Avram, I mentioned local Rav not r Moshe because you want to be sure you get unbiased advice. If you read r Moshe and then read someone else paskening differently, how do you know you didn’t select the cheapest option? Unless you always go by IM.
I see what you are saying about taxes. This is an argument that welfare is not my community charity. Otherwise you could claim you fulfill tzedoka through IRS… I see welfare as nonJewish collective charity. Note that they let you to sometimes subtract your charity from taxes, do they see the kesher. Politically, people definitely see difference between types of spending. Most people are okay going getting unemployment and social security, but many wouldn’t sign up for subsidies for the poor and look down at people who use those without a need. This may be old fashioned and outdated, but I think it still exists.
I agree that the fact this is not coming from a king may changes that SA refusal to use the funds. But it could cut both ways. As stealing from a tzibur is hard to atone for. So, if you inappropriately spent NJ funds, you got to go to all towns and build water fountains there!? It maybe sakanah