So, we begin this discussion with an AP article highlighting the occasional practice of police departments actually _selling_ seized guns to acquire better capital goods (like, say, squad cars, communications systems, and bullet-proof vests).
http://www.knoxnews.com/news/2010/mar/14/ap-exclusive-pentagon-gun-was-memphis-police/The money quote is this:
John Timoney, who led the Philadelphia and Miami police departments and served as New York's No. 2 police official, said he doesn't believe police departments should be putting more guns into the market.
"I just think it's unseemly for police departments to be selling guns that later turn up," he said, recalling that he had once been offered the chance to sell guns to raise money for the police budget.
Fine. By that logic, we should also ban police departments from selling surplus vehicles. After, cars kill _far_ more people than firearms in the US. For them to facilitate that is simply unseemly.