Ask MRSC - Finance & Budgeting

In general, either a resolution or motion should be sufficient for a city council to accept grant funds—with some caveats discussed below.

There is typically a contract associated with a grant that the city council would need to approve. RCW 35A.11.040 (applicable to code cities) generally allows city councils to accept grants. This statute specifies no particular acceptance method, and presumably city councils can accept grants by motion or resolution.

But also keep in mind that individual grants sometimes require acceptance through a particular method like a formal council resolution. In those instances, the city would need to follow the grant’s specific acceptance requirements to receive its funds. Likewise, sometimes a city’s code will specify how the council approves contracts or accepts donations. If there is a certain procedure set forth in code or local policy, that procedure should be followed.

The city attorney can provide legal advice regarding how the city may accept any specific grant.

MRSC has a webpage called Credit Card Use Policies which covers the statutory authority, types of cards (merchant, fuel, bank, etc.), key components of a policy, authorized expenses, and more. That page also includes sample policies from cities, counties, and special purpose districts and recommended resources from the State Auditor’s Office and Government Finance Officers Association (GFOA).

Questions about the legality and wisdom of specific proposed port business investments (and how to manage them) need to be directed to the port’s legal counsel for a definitive opinion and advice. However, RCW 53.08.245  generally allows ports to engage in economic development activities as part of their overall operations. That statute provides that engaging in “economic development programs” is within a port’s “public purpose.” See RCW 53.08.245(1). That section, RCW 53.08.245(2)(a), goes on to describe economic development programs to include:

Occupational job training and placement, job advancement and job retention, preapprenticeship training, or occupational education programs associated with port tenants, customers, and local economic development related to port tenants or port-related economic activities that are sponsored by a port and operated by a nonprofit, private, or public entity.

The court in Lane v. Port of Seattle (2023) analyzed the scope of RCW 53.08.245 and interpreted the statute broadly in favor of a port’s ability to support economic development. The plaintiffs in that case questioned whether a port’s purchase of a rail corridor was within a port’s authorized economic development activities. In holding that the purchase was within the port’s authority, the court stated (with emphasis added):

Plaintiffs argue that a port's involvement with economic development is limited to programs for job training and placement under RCW 53.08.245(2). This argument has no merit […] the supposed limiting language is simply permissive; it states that economic development programs “may include” job training and placement. The intent of the statute is not to limit a port's activities to job training and placement but rather to resolve any doubt that the term “economic development” is broad enough to include job training and placement.” 

The Lane decision’s broad interpretation of a port’s economic development activities in RCW 53.08.245 could be argued to support a broader range of port business investments designed to increase port related economic development. 

In addition to the above statutory provisions, port investments need to avoid the state constitutional restriction on  gifts of public funds, which prohibits municipalities from giving their funds away except to support the poor or infirm or to accomplish fundamental government purposes. So, the port should receive adequate legal value in exchange for its investments to comply with this gifting restriction. For a gift of public funds analysis relevant to a port district, see Peterson v. Port of Benton (2020).  

Procedurally, RCW 53.08.245(2)(b) requires ports to enact resolutions declaring how their proposed economic development activities will “provide a substantial public benefit consistent with the port’s economic development goals.” Enacting this required resolution can help the port identify proper purposes and return value for its proposed investments that are consistent with the above statutory and constitutional requirements.

Generally speaking, there is no prohibition against cities or towns accepting donations from religious organizations. MRSC has referred to RCW 35.21.100, which states:

Every city and town by ordinance may accept any money or property donated, devised, or bequeathed to it and carry out the terms of the donation, devise, or bequest, if within the powers granted by law. If no terms or conditions are attached to the donation, devise, or bequest, the city or town may expend or use it for any municipal purpose.

Importantly, the terms of a donation must be for allowable municipal expenditures—so if a religious organization seeks to place terms or conditions on the donation that would result in an unconstitutional Establishment Clause violation, for example, the city or town should either reject the terms and conditions of the donation or the donation itself, if the religious organization does not agree to remove the conditions. Any donation and associated terms and conditions should be discussed with the city attorney.

The statute also requires that the acceptance of donations be done by ordinance. MRSC recommends local governments establish a donation policy as opposed to passing an ordinance for each donation.

