Skip to main content

Public Purpose as a Justification for Economic Incentives

By June 20, 2012September 30th, 2019Community and Charitable Activities

With all of the attention focused on economic incentives these days, it is good to keep in mind that there is no single statute that controls the definition of public purpose in Missouri. The courts have consistently held that as long as governmental action is designed to fulfill a public purpose, the wisdom of the governmental action is not subject to review.

The determination of whether a benefit is for a public purpose is a legislative decision, which will not be overturned in the absence of bad faith, fraud or abuse of authority.  Economic development has been recognized by Missouri Courts as a valid public purpose. What is often overlooked by developers are the anti-gift clauses in the constitution, e.g., the Missouri Constitution generally prohibits a political subdivision from assisting any private individual or entity. That some individual or private entity might profit from an economic incentive does not divest an act of its public purpose. Incidental private benefits will not deprive the purpose of its public character if the primary object is public. The Constitution does not require the courts to determine whether the private benefit is greater than the public benefit. Obviously, where the local government receives consideration for the expenditure, there is no “grant” of public funds.