held
that "[t]he prohibition against the pledge of the state's credit does
not hinge on whether the legislation achieves a `public purpose,' when
the pledge benefits a private individual, association, or
corporation." Id. at 722, 467 N.W.2d at 852. Rather, the key focus
of Article XIII, §3 is whether the state stands as a creditor through
the expenditure of its funds or as a debtor by the extension of
Under the legislation it reviewed, the Haman court found
that "the state would be forever liable for the losses of industrial
company depositors. . . ." Id. at 720, 467 N.W.2d at 850. Moreover,
the "stated purpose of the act [was] redemption of the guarantees of
a private corporation to depositors by obligating present and future
taxes from the state's general fund." Id. Thus, the court found that
the state's credit was "given or loaned." Since state funds would be
provided to private depositors, the court found the third-prong of the
Article XIII, §3 to be implicated, as well, by the legislation.
To determine whether the expenditure of state funds proposed
by LB 755 would violate Article XIII, Sec. 3, we return to the
three-prong test set forth in Haman v. Marsh. The threshold question
which must be analyzed is whether the appropriation proposed in LB 755
involves the "credit of the state." In Haman, the court stated that
"[t]here is a distinction between the loaning of state funds and the
loaning of the state's credit. When a state loans funds, it is in the
position of creditor, whereas the state is in the position of debtor
upon a loan of credit." Id. at 719-720, 467 N.W.2d at 850.
The $30,000 grant proposed by LB 755 is a one-time
expenditure of state funds. Clearly, the appropriation authorized by
LB 755 does not place the State of Nebraska in the position of a
debtor or surety of another's debt. Therefore, we conclude that the
legislative proposal does not violate Article XIII, Section 3 of the
state Constitution. Our conclusion is that the use of state funds as
a donation to a private foundation for the purpose of constructing a
memorial to women veterans would not violate the constitutional
prohibition against lending the credit of the state; however, the LB
755 proposal might be challenged as an expenditure of state funds for
private purposes. (See our discussion, below, in response to your
Limitation on Governmental Powers.
The additional provision of the Constitution which you have
asked us to assess provides:
The state or any local government may exercise any of its
powers or perform any of its functions, including financing
the same, jointly or in cooperation with any other
governmental entity or entities, either within or without
the state, except as the Legislature shall provide
otherwise by law.
Neb. Const. art. XV, §18. This provision has no application to LB
755. Under the current version of that bill, a state agency, at the
direction of the Legislature, would be making a $30,000 grant to a
private memorial foundation as a contribution to the construction of
the Women In Military Service For America Memorial. Although
construction of the memorial is expressly authorized by federal law,
a private, incorporated foundation -- and not the federal government -
- would be the recipient of the grant funds. Therefore, Section XV,
§18 is not implicated by the proposal set forth in LB 755.
2. Would these moneys [which, for purposes of analysis, we
assume to be the proposed $30,000 appropriation] be
considered public moneys being used to encourage private
Article XIII, § 3 of the Nebraska Constitution is the
provision which is intended to prevent the State from extending its
credit to private enterprises. United Community Services v. The Omaha
National Bank, 162 Neb. 786, 77 N.W.2d 576 (1956). "Closely related
to the prohibition against the giving or lending of the state's credit
. . . is the principle of law that public funds cannot be expended for
private purposes." Haman, 237 Neb. at 721-722, 467 N.W.2d at 851.
This longstanding constitutional principle involves the
expenditure of state funds in contrast to the extension of credit.
While the Constitution contains no express provision against expending
funds for essentially private purposes, the Nebraska Supreme Court has
stated that this principle "is grounded on the `fundamental concepts
of our constitutional system.'" State ex rel. Douglas v. Thone, 204
Neb. 836, 842, 286 N.W.2d 249 (1979) (quoting State ex rel. Beck v.
City of York, 164 Neb. 223, 82 N.W.2d 269 (1957)); Oxnard Beet Sugar
Co. v. State, 73 Neb. 57, r'hrg denied, 73 Neb. 66 (1905).
