Opinion ID: 1206954
Heading Depth: 1
Heading Rank: 2

Heading: QUESTIONS II and IV

Text: Questions II and IV present essentially the same question, namely, whether the 1969 Act violated Article VII, § 6, or Article V, § 4, of the Constitution of North Carolina. Question II refers to the lending of the credit of the State and Question IV refers to the creation of a debt. Article VII, § 6, provides: No county, city, town, or other municipal corporation shall contract any debt, pledge its faith or loan its credit, nor shall any tax be levied or collected by any officers of the same except for the necessary expenses thereof, unless approved by a majority of those who shall vote thereon in any election held for such purpose. This constitutional provision is applicable to a county, city, town, or other municipality. It requires the approval of a majority of the voters therein before such subdivision of the State may pledge its credit or levy a tax except for its necessary expenses. It places no limitation upon the General Assembly or on an instrumentality of the State created by the General Assembly for a public purpose. Article V, § 4, in part, provides: The General Assembly shall have the power to contract debts and to pledge the faith and credit of the State and to authorize counties and municipalities to contract debts and pledge their faith and credit for the following purposes:   . (Our italics.) The 1969 Act provides: § 6. Credit of State not pledged. Obligations issued under the provisions of this Act shall not be deemed to constitute a debt, liability or obligation of the State or of any political subdivision thereof or a pledge of the faith and credit of the State or of any such political subdivision, but shall be payable solely from the revenues or assets of the Corporation. Each obligation issued under this Act shall contain on the face thereof a statement to the effect that the Corporation shall not be obligated to pay the same nor the interest thereon except from the revenues or assets pledged therefor and that neither the faith and credit nor the taxing power of the State or of any political subdivision thereof is pledged to the payment of the principal of or the interest on such obligation. Expenses incurred by the Corporation in carrying out the provisions of this Act may be made payable from funds provided pursuant to this Act and no liability shall be incurred by the Corporation hereunder beyond the extent to which moneys shall have been so provided. Decisions of this Court establish that this method of financing does not create a debt within the meaning of the Constitution and therefore the limitations of Article V, § 4, are inapplicable. North Carolina Turnpike Authority v. Pine Island, 265 N.C. 109, 117, 143 S.E.2d 319, 325 (1965), and cases there cited. We hold that the 1969 Act does not violate either Article VII, § 6, or Article V, § 4, of the Constitution of North Carolina. Section 18 of the 1969 Act provides: The Corporation is authorized to accept such moneys as may be appropriated from time to time by the General Assembly for effectuating its corporate purposes including, without limitation, the payment of the initial expenses of administration and operation and the establishment of a reserve or contingency fund to be available for the payment of the principal of and the interest on any bonds or notes of the Corporation. However, the fact that the $500,000.00 heretofore appropriated and such further appropriations, if any, as the General Assembly may see fit to make, may be used for the establishment of a reserve or contingency fund to be available for the payment of the principal of and the interest on any bonds or notes of the Corporation, does not constitute a pledge of the faith and credit of the State or of any political subdivision thereof for the payment of the principal of and the interest on any bonds or notes of the Corporation. The Corporation has no authority to incur any debt which would obligate the General Assembly to make appropriations. Moreover, the 1969 General Assembly, assuming it had authority to do so, did not purport to control actions of succeeding sessions of the General Assembly. Massachusetts Hous. F. Ag. v. New England Mer. Nat. B., supra, 249 N.E.2d at 608.