(1) Regulation of borrowing and debt. The General Assembly shall enact general laws relating to the borrowing of money secured by a pledge of the faith and credit and the contracting of other debts by counties, cities and towns, special districts, and other units, authorities, and agencies of local government.
(2) Authorized purposes; two-thirds limitation. The General Assembly shall have no power to authorize any county, city or town, special district, or other unit of local government to contract debts secured by a pledge of its faith and credit unless approved by a majority of the qualified voters of the unit who vote thereon, except for the following purposes:
(a) to fund or refund a valid existing debt;
(b) to supply an unforeseen deficiency in the revenue;
(c) to borrow in anticipation of the collection of taxes due and payable within the current fiscal year to an amount not exceeding 50 per cent of such taxes;
(d) to suppress riots or insurrections;
(e) to meet emergencies immediately threatening the public health or safety, as conclusively determined in writing by the Governor;
(f) for purposes authorized by general laws uniformly applicable throughout the State, to the extent of two-thirds of the amount by which the unit's outstanding indebtedness shall have been reduced during the next preceding fiscal year.
(3) Gift or loan of credit regulated. No county, city or town, special district, or other unit of local government shall give or lend its credit in aid of any person, association, or corporation, except for public purposes as authorized by general law, and unless approved by a majority of the qualified voters of the unit who vote thereon.
(4) Certain debts barred. No county, city or town, or other unit of local government shall assume or pay any debt or the interest thereon contracted directly or indirectly in aid or support of rebellion or insurrection against the United States.
(5) Definitions. A debt is incurred within the meaning of this Section when a county, city or town, special district, or other unit, authority, or agency of local government borrows money. A pledge of faith and credit within the meaning of this Section is a pledge of the taxing power. A loan of credit within the meaning of this Section occurs when a county, city or town, special district, or other unit, authority, or agency of local government exchanges its obligations with or in any way guarantees the debts of an individual, association, or private corporation.
(6) Outstanding debt. Except as provided in subsection (4), nothing in this Section shall be construed to invalidate or impair the obligation of any bond, note, or other evidence of indebtedness outstanding or authorized for issue as of July 1, 1973.
(1969, c. 1200, s. 1.)
Cross References. - As to limitations upon the increase of State debt, see N.C. Const., Art. V, § 3.
History Note. - The provisions of subsection (2) of this section are similar to those of Art. V, § 4, Const. 1868, as amended in 1924 and 1936. The provisions of subsection (3) are similar to those of Art. VII, § 6, Const. 1868, as amended in 1948 and 1962. The provisions of subsection (4) are similar to those of Art. VII, § 9, Const. 1868, as amended in 1936 and 1962.
Legal Periodicals. - For article on "Necessary Expenses," see 18 N.C.L. Rev. 93 (1940).
For note on "necessary expenses" of municipal corporations under this section, see 30 N.C.L. Rev. 313 (1952).
For note, " 'Necessary Expense' Limitation - Four Recent Developments," see 43 N.C.L. Rev. 372 (1965).
For comment on Vance County v. Royster, 271 N.C. 53, 155 S.E.2d 790 (1967), cited in the note below, see 46 N.C.L. Rev. 188 (1967).
For note on taxation and revenue bonds to finance low-income housing, see 49 N.C.L. Rev. 830 (1971).
For comment, "The States, Balanced Budgets, and Fundamental Shifts in Federalism," see 82 N.C.L. Rev. 1195 (2004).
For comment, " 'Don't Know What a Slide Rule Is For': The Need for a Precise Definition of Public Purpose in North Carolina in the Wake of Kelo v. City of New London," see 28 Campbell L. Rev. 291 (2006).
CASE NOTES
I. Decisions under Current Section.
II. Decisions Prior to Amendment Effective July 1, 1973.
I. DECISIONS UNDER CURRENT SECTION.
The amendment effective July 1, 1973 is designed to narrow this section's restriction on the local government's contracting powers. The previously effective language was held to require submission to the voters of a wide variety of contract obligations. United States v. 30.60 Acres of Land, 535 F. Supp. 33 (E.D.N.C. 1981).
