Use of Public Funds

Public entities often make investments and engage in projects that benefit the community, for example, by creating affordable housing or supporting residents in need. When doing so, however, public entities must be careful that their investments do not violate constitutional provisions that prohibit the gift of public funds and lending of credit to private parties. These restrictions apply to virtually all types of Washington public entities, including the state, counties, cities, school districts, municipal corporations, and special purpose districts.

We help our public clients understand where the constitutional line lies between proper and improper use of public funds. This includes advising clients on the appropriate steps and procedures that must be carefully followed to avoid constitutional violations and increase the likelihood of being upheld if there is a legal challenge. Often, these procedures are focused on documenting the public purpose and public benefits to be gained by the investment or transaction, as well as documenting that any incidental private benefits are provided without donative intent.

Our work has included drafting legislation, evaluating potential policy measures, advising on the constitutionality of options involving gifts or loans, and litigating the constitutional issues all the way up to the Washington Supreme Court. We also give presentations to public entities on complying with the gift of public funds and the lending of credit requirements.

Our constitutional litigation and appellate experience has resulted in favorable results for our clients, including successfully representing the Port of Benton and BNSF Railway Company in a gift of public funds case before the Washington Supreme Court. Pacifica attorneys also advise policy and political groups on crafting ballot measures that comply with these constitutional restrictions.

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