What are their actual goals in saying for-profit companies can't use it? Not wanting competition?
It's not competition... well, sort of. It's something being developed by a local government and they do not want the taxpayers money to be developing something that someone will take and resell back to the same constituents by simply using some advertising. At least, that's my current understanding (and as a taxpayer, I sort of agree).
Dual-license GPL seems sort of like the way to go, or potentially even the Affero/GPL approach?
Their idea is that this may be something other agencies in other states might be able to reuse, and they don't want to put restrictions on that, but are concerned that someone will take the code and 'sell' it, when it's been taxpayer $ funding it.
Or you could, you know, just not license it to commercial entities.
"Can I license software using CC licenses? We do not recommend it. Creative Commons licenses should not be used for software."