The amendment to this section effective July 1, 1973 specifically defined "debt" to mean the borrowing of money by the local government, thereby excluding most general contractual obligations from the requirement of submission to the voters. United States v. 30.60 Acres of Land, 535 F. Supp. 33 (E.D.N.C. 1981).
Sections 159-72 and 159-78, which allow municipalities to issue general obligation refunding bonds in an amount greater than the bonds to be refunded, without a vote of the people, do not violate this section. City of Concord v. All Owners of Taxable Property, 330 N.C. 429, 410 S.E.2d 482 (1991).
Refund of Valid Existing Debt. - Subdivision (2)(a) of this section provides that voter approval is not required if a municipality's purpose for contracting a debt is to refund a valid existing debt; there is no requirement that the refunding indebtedness be less than or equal to the outstanding indebtedness. City of Concord v. All Owners of Taxable Property, 330 N.C. 429, 410 S.E.2d 482 (1991).
Contract Granting Security Interest in Real Property Subject to Improvement. - Section 160A-20, which authorizes a local government unit to enter into a contract granting a security interest in real property subject to improvement, does not contravene this section. Wayne County Citizens v. Wayne County Bd. of Comm'rs, 328 N.C. 24, 399 S.E.2d 311 (1991).
Applied in In re Denial of Approval to Issue Hous. Bonds, 307 N.C. 52, 296 S.E.2d 281 (1982).
II. DECISIONS PRIOR TO AMENDMENT EFFECTIVE JULY 1, 1973.
Editor's Note. - The cases cited below were decided under this section as it stood before the revision of this Article by the amendment adopted Nov. 3, 1970, effective July 1, 1973, or under corresponding provisions of the Constitution of 1868.
Effect of Subsection (2). - For case construing provisions from which subsection (2) of this section was derived as the dominant or controlling limitation upon the power of local units to contract debts or to issue bonds, see Coe v. Surry County, 226 N.C. 125, 36 S.E.2d 910 (1946).
The limitation prescribed by provisions from which subsection (2) of this section was derived was in addition to other constitutional limitations relating to taxation prescribed by this section and N.C. Const., Art. V, § 6; thus, a county may not borrow money, even for a necessary expense, without submitting the question to a vote, when its outstanding indebtedness has not been reduced during the prior fiscal year, and a taxpayer is entitled to injunctive relief restraining the issuance of the proposed bonds. Hallyburton v. Board of Educ., 213 N.C. 9, 195 S.E. 21 (1938).
The language of provision from which subsection (2) of this section was derived was unambiguous; by its plain terms the power of any county or municipality to contract debts in any fiscal year, without submitting the matter to a vote of the people, except for those purposes specifically enumerated in the amendment, is definitely prescribed to two-thirds of the amount by which its outstanding indebtedness was decreased during the prior fiscal year. Hallyburton v. Board of Educ., 213 N.C. 9, 195 S.E. 21 (1938).
As to intent and effect of provisions from which subsection (3) of this section was derived, see Brodnax v. Groom, 64 N.C. 244 (1870); Paine v. Caldwell, 65 N.C. 488 (1871); Chester & L.N.G.R.R. v. Commissioners of Caldwell County, 72 N.C. 486 (1875); Horton v. Redevelopment Comm'n, 259 N.C. 605, 131 S.E.2d 464 (1963).
