Okay so far from what I've heard, the government has "temporarily owned" slaves to either then free them, auction them off, or use them during times of war.
But what I really want to know is, if slavery was legal, why didn't Southern State Governments permanently own slaves and use them for public works projects or as civil servants (only certain positions), labor for government corporations, etc? Was there laws preventing them from doing so?
As far as I know, no there were no laws or prohibitions against governments owning slaves. If they existed, it would be on a state by state basis, and up to the laws and constitution of the state in question. But as I said, as far as I know no such prohibitions existed. The reason slaves were never purchased by the government for use as laborers is simple: cost. Slaves could be really,
really expensive in the South. So while there's no reason states couldn't own slaves, it didn't really make much sense for them to. It would be cheaper to just hire labor on the market for whatever project needed doing, be it slave or free. And if there was some particular reason for the state to use slave labor for a given task, it could simple rent them from the owners for as long as they were necessary, or hire them on as day laborers, which was a fairly common practice with slaves. Either is a more efficient use of funds to achieve a given task than purchasing a stock of slaves to use as the state's own laborers. There's also the matter of the state really not doing too much in the way of big construction projects outside of war, especially in the South. That was the bastion of the old anti-whig opposition to internal improvements, and of government action in general (although both of those things can be and often are over exaggerated). So there weren't very many projects where the state would be looking for a large number of laborers and wouldn't simply contract the work out. As for using slaves as civil servants, what position exactly do you think they would be able and trusted to fill? Any position that required reading and writing was out as to my knowledge virtually every slave state prohibited teaching slaves to read and write- it still happened a good deal, but it was theoretically illegal. And even if they could read and write, what position could you fill with a slave? Something that didn't require too much actual authority so it would have to be menial, and ideally not one privy to sensitive information as the South was paranoid of slave rebellions since Turner's Rebellion and the Denmark Vessey's plot in Charleston. And it couldn't be a position that whites would want, since that would be taking away opportunitities for local politicians and grandees to distribute largess and patronage. I don't doubt you could find a few positions that satisfied these requirements, but you still run into the cost issue of before. Slaves are really expensive, so they need to be doing something that, in this case, would be substantially more expensive for the government to hire whites to do. Now, it's possible that there were still some positions that slaves could viably fill, and it might even have been done, but I think you can see at this point all of the things that prevented it ever becoming significant.