## Facts

- The Utah Legislature enacted the Utah Technology and Innovation Act creating Utah Technology Finance Corporation (UTFC), a statutorily created public nonprofit corporation intended to support small high-technology businesses.
- The Act authorized UTFC to deploy public funds through loans and investments, including taking equity interests connected to private enterprises.
- UTFC used approximately $1 million in public funds to acquire a limited partnership interest in a private venture fund that combined public and private money and invested in stock of technology companies.
- The Utah Attorney General and State Treasurer challenged the Act as unconstitutional under Utah constitutional provisions barring (1) lending the State’s credit and (2) subscribing to stock or bonds in aid of private corporate enterprise.
- The challengers also contended that allowing UTFC to hire private counsel infringed the Attorney General’s constitutional role as the State’s chief legal officer.
- The district court, on cross-motions for summary judgment, upheld the Act against the credit challenge, permitted UTFC to employ private counsel, and generally treated the Act as constitutional.
- The Attorney General appealed; UTFC cross-appealed on related issues.

## Issues

1. Whether statutory authorization to use public funds to support private technology businesses violates the Utah Constitution’s prohibition on the State “lending its credit” in aid of private enterprise.
2. Whether statutory authorization for UTFC to acquire equity interests that function as stock subscriptions violates the Utah Constitution’s prohibition on the State “subscribing to stock” in aid of private corporate enterprise.
3. Whether permitting UTFC to retain private legal counsel unconstitutionally interferes with the Attorney General’s constitutional duties.

## Decision

- The Utah Supreme Court affirmed in part and reversed in part.
- It held the Act did not violate the constitutional prohibition on lending the State’s credit because the program involved lending or investing state funds, not guaranteeing private debt.
- It held unconstitutional the statutory authority permitting UTFC to subscribe to stock or hold stock-like equity interests in aid of private enterprises.
- It held the invalid stock-subscription authorization was severable, leaving the remainder of the Act operative.
- It upheld UTFC’s authority to employ private legal counsel, given UTFC’s separate statutory identity and autonomy.

## Legal Principles

- A constitutional ban on “lending the State’s credit” targets state suretyship or guarantees of private obligations; it does not bar loans or investments of public funds made for a public purpose when the State does not pledge its credit.
- Where a constitution expressly prohibits the State from “subscribing to stock” in aid of private enterprise, legislation authorizing a public entity to acquire equity interests equivalent to stock subscriptions is invalid even if the program serves a public purpose.
- An автономous, legislatively created public nonprofit corporation may be authorized to retain private counsel without violating the Attorney General’s constitutional status, so long as the arrangement does not eliminate the Attorney General’s essential functions.
- Unconstitutional provisions may be severed if the remaining statutory scheme can function consistently with legislative intent.

## Conclusion

The Utah Supreme Court sustained the State’s use of public funds for technology-development lending and investment without state guarantees, but struck down as unconstitutional and severable the Act’s authorization for UTFC to take equity interests amounting to stock subscriptions in aid of private corporations, while also permitting UTFC to hire private counsel.


Utah Tech. Fin. Corp. v. Wilkinson, 723 P.2d 406 (Utah 1986)