Necessary Expenses. - For cases construing and applying the former "necessary expense" limitation found in subsection (2) (now subsection (3)) of this section prior to its amendment effective July 1, 1973, and in corresponding provisions of the Constitution of 1868, see Wilson v. Board of Aldermen, 74 N.C. 748 (1876); Tucker v. City of Raleigh, 75 N.C. 267 (1876); Halcomb v. Commissioners of Haywood, 89 N.C. 346 (1883); Lynchburg & D.R.R. v. Board of Comm'rs, 109 N.C. 159, 13 S.E. 783 (1891); Herring v. Dixon, 122 N.C. 420, 29 S.E. 368 (1898); Garsed v. City of Greensboro, 126 N.C. 159, 35 S.E. 254 (1900); Brockenbrough v. Board of Water Comm'rs, 134 N.C. 1, 46 S.E. 28 (1903); Fawcett v. Town of Mt. Airy, 134 N.C. 125, 45 S.E. 1029 (1903); Greensboro v. Scott, 138 N.C. 181, 50 S.E. 589 (1905); Town of Hendersonville v. Jordan, 150 N.C. 35, 63 S.E. 167 (1908); Hightower v. City of Raleigh, 150 N.C. 569, 65 S.E. 279 (1909); Jones v. City of New Bern, 152 N.C. 64, 67 S.E. 173 (1910); Ellison v. Town of Williamston, 152 N.C. 147, 67 S.E. 255 (1910); Underwood v. Town of Asheboro, 152 N.C. 641, 68 S.E. 147 (1910); City of Kinston v. Security Trust Co., 169 N.C. 207, 85 S.E. 399 (1915); Keith v. Lockhart, 171 N.C. 451, 88 S.E. 640 (1916); Swindell v. Town of Belhaven, 173 N.C. 1, 91 S.E. 369 (1917); Woodall v. Western Wake Hwy. Comm'n, 176 N.C. 377, 97 S.E. 226 (1918); Davis v. Lenoir County, 178 N.C. 668, 101 S.E. 260 (1919); Emery v. Commissioners of Mecklenburg County, 181 N.C. 420, 107 S.E. 443 (1921); Brown v. Town of Hillsboro, 185 N.C. 368, 117 S.E. 41 (1923); Norfolk S.R.R. v. Reid, 187 N.C. 320, 121 S.E. 534 (1924); Reed v. Howerton Eng'g Co., 188 N.C. 39, 123 S.E. 479 (1924); Lassiter v. Board of Comm'rs, 188 N.C. 379, 124 S.E. 738 (1924); Storm v. Town of Wrightsville Beach, 189 N.C. 679, 128 S.E. 17 (1925); Hill v. Board of Comm'rs, 190 N.C. 123, 129 S.E. 154 (1925); Henderson v. City of Wilmington, 191 N.C. 269, 132 S.E. 25 (1926); Moore v. City of Greensboro, 191 N.C. 592, 132 S.E. 565 (1926); Ellis v. Greene, 191 N.C. 761, 133 S.E. 395 (1926); Board of Comm'rs v. Assell, Goetz & Moerlien, Inc., 194 N.C. 412, 140 S.E. 34 (1927), petition for rehearing dismissed, 195 N.C. 719, 143 S.E. 474 (1928); Drysdale v. Prudden, 195 N.C. 722, 143 S.E. 530 (1928); Barbour v. County of Wake, 197 N.C. 314, 148 S.E. 470 (1929); Burleson v. Board of Aldermen, 200 N.C. 30, 156 S.E. 241 (1930); Walker v. Town of Faison, 202 N.C. 694, 163 S.E. 875 (1932); Starmount Co. v. Ohio Sav. Bank & Trust Co., 55 F.2d 649 (4th Cir. 1932); Starmount Co. v. Town of Hamilton Lakes, 205 N.C. 514, 171 S.E. 909 (1933); Lamb v. City of Randleman, 206 N.C. 837, 175 S.E. 293 (1934); Wilson v. City of Charlotte, 206 N.C. 856, 175 S.E. 306 (1934); Martin v. Board of Comm'rs, 208 N.C. 354, 180 S.E. 777 (1935); Martin v. City of Raleigh, 208 N.C. 369, 180 S.E. 786 (1935); Board of Fin. Control v. County of Henderson, 208 N.C. 569, 181 S.E. 636, 101 A.L.R. 783 (1935), overruled on other grounds, In re Univ. of N.C. 300 N.C. 563, 268 S.E.2d 472 (1980); Newman v. Watkins, 208 N.C. 675, 182 S.E. 453 (1935); Burt v. Town of Biscoe, 209 N.C. 70, 183 S.E. 1 (1935); Thomson v. Harnett County, 209 N.C. 662, 184 S.E. 490 (1936); Atkins v. City of Durham, 210 N.C. 295, 186 S.E. 330 (1936); Morrow v. Durham, 210 N.C. 564, 187 S.E. 752 (1936); Goswick v. City of Durham, 211 N.C. 687, 191 S.E. 728 (1937), citing Hargrave v.