There is no hard and fast rule for determining whether a
proposed expenditure of public funds is for a public purpose. In
Platte Valley Public Power & Irrigation District v. County of Lincoln,
144 Neb. 584, 14 N.W.2d 202 (1944), the Nebraska Supreme Court
discussed the parameters of a "public purpose." Generally, the court
noted that a "public purpose" is one which has for its objective the
promotion of the public health, safety, morals, security, prosperity,
contentment, and the general welfare of citizens. Later, in United
Community Services v. The Omaha National Bank, 162 Neb. 786, 800, 77
N.W.2d 576 (1956), the court explained that
[i]t is the province of the [L]egislature to determine
matters of policy. In appropriating the public funds, if
there is reason for doubt or argument as to whether the
purpose for which the appropriation is made is a public or
private purpose, and reasonable men might differ in regard
to it, it is generally held that the matter is for the
[L]egislature [to determine].... [T]he vital point in all
such appropriations is whether the purpose is public; and
that, if it is, it does not matter whether the agency
through which it is dispensed is public or not; that the
appropriation is not made for the agency, but for the
object which it serves; the test is in the end, not in the
means [utilized to achieve the Unicameral's purpose].
Id. at 800-801, 77 N.W.2d at 587 (citations omitted).
In State ex rel. Douglas v. Thone, 204 Neb. 836, 286 N.W.2d
249 (1979), the court also held that there is no requirement that a
legislative act calling for the expenditure of public funds need
contain an express declaration of public purpose. Thus, our court has
evidenced a willingness to engage in a somewhat flexible
interpretation of the public purpose doctrine in relation to the
expenditure of state monies. For example, with regard to housing,
the court has found constitutional the act creating the Housing
Authority of the City of Omaha (Lennox v. Housing Authority of City
of Omaha, 137 Neb. 582, 290 N.W. 451 (1940)), and has found as
constitutional the act creating the Nebraska Mortgage Finance Fund
(State ex rel. Douglas v. Nebraska Mortgage Finance Fund, 204 Neb.
445, 283 N.W.2d 12 (1979)).
The court, however, has also held that laws which authorize
the expenditure of state funds to encourage private enterprises do not
serve a public interest. A statute offering compensation or a bounty
to private companies to encourage the manufacture of sugar and chicory
was found unconstitutional in Oxnard Beet Sugar Co. v. State, 73 Neb.
57 (1905). Further, in Chase v. County of Douglas, 195 Neb. 838, 241
N.W.2d 334 (1976), the court found that the provisions of the statute
authorizing expenditures for the purpose of acquiring real estate or
options on real estate for industrial development were in derogation
of Article XIII, § 3.
Clearly, the expenditure of funds authorized in LB 755 would
be made to a private foundation. It is asserted, however, that the
purpose of the expenditure would be to specially recognize the State
of Nebraska's financial contribution to the memorial honoring the
Nation's women veterans. Such an expenditure is similar to
legislation enacted in 1933 which authorized the collection of
voluntary donations and subscriptions and the levy of state taxes for
the purpose of placing, on behalf of the State of Nebraska, memorial
statues of William Jennings Bryan and J. Sterling Morton in Statuary
Hall in the U.S. Capitol in Washington, D.C. See 1933 Neb. Laws,
c.97, §1, §3, p. 405-406. We cannot clearly conclude that such
expenditures have no valid "public purpose." Thus, if the Legislature
determines, as a matter of policy, that such an expenditure is
appropriate, and demonstrates the basis for its decision during debate
on the measure, then it would likely survive scrutiny by the Nebraska
Supreme Court under Article XIII, § 3.
3. If LB 755 is in violation of the Nebraska Constitution,
is there any means in which the Nebraska Legislature could
appropriate funding to ensure that Nebraska women veterans
would receive the recognition that they deserve?
Due to our responses to the preceding questions, it is
unnecessary to address this question.
Lauren L. Hill
Assistant Attorney General
cc: Patrick J. O'Donnell
Clerk of the Legislature