The Supreme Court of Virginia has held that the three prohibitions contained in Article X, § 10, commonly referred to as the “credit clause,” “stock or obligations clause,” and the “internal improvement clause,” are intended “to remedy the same evil”–”the use of the State’s funds and credit to foster and encourage construction and operation of private enterprises.” In interpreting and applying these three clauses, the Court consistently has held that “‘the moving consideration and motivating cause of a transaction are the chief factors by which to determine if it is prohibited.’” Thus, the Court repeatedly has found that transactions which involve extensions of public credit or expenditures of public funds that benefit private enterprises do not violate Article X, § 10, provided such transactions are motivated by a clearly defined public purpose. “It is the animating purpose of the transaction, and not its form or the extent to which it may benefit the private business involved, that determines its constitutionality.”
2000-040 Op. Va. Att’y Gen.
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