(1) Sinking funds. The General Assembly shall not use or authorize to be used any part of the amount of any sinking fund for any purpose other than the retirement of the bonds for which the sinking fund has been created, except that these funds may be invested as authorized by law.
(2) Retirement funds. Neither the General Assembly nor any public officer, employee, or agency shall use or authorize to be used any part of the funds of the Teachers' and State Employees' Retirement System or the Local Governmental Employees' Retirement System for any purpose other than retirement system benefits and purposes, administrative expenses, and refunds; except that retirement system funds may be invested as authorized by law, subject to the investment limitation that the funds of the Teachers' and State Employees' Retirement System and the Local Governmental Employees' Retirement System shall not be applied, diverted, loaned to, or used by the State, any State agency, State officer, public officer, or public employee.
(1969, c. 1200, s. 1.)
History Note. - The provisions of subsection (1) of this section are similar to those of Art. II, § 30, Const. 1868, as adopted in 1924, and the provisions of subsection (2) are similar to those of Art. II, § 31, Const. 1868, as adopted in 1950.
Legal Periodicals. - For note on taxation and revenue bonds to finance low-income housing, see 49 N.C.L. Rev. 830 (1971).
CASE NOTES
Construction with Art. 3, § 5. - N.C. Const. art. V, § 6(2) provides that sinking funds and retirement funds are inviolable; however, N.C. Const. art. III, § 5 details the duties of the Governor, requiring that he balance the budget, and State Employees Association of North Carolina, Inc. lacked standing to contest an executive order providing for the reallocation of retirement funds. State Employees Ass'n of N.C. Inc. v. State, 154 N.C. App. 207, 573 S.E.2d 525 (2002).
Sum Erroneously Placed in Sinking Fund. - While sinking funds provided for the retirement of municipal bonds may not be diverted from that purpose to other municipal requirements by a city, a sum erroneously placed on the books of the city in a sinking fund by a clerk without authorization, which sum was actually derived from profits from the municipal electric plant, does not fall within the constitutional or statutory inhibitions, and the city may by ordinance correct the error of the clerk and use the funds for other lawful municipal purposes. Mewborn v. City of Kinston, 199 N.C. 72, 154 S.E. 76 (1930), decided under former Art. II, § 30, Const. 1868.
Expenditure of Surplus Unencumbered Funds. - Although the General Assembly cannot authorize a diversion of a county's sinking funds which are necessary to pay outstanding sinking fund bonds, it can direct the expenditure of surplus unencumbered sinking funds, provided the expenditure is for a public purpose. Johnson v. Marrow, 228 N.C. 58, 44 S.E.2d 468 (1947), decided under former Art. II, § 30, Const. 1868.