Overcoming Barriers to Paying for Distributed Infrastructure

Nearly every state in the US has a constitutional prohibition against local governments making “gifts” of public funds for private purposes. However, gift clauses do not operate as a limitation on the ability of public entities to spend public funds on private property distributed water infrastructure. This is because virtually every state has interpreted their gift clauses to allow for exceptions when the governmental funding – whether in the form of rebates or direct spending – is being used for a public purpose or to provide public benefits. For example, Kentucky’s Constitution allows local governments to use public resources for the benefit of any individual, association, corporation, or municipality if such a transaction achieves a public purpose. In Delaware, the Constitution permits local governments to use their credit to aid private individuals or companies if it serves a public purpose even if private parties incidentally benefit from the use of public funds.  

 To explore your state’s gift prohibitions and exceptions, state-specific case law, attorney general opinions or other local agency opinions on the subject you can search WaterNow’s 50-state database below.  Choose the state from the dropdown menu and the relevant information will be provided. You can also select multiple states by clicking the “Search Another State” button. And select the “Email this to Me” option to receive a record of your search.