Board of Comm'rs, 168 N.C. 626, 84 S.E. 1044 (1915); Palmer v. County of Haywood, 212 N.C. 284, 193 S.E. 668, 113 A.L.R. 1195 (1937); Williamson v. City of High Point, 213 N.C. 96, 195 S.E. 90 (1938); Nantahala Power & Light Co. v. County of Clay, 213 N.C. 698, 197 S.E. 603 (1938); Nash v. Town of Tarboro, 227 N.C. 283, 42 S.E.2d 209 (1947); Green v. Kitchin, 229 N.C. 450, 50 S.E.2d 545 (1948), discussed in 27 N.C.L. Rev. 500; Board of Managers v. City of Wilmington, 237 N.C. 179, 74 S.E.2d 749 (1953); Wilson v. City of High Point, 238 N.C. 14, 76 S.E.2d 546 (1953); City of Greensboro v. Smith, 241 N.C. 363, 85 S.E.2d 292 (1955); DeLoatch v. Beamon, 252 N.C. 754, 114 S.E.2d 711 (1960); Dennis v. City of Raleigh, 253 N.C. 400, 116 S.E.2d 923 (1960); Horton v. Redevelopment Comm'n, 259 N.C. 605, 131 S.E.2d 464 (1963); Horton v. Redevelopment Comm'n, 262 N.C. 306, 137 S.E.2d 115 (1964); Keeter v. Town of Lake Lure, 264 N.C. 252, 141 S.E.2d 634 (1965); Vance County v. Royster, 271 N.C. 53, 155 S.E.2d 790 (1967); Harrelson v. City of Fayetteville, 271 N.C. 87, 155 S.E.2d 749 (1967); Cole v. City of Asheville, 2 N.C. App. 652, 163 S.E.2d 628 (1968).
Schools. - For cases dealing with the operation and maintenance of schools under this section prior to its amendment effective July 1, 1973, and under corresponding provisions of the Constitution of 1868, see Smith v. School Trustees, 141 N.C. 143, 53 S.E. 524 (1906); Hollowell v. Borden, 148 N.C. 255, 61 S.E. 638 (1908); Lacy v. Fidelity Bank, 183 N.C. 373, 111 S.E. 612 (1922); Lovelace v. Pratt, 187 N.C. 686, 122 S.E. 661 (1924); Tate v. Board of Educ., 192 N.C. 516, 135 S.E. 336 (1926); Frazier v. Board of Comm'rs, 194 N.C. 49, 138 S.E. 433 (1927); Hartsfield v. Craven County, 194 N.C. 358, 139 S.E. 698 (1927); Hall v. Commissioners of Duplin County, 194 N.C. 768, 140 S.E. 739 (1927); Owens v. Wake County, 195 N.C. 132, 141 S.E. 546 (1928); Hall v. Commissioners of Duplin, 195 N.C. 367, 142 S.E. 315 (1928); Hammond v. City of Charlotte, 206 N.C. 604, 175 S.E. 148 (1934); Fuller v. Lockhart, 209 N.C. 61, 182 S.E. 733 (1935); City of Greensboro v. Guilford County, 209 N.C. 655, 184 S.E. 473 (1936); Boney v. Board of Trustees, 229 N.C. 136, 48 S.E.2d 56 (1948); Harris v. Board of Comm'rs, 1 N.C. App. 258, 161 S.E.2d 213, aff'd, 274 N.C. 343, 163 S.E.2d 387 (1968); Benvenue Parent-Teacher Ass'n v. Nash County Bd. of Educ., 4 N.C. App. 617, 167 S.E.2d 538, appeal dismissed, 275 N.C. 675, 170 S.E.2d 473 (1969); Yoder v. Board of Comm'rs, 7 N.C. App. 712, 173 S.E.2d 529 (1970).
