The Gift of Public Funds Bogeyman

Abstract: Washington’s “gift of public funds” doctrine is frequently misunderstood in ways that impede innovative ideas aimed at remedying some of our state’s most intractable problems. This doctrine arises from article VIII, sections 5 and 7 of the Washington Constitution, which prohibit state and local governments from gifting assets or loaning credit. While the Washington State Supreme Court historically applied these provisions in restrictive and confusing ways, the Court’s modern jurisprudence recognizes that the doctrine is inapplicable to funding expended for any of the many “fundamental purposes” of government. Even where a government program does not fall under this broad category, governments need only demonstrate, subject to very deferential review, that there was some consideration for their expenditure and no donative intent. The provisions also include broad exceptions for funding to support the “poor and infirm.” A review of the modern doctrine, with all its exceptions and exclusions, shows there is almost nothing that a competent government agency in Washington would want to do that would violate the constitutional prohibition on gifting public funds if thoughtfully implemented. A proper understanding of the gift of public funds doctrine will permit public officials to make better assessments of legal risk for government programs.