For more information, see this MRSC blog article Donations and Local Governments: The Basics of Giving and Receiving (2022). And here are a few examples of donation/gift policies:

• Bellevue Donation Policy & Procedures (2019) – Broader
• Mercer Island Parks & Rec Gift Acceptance Policy (2023) – Restricted, park focused
• Newcastle Donation and Memorial Policy (2014) – Restricted, park focused

Yes, RCW 82.14.450 provides for a one-tenth of 1% public safety sales tax option for cities or towns. This option is also available to the county with voter approval for up to three-tenths of 1% sales tax. One-third of all money received must be used for “criminal justice purposes, fire protection purposes, or both.” If it is approved countywide then funds are shared with the cities 60/40. If a city adopts it on its own, then it is shared with the county 85/15.

An additional criminal justice sales tax option that is potentially available is RCW 82.14.340. This one-tenth of 1% sales tax option is available only to counties but requires that the counties share with cities within the county using a formula defined within the statute. This sales tax option does not require a vote.

The city, town, or county would have to conclude that the youth sports tournament is a draw for “tourism,” “tourism promotion,” or a “tourism-related facility” as defined in RCW 67.28.080. The challenge with youth sports leagues is that they are typically local and do not draw overnight guests or folks from more than 50 miles away (or out of the county). However, if the league hosts regional competitions that do draw non-local players, those regional events (if not the whole league) might qualify for lodging tax funds.

For more detailed information, see our Lodging Tax (Hotel-Motel Tax) page and our blog post, Can We Spend Lodging Tax Funds on That? MRSC recommends consulting with your city or county attorney for advice on this specific use of lodging tax funds.

The city has discretion as to who is authorized to sign checks. RCW 35A.12.170 states:

All demands against a code city shall be presented and audited in accordance with such regulations as may be prescribed by charter or ordinance; and upon the allowance of a demand, the clerk shall draw a warrant upon the treasurer for it, which warrant shall be countersigned by the mayor, or such person as he or she may designate, and shall specify the fund from which it is to be paid; or, payment may be made by a bank check when authorized by the legislative body of the code city under authority granted by RCW 35A.40.020, which check shall bear the signatures of the officers designated by the legislative body as required signatories of checks of such city, and shall specify the fund from which it is to be paid. [emphasis added]

ARPA funds either need to be spent or obligated by December 31, 2024. Obligated funds must be spent by December 31, 2026. Funds that have merely been allocated must be spent by December 31, 2024. Funds that have not been spent or obligated by December 31, 2024, would need to be returned to the Department of Treasury. If the city has any allocated funds that are in jeopardy of not being spent by December 31, 2024, the city should be sure to obligate them by December 31, 2024.

This 2024 blog post, New Guidance for Obligating Remaining ARPA Funds, includes additional helpful information.

WAC 296-126-040 requires a pay stub to be furnished on payday, and subsection (3) says (with emphasis added):

The pay statement may be furnished or made available electronically provided each employee has access to receive and copy it on the payday. If an employee cannot receive an electronic pay statement at work or at home on the established payday, the employer must provide a written pay statement to the employee on the payday.

We recommend that agencies check any collective bargaining agreements that may include provisions affecting this issue, as well.

The only comprehensive anti-fraud policies we found are from other states:

• Fernley, NV: Fraud Policy (2017)
• Gainesville, FL: Fraud Risk Management Policy (2021)
• Lakeland, TN: Anti-Fraud Policy (2008)
• Phoenix, AZ: Fraud Prevention and Reporting Policy (2015)
• St. Helena, CA: Fraud Prevention and Detection Policy (2018)

Below are some Washington State resources:

• Washington State Auditor’s Office (SAO): Fraud Program – Including these pages, Preventing Fraud and #BeCyberSmart
• Washington Technology Solutions (WaTech): Cybersecurity Resources – See also Training and Events

There are also anti-fraud policies found within policies covering specific activities/uses (e.g., personnel policies, credit card use policies, cybersecurity policies, etc.). Below are some resources related to these policies.