As to application of what is now subsection (4) of this section, see Leak v. Commissioners of Richmond County, 64 N.C. 133 (1870); Poindexter v. Davis, 67 N.C. 112 (1872); Weith v. City of Wilmington, 68 N.C. 24 (1873); Logan v. Plummer, 70 N.C. 388 (1874); Davis v. Board of Comm'rs, 72 N.C. 441 (1875); Brickell v. Commissioners of Halifax, 81 N.C. 240 (1879); Wingate v. Parker, 136 N.C. 369, 48 S.E. 774 (1904); Jones v. Commissioners, 137 N.C. 579, 50 S.E. 291 (1905); Smith v. School Trustees, 141 N.C. 143, 53 S.E. 524 (1906); Southern Ry. v. Board of Comm'rs, 148 N.C. 220, 61 S.E. 690 (1908); Board of Trustees v. Webb, 155 N.C. 379, 71 S.E. 520 (1911).
The Constitution gives the people the power to decide whether or not to contract a debt by requiring their duly elected representatives to submit the question to them for their approval before the indebtedness is assumed. Vance County v. Royster, 271 N.C. 53, 155 S.E.2d 790 (1967); Cole v. City of Asheville, 2 N.C. App. 652, 163 S.E.2d 628 (1968).
The constitutional provision imposing a limitation upon the power of the State, counties and municipalities to contract debts without a vote of the people does not deprive the county of any power to contract a debt. It merely declares who shall have the power of decision. Vance County v. Royster, 271 N.C. 53, 155 S.E.2d 790 (1967); Cole v. City of Asheville, 2 N.C. App. 652, 163 S.E.2d 628 (1968).
The Constitution proceeds upon the theory that if it is, indeed, wise to contract an indebtedness for an unnecessary county or city expense, the people of the county or city will recognize this when the facts are presented to them and will approve the assumption of the obligation; and if they do not approve it, it ought not to be undertaken at their expense even though the county or city commissioners, and the courts as well, deem it wise to do so. Vance County v. Royster, 271 N.C. 53, 155 S.E.2d 790 (1967); Cole v. City of Asheville, 2 N.C. App. 652, 163 S.E.2d 628 (1968).
The term "municipal corporation" should not be construed narrowly to include only cities, towns, counties and school districts, as the Constitution contemplates a broader construction of the term. In its broader sense, the term includes all public corporations exercising governmental functions within the constitutional limitations. Wells v. Housing Auth., 213 N.C. 744, 197 S.E. 693 (1938); Carolina-Virginia Coastal Hwy. v. Coastal Tpk. Auth., 237 N.C. 52, 74 S.E.2d 310 (1953).
The State is not a municipality within the meaning of the Constitution. It may perform the duties required of it by the Constitution, as well as exercise those powers not otherwise prohibited, without embarrassment by constitutional limitations expressly operating on municipalities alone. Harris v. Board of Comm'rs, 1 N.C. App. 258, 161 S.E.2d 213, aff'd, 274 N.C. 343, 163 S.E.2d 387 (1968).
Debt. - As to meaning of "debt" under provisions from which subsections (2) and (3) of this section were derived, see Williamson v. City of High Point, 213 N.C. 96, 195 S.E. 90 (1938). See also, McGuinn v. City of High Point, 219 N.C. 56, 13 S.E.2d 48 (1941).
When Bonds Are Not a "Debt". - Bonds of a city, issued for the purpose of acquiring revenue-producing property and which expressly provide that only the revenues produced by such property shall be used for or subject to demand for payment of such bonds, are not a "debt" of the city. Vance County v. Royster, 271 N.C. 53, 155 S.E.2d 790 (1967).
