Getting Around “Lending of Credit”

November 12, 2010

Every economic development blog in the state of Washington has, at some point, railed against the “lending of credit” provision in the state’s constitution. Which is actually a pretty good pun, considering the lending of credit provision was put in as a backlash against “greedy” railroad barons. Zinger! Anyway, you know what I’m talking about: the prohibition against direct investment of public funds into private enterprises. Which is a big deal around the country in economic development, where cities and states will throw money at a company to get it to move there. Sometimes that works out, sometimes it’s money that they don’t quite have.

A lot of folks in the state talk about making a run at a constitutional amendment, but I’ve never seen anyone actually make a go of it. Not that there’s a lot of money in the state government to lend to private companies anyway. But there are actually some interesting approaches that get around that prohibition going on these days. Read the rest of this entry »