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<br />145 University Ave. West www.lmc.org 10/15/2018 <br />Saint Paul, MN 55103-2044 (651) 281-1200 or (800) 925-1122 © 2018 All Rights Reserved <br />This material is provided as general information and is not a substitute for legal advice. Consult your attorney for advice concerning specific situations. <br /> <br /> <br />HANDBOOK FOR MINNESOTA CITIES <br />Chapter 22 <br />Expenditures, Purchasing, and <br />Contracts <br /> <br />Learn about state laws regulating disbursement of public funds, such as competitive bidding <br />requirements, best value and emergency contracting, construction contracts, contracting with other <br />governmental entities, and purchasing consultant services. Get guidance on the city official <br />prohibition against having a personal financial interest in city contracts. <br />RELEVANT LINKS: I. Expenditures <br />LMC information memo, <br />Public Purpose <br />Expenditures. <br />Cities may spend money only for authorized purposes. Since <br />councilmembers may have personal liability for the unauthorized <br />disbursement of city funds, they should consult their city attorney <br />whenever they doubt the legality of the expenditure. <br /> A. Legal expenditures <br /> Any city expenditure must satisfy the following to be considered lawful: <br /> • Public purpose. There must be a public purpose for the expenditure. <br />• Authority. There must be specific or implied authority for the <br />expenditure in state statute or the city’s charter. <br />• Procedure. The council must properly approve the expenditure. <br /> 1. Public purpose <br />Minn. Const. art. X, § 1. <br />Visina v. Freeman, 252 <br />Minn. 177, 89 N.W.2d 635 <br />(1958). <br />The Minnesota Constitution requires that taxes further a public purpose. <br />However, the meaning of “public purpose” constantly evolves through <br />court decisions. The Minnesota Supreme Court has followed a rather <br />liberal approach, generally concluding that a “public purpose” exists when <br />an activity meets all the following standards: <br /> • Benefits the community as a body. <br />• Is directly related to functions of government. <br />• Does not have as its primary objective the benefit of a private interest. <br />LMC information memo, <br />Public Purpose <br />Expenditures. <br />The League information memo, Public Purpose Expenditures, provides a <br />more detailed discussion of lawful expenditures, including specific <br />references to common lawful public purpose expenditures.