Year Debt Contracted. - A debt is contracted during the fiscal year following that in which the debt was reduced, even though the certificate of the secretary of the local government commission required by G.S. 159-18 was not executed within that time. Board of Educ. v. State Bd. of Educ., 217 N.C. 90, 6 S.E.2d 833 (1940).
In determining the amount of debt contracted in any fiscal year within the provision of subsection (2) of this section, limiting the power of a taxing unit to contract debts to two-thirds the amount by which the taxing unit's outstanding debt was decreased during the prior fiscal year, the total amount of bonds issued during the fiscal year, by the taxing unit, whether with or without the approval of its voters, should be included, except bonds issued by it to fund or refund a valid existing debt, to supply a casual deficit, to suppress riots or insurrections, or to repel invasions, and except tax anticipation notes issued in an amount not exceeding 50% of the taxes for the fiscal year. Hallyburton v. Board of Educ., 213 N.C. 9, 195 S.E. 21 (1938).
Bonds in excess of two-thirds of amount by which taxing unit decreased its outstanding debt during prior fiscal year may be issued upon approval of a majority of those voting under subsection (2) of this section. Twining v. City of Wilmington, 214 N.C. 655, 200 S.E. 416 (1939).
When a proposed bond issue is in excess of two-thirds of the amount by which the issuing county reduced its outstanding indebtedness during the prior fiscal year, the question must be submitted to a vote and the issuance must be approved by a majority of the voters who shall vote thereon, regardless of the purpose of the bonds, unless the purpose is within the specific exceptions enumerated in subsection (2) of this section. Sessions v. Columbus County, 214 N.C. 634, 200 S.E. 418 (1939).
Bonds are outstanding within the meaning of subsection (2) of this section until actually paid and canceled or delivered to the county for cancellation. Coe v. Surry County, 226 N.C. 125, 36 S.E.2d 910 (1946).
Where county bonds were payable at a certain banking institution on the first day of a county fiscal year, and before the close of the next preceding fiscal year the county made available funds for payment thereof, the bonds were outstanding at the close of the latter year within the meaning of subsection (2) of this section. Coe v. Surry County, 226 N.C. 125, 36 S.E.2d 910 (1946).
Refunding Bonds. - A municipal corporation does not contract a "debt" when under statutory authority it issues bonds to refund bonds which at the date of the issuance of the refunding bonds are valid and enforceable obligations of the corporation. Bolich v. City of Winston-Salem, 202 N.C. 786, 164 S.E. 361 (1932).
Where a proposed county bond issue was to refund a valid existing debt of the county within the meaning of subsection (2) of this section, under the exception therein provided a vote was unnecessary, nor could the means for the repayment of the bonds be adversely affected by any constitutional change. Thompson v. Harnett County, 212 N.C. 214, 193 S.E. 158 (1937).
Where, during the prior fiscal year, defendant county began refunding operations, and during that year issued its refunding bonds, but did not retire the bonds refunded until the first day of the present fiscal year, and where plaintiff contended that since both the refunding bonds and the bonds refunded were outstanding during the prior fiscal year, that there had been an increase rather than a decrease in the county's outstanding indebtedness during the prior fiscal year, it was held that the failure of the county to complete its refunding operations during the prior fiscal year was immaterial, and that the refunding bonds should not be included in determining the amount by which the county had reduced its outstanding indebtedness during the prior fiscal year within the meaning of the constitutional limitation on an increase of debt by counties and municipalities. Royal v. Sampson County, 214 N.C. 259, 199 S.E. 15 (1938).
Bonds for Streets and Sewage. - A municipality may not issue bonds for street and sewage construction or extension without a vote when, during the fiscal year, such city has issued bonds with the approval of the voters in excess of the amount by which it had reduced its outstanding indebtedness during the prior fiscal year, the purpose of subsection (2) of this section being to limit the existing power of the governing authorities to issue bonds for necessary expenses so that the net indebtedness of the taxing unit should not be increased beyond the limits prescribed in the amendment, except with the approval of its voters. Gill v. City of Charlotte, 213 N.C. 160, 195 S.E. 368 (1938).