MRSC resources:

• Being Cyber Aware in the Age of COVID-19 (2020)
• Big Cybersecurity for Small Jurisdictions (2017)
• Credit Card Use Policies
• Cybercrime: A Hard Lesson (2021)
• Cyber Plans: What to Do If Your System Is Attacked (2019)
• Cyber Response and Insurance (2019)
• Cybersecurity Resources for Local Governments
• Electronic Vendor Fraud: How to Protect your Agency from the Latest Cybercrimes (2019)
• MRSC and WA State Auditor: Information Security Assessment Tool
• Internal Controls for Utility Finances

The below personnel policy manuals from MRSC’s Personnel Policy Manuals page include references to fraud:

• East Wenatchee Personnel Manual and Procedures (2022) – See 102.4.8, 200.6, and 203.1, which reference various types of fraud.
• Ellensburg Personnel Policies Manual (2024) – See section regarding disciplinary action for fraud on page 22. Section 10.1 also references fraud.
• Issaquah Personnel Policies (2025) – Page 18 of the PDF notes that “Procedures for submitting fraud, waste, abuse, and whistleblower complaints are generally accessible on the agency Office of the Inspector General Hotline or Whistleblower internet sites.”
• Kitsap County Personnel Manual – References fraud on pages 19 and 62.
• Port Orchard Personnel Policies Manual (2026) – See 3.1, which references fraud.
• Sequim Personnel Policy Manual (2022) – Page 48 references fraud protection.
• Sunnyside Personnel Policies (2022) – Fraud is referenced in 1.14. The GAO Fraud Hotline and Dept. of Veterans Affairs Fraud/Waste/Abuse Hotline are also included.

And below are a few related articles:

• International City Managers Association (ICMA)
  • Fraud and Embezzlement in Local Government (2022)
  • It Can Happen Here: No Local Government Is Safe from Fraud (2023)
• Workable: Anti-fraud and anti-corruption policy template

RCW 82.46.037 discusses the requirements for using REET 2 for maintenance. First, the city would be limited to the greater of $100,000 or 25% of available REET 2 funds not to exceed $1,000,000. REET 2 can be used for:

• Maintenance of REET 2 projects
• Planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, improvement, or maintenance of REET 1 capital projects that are not also included in the definition of REET 2 capital projects

In order to use REET 2 for these purposes, the city would need to prepare a written report showing the city will have sufficient funding to pay for all of its capital projects. The report must include:

• Information necessary to show compliance with the requirement to have sufficient funding for all capital projects
• How REET 2 revenues were used by the city during the prior two-year period
• How REET 2 revenues were used by the city during the succeeding two-year period
• The percentage of REET 2 funds used for capital project compared to all other sources of capital project funding.

This report must be prepared and adopted as part of the city’s public budget process.

“Maintenance” is defined in RCW 82.46.037 as:

[T]he use of funds for labor and materials that will preserve, prevent the decline of, or extend the useful life of a capital project. "Maintenance" does not include labor or material costs for routine operations of a capital project.

We could not find language in the statute which says REET 2 used for REET 1 maintenance can only be for capital projects that were paid for with REET 1 funds. The statute merely says, “maintenance of capital projects as defined in RCW 82.46.010(6)(b).”

We recommend conferring with your city attorney for their legal opinion on this matter.

The town needs to consider both the constitutional prohibition against gifts of public funds and the requirement that utility funds only be used for utility purposes. As we note on our Gift of Public Funds page and related blog posts, there are two tests for determining whether an expenditure is an unconstitutional gift of public funds. First, is the expenditure for a fundamental purpose of government? If not, the court looks to see whether the government entity had a “donative intent,” and whether it received an adequate return for the transfer.

The first test is whether the use of town resources is for a fundamental purpose of government. Regardless of the nature of the entity that owns the pool (school district, YMCA, or other non-profit, park district), providing water for a pool that is not owned by the town may not be a fundamental purpose of the town’s government. Looking at the second test, the town would have to show that it did not intend to make a “gift,” and that it considered some kind of agreement to be “adequate return” for the cost of providing water for this purpose. If the town has a contract with the owner of the pool where the pool is providing a service that the town could provide but chooses not to, such as recreation or water safety, the town could provide water in lieu of other payment for those services. An additional consideration is the requirement in RCW 43.09.210(3) that:

All service rendered by, or property transferred from, one department, public improvement, undertaking, institution, or public service industry to another, shall be paid for at its true and full value by the department, public improvement, undertaking, institution, or public service industry receiving the same, and no department, public improvement, undertaking, institution, or public service industry shall benefit in any financial manner whatever by an appropriation or fund made for the support of another.