Bonds for Municipal Power Plant. - A contract of a municipality to construct a municipal electric power plant and to issue its bonds to pay for same, with provision that principal and interest of the bonds should be paid exclusively from the profits from the plant without resort to funds raised by taxation, does not create a "debt" of the municipality within the meaning of subsection (2) of this section, which prohibits the contracting of a debt by a municipality in any fiscal year in excess of two-thirds of the amount by which its debt was decreased during the prior fiscal year. Williamson v. City of High Point, 213 N.C. 96, 195 S.E. 90 (1938). See also, McGuinn v. City of High Point, 219 N.C. 56, 13 S.E.2d 48 (1941).
In an election for the issuance of county bonds for a new school building, a necessary expense, a favorable vote of the majority of those voting is sufficient to validate the bond resolution and authorize the issuance and sale of the proposed bonds. Mason v. Moore County Bd., of Comm'rs, 229 N.C. 626, 51 S.E.2d 6 (1948).
Local bond issue of town of Lake Lure held not to violate this section. Keeter v. Town of Lake Lure, 264 N.C. 252, 141 S.E.2d 634 (1965).
Authority to Issue Bonds Implies Authority to Levy Taxes for Payment of Bonds. - The exercise by a municipal corporation of the power to pledge its credit is an incipient step in the exercise of the power of taxation, and authority given to a municipality to issue bonds necessarily involves the power to levy taxes for the payment of interest on said bonds and the payment of said bonds at maturity. Wilson v. City of High Point, 238 N.C. 14, 76 S.E.2d 546 (1953).
This section contemplates a contracting of an obligation to be paid at some future time. Davis v. Iredell County, 9 N.C. App. 381, 176 S.E.2d 361 (1970).
It does not apply where the funds to be applied are already on hand and the proposed expenditure will impose no further liability on the municipality, nor involve the imposition of further taxation upon it. Davis v. Iredell County, 9 N.C. App. 381, 176 S.E.2d 361 (1970).
Provision from which subsection (3) of this section was derived from had no application where the funds to be applied were already on hand and the proposed expenditure would impose no further liability on the municipality. Adams v. City of Durham, 189 N.C. 232, 126 S.E. 611 (1925).
The acquisition of land from surplus funds is not beyond the power of a city and it in no way offends the provisions of this section. Davis v. Iredell County, 9 N.C. App. 381, 176 S.E.2d 361 (1970).
The acquisition of the land for a municipal airport from surplus funds was not beyond the power of the city and it in no way offended this section. Goswick v. City of Durham, 211 N.C. 687, 191 S.E. 728 (1937).
Where appropriations were made by two cities and county to airport authority out of funds not derived from ad volorem taxes, and the funds were free from other specified purpose or legal commitment, no question of credit in violation of this section was involved. Greensboro-High Point Airport Auth. v. Johnson, 226 N.C. 1, 36 S.E.2d 803 (1946).
Agreement to Contribute Nontax Revenue for Airport. - Even though an agreement between a city and a county and the federal government might be construed to obligate the city and county to spend only nontax revenue for the maintenance and operation of an airport, county and city were without authority to incur such debt without the approval of the voters. Vance County v. Royster, 271 N.C. 53, 155 S.E.2d 790 (1967).
A contract between a county and one of its municipalities to contribute funds for the construction and operation of an airport, without submitting the question to a vote, was invalid, even if the contribution of funds for the construction of the airport was made from nontax revenue, where the contract was indivisible and the pledging of future operating funds was unlimited, and, even if limited to nontax revenue, would be unconstitutional. Yokley v. Clark, 262 N.C. 218, 136 S.E.2d 564 (1964).
Where a city sells land used for recreation purposes and turns the proceeds of the sale over to its park and recreation commission, the action is not a pledging of its faith and credit. Hall v. Redd, 196 N.C. 622, 146 S.E. 583 (1929).
Vote on Distinct Debts in One Ballot Box. - An issue of municipal bonds, when approved by the voters, under the authority of a statute passed according to the constitutional requirements, is not invalid because there were several distinct debts provided and voted for in one ballot box. Smith v. Town of Belhaven, 150 N.C. 156, 63 S.E. 610 (1909).
Only a single proposition may be placed on the ballot for submission to the voters in a bond election, since the submission of dual propositions would defeat the right of the voters to express their choice. Jamison v. City of Charlotte, 239 N.C. 682, 80 S.E.2d 904 (1954).
Submission of Question of Issuance of County Bonds and City Bonds. - In a bond election in a county and a city situate therein, the submission to the voters of the question of the issuance of county bonds in a stipulated sum and city bonds in a stipulated sum for the purpose of providing funds for erecting and equipping public libraries for the city and for the county, and the imposition of a tax within the city for the payment of the city bonds and a tax in the entire county, including the city, for the payment of the county, as a single question, is the submission of but a single proposition so related and united as to form a rounded whole and does not violate this section. Jamison v. City of Charlotte, 239 N.C. 682, 80 S.E.2d 904 (1954).
Endorsement of Township Bonds by County. - Where townships are permitted to call an election for the purpose of voting upon the issuance of township bonds for the roads of the township, the proceeds to be turned over to the sole management and control of the township commissioners, with further provision that the county endorse the bonds upon being satisfied of the validity of the issuance, the endorsement by the county of the township bonds is a loan of the credit of the county, without benefit to the other townships, and contrary to this section. Commissioners of Bladen County v. Boring, 175 N.C. 105, 95 S.E. 43 (1918).
Act Not Limiting Amount of Bonds. - An exception to the constitutionality of an act submitting the question of a bond issue to the voters cannot be sustained on the ground that it does not limit the amount of the bonds that may be issued for the purposes therein authorized. Waters v. Board of Comm'rs, 186 N.C. 719, 120 S.E. 450 (1923).
Function Assumed by Municipality Must Be Public. - A municipal corporation cannot, even with express legislative sanction, embark on any private enterprise or assume any function which is not in a legal sense public. Brown v. Board of Comm'rs, 223 N.C. 744, 28 S.E.2d 104 (1943).
A municipal corporation cannot, even with express legislative sanction, engage in any private enterprise or assume any function which is not in a legal sense public in nature, the word "private" as used in opinions discussing the powers of a municipality being used to designate proprietary, as distinguished from governmental, functions. Keeter v. Town of Lake Lure, 264 N.C. 252, 141 S.E.2d 634 (1965).
Expansion of City's Power Lines with Surplus Profits. - Where an incorporated city under authority of statute furnishes through its own transmission lines electricity for its citizens for hire within a circumscribed territory adjoining its limits, and the expenses incident thereto are paid out of its surplus profits, the proposition is not one that requires the approval of the voters. Holmes v. City of Fayetteville, 197 N.C. 740, 150 S.E. 624 (1929), appeal dismissed, 281 U.S. 700, 50 S. Ct. 353, 74 L. Ed. 1126 (1930).
No Right Vested by Former Construction. - A public service corporation, which was granted a franchise and entered into a contract with a city when, under Art. VII, § 6, Const. 1868, as then construed, the city was without power to construct competing works, but which constitutional provision was subsequently construed to grant such power, had no standing, after its franchise and contract had expired by limitation, to invoke the rule that one acquiring rights under one construction of a state law may not be deprived of them by a subsequent different construction. Hill v. Elizabeth City, 298 F. 67 (4th Cir. 1924).
Provisions of former G.S. 131-138 et seq., authorizing local governmental units to enter into lease agreements with the Medical Care Commission (now Department of Human Resources) and making obligations of any such governmental unit under a lease agreement payable not only from revenues derived from the leased facility but also from revenues derived from other hospital facilities owned by the lessee and related to the leased facility, were unconstitutional in that they authorized local government units to contract a debt without a vote of the people in excess of the amount specified in this section. Foster v. North Carolina Medical Care Comm'n, 283 N.C. 110, 195 S.E.2d 517 (1973).