Washington case law has interpreted this statute to mean that a city or town cannot use utility funds (which are provided by the ratepayers) to benefit a general fund (tax-supported) function. To avoid violating this requirement the town, in addition to determining that it was not a gift of public funds, would separately have to determine that the expenditure directly benefited the water utility, and not just the public as a whole. So, even if the town does have a contract with the pool for services, the town’s general fund would probably be required to pay the water utility for the water. Providing a more specific opinion about this particular request is outside the scope of the general consulting services MRSC provides. We defer to your town attorney to advise you regarding this request.

There are two ways in which funds can be created. They can either be created through a separate ordinance, or they can be created as part of a budget ordinance or budget amendment ordinance. Below are examples that you might find helpful:

• Bainbridge Island Ordinance No. 2015-05 (2015) – Provides for the establishment of a new “Tree Fund” creating a new code chapter
• Bothell Ordinance No. 2013 (2009) – Establishment of a 1% for public art program
• Lakewood Ordinance No.763 (2021) – Establishes ARPA fund
• Maple Valley Ordinance No. O-21-728 (2021) – Establishes a special revenue fund “ARPA Fund” in the city’s budget

The Lakewood and Maple Valley examples are likely the best examples for establishing a fund for grant monies because they are related to use of American Rescue Plan Act (ARPA) funds which is similar to a grant.

Below are several examples of programs in Washington cities. These examples are a mix of grant and loan programs, but all appear to be funded with non-general fund monies, such as Community Development Block Grant (CDBG) funds.

• Chehalis Community Renaissance Team (CCRT) Façade Program – Grants provide a 50 percent match, up to $2,500 per business or property, for approved improvement costs; administered by CCRT, which is primarily a privately funded organization.
• Business Improvement Districts: Edmonds Downtown BID – Business Improvement Districts (BIDs) are special assessment areas established under chapter 35.87A RCW. This was set up by Edmonds City Council. Edmonds BID has nearly 350 members under this special assessment area. Participating businesses assess themselves in order to fund programs and activities such as beautification, marketing, security, parking, or administration. Their website provides information on how often the group meets, what the process is to join, how decisions to spend funds are spent, etc.
• Port Angeles Façade and Sign Improvement Program – Up to $10,000 for façade improvement and/or $1K for signage improvements, using CDBG funds.
• Renton Façade Improvement Program – Loan program with a minimum loan of $10,000 using CDBG funds.
• Selah Downtown Beautification Grant Program Application (2021) – Administered by the SDA, a 501(c)(3) non-profit organization. Here are the eligibility requirements.
• Tacoma Building Facade Assistance Program – Loan program for business improvements including façades.
• Downtown Association of Yakima (DAY) Façade Improvement Grant Program – Grant of up to $10K (with a 50% match required) for both business owners and commercial building owners; administered by the DAY.

Here are some additional resources that may be helpful:

• Main Street Program – Washington’s Main Street Program (MSP) is a state iteration of a nationwide program to revitalize downtown districts. Some examples of cities that participate are Kent, Bellingham, Cle Elum, Puyallup, and Yakima. This program offers funding, networking opportunities, training, and other resources to cities who have an independent 501(c)(3) or 501(c)(6) nonprofit organization dedicated solely to downtown revitalization. Nationally, there are a vast number of cities that participate in this program.
• USDA Information Center: Downtown Revitalization – Links to a variety of case studies, articles and guides, funding sources, relevant organizations, etc. Some of the topics covered on this site include Business Improvement Districts, community planning, downtown revitalization, and regional rural development.

MRSC staff have noted that an obstacle to building façade improvement loan programs from cities is the state constitutional prohibition on the loaning or gifting of public funds in Article VIII, Section 7 of the State Constitution. Programs that have been successfully implemented appear to have been funded by passing through money from other sources such as the CDBG program or the Economic Development Administration.

For more information, here are links to MRSC’s Gift of Public Funds page and Economic Development series.

For general information on regulation of special events, including parades, see our Special Events Permits webpage. MRSC also recently published a blog article: A How-To Guide to Sponsoring Summer Celebrations. And here are a couple of examples of city parade regulations:

• Bainbridge Island Municipal Code Ch. 12.06 – Parades and Assemblies. Covers traditional parades, fun runs, roadway foot races, fundraising walks or runs, auctions, bikeathons, parades, carnivals, shows or exhibitions, filming/movie events, circuses, block parties, and street fairs.
• Coupeville Municipal Code Ch. 5.34 – Parades, Athletic Events and Other Special Events