xt7c599z3252 https://exploreuk.uky.edu/dips/xt7c599z3252/data/mets.xml North Carolina United States Works Progress Administration 1937 Other contributors include: Robert C. Lowe (Robert Chapin) and Helen R Sherfey; 15 pages, 27 cm; Includes bibliographical references; UK holds archival copy for ASERL Collaborative Federal Depository Program libraries; Call number Y 3. W 89/2:36/N 81c books English Washington, D.C.: Works Progress Administration This digital resource may be freely searched and displayed in accordance with U. S. copyright laws. North Carolina Works Progress Administration Publications Analysis of Constitutional Provisions Affecting Public Welfare in the State of North Carolina text Analysis of Constitutional Provisions Affecting Public Welfare in the State of North Carolina 1937 1937 2015 true xt7c599z3252 section xt7c599z3252   N
  I
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 I WORKS PROGRESS ADMINISTRATION
{ ` HARRY L. HOPKINS, ADMINISTRATOR
I ·CORRINGTON GILL, ASSISTANT ADMINISTRATOR
· HOWARD B. MYERS, DIRECTOR
i DIVISION OF SOCIAL REseARcH
O
ANALYSIS OE CONSTITUTIONAL PROVISIONS
APEECTINC PUBLIC WELFARE IN THE STATE OE
_ , NORTH CAROLINA
 
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PREPARED BY
ROBERT C. LOWE AND HELEN R. SHERFEY
LEGAL RESEARCH SECT|ON
UNDER THE SUPERVISION OF
A. Ross ECKLER, COORDINATOR OF SPECIAL INDu•RnEs °
DIVISION OF SOCIAL RESEARCH
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PREFACE
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This bulletin is one of a series presenting
• State constitutional provisions affecting public wel-
fare, prepared to supplement the State by State digests "
of public welfare laws so as to provide in abstract
form the basis for the public welfare services of the
several States.
, The provisions quoted are those concerned
directly with public welfare administration and such
others as may substantially affect a public welfare
program, even though only indirectly related. It would
be impossible to consider within the limits of this
• study every remotely connected constitutional provi-
. sion. The indirectly related provisions included,
therefore, have been restricted to those concerning
· finance, legislation, and the methods of constitutional
amendment. _
i An attempt has been made, bya careful selec-
tion of the most recent cases decided by the highest
courts of the States, to indicate wherever possible how
these provisions have been construed. These cases are
included in footnotes appended to the constitutional
» provisions shown.
I · It is hoped that these abstracts will be
useful to those interested in public welfare questions
in indicating howState and local public welfare admin-
· istration may be affected by constitutional powers and
· limitations.
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CONTENTS
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Page
Incidence of Responsibility for Welfare Program .................. 1
• Financial Powers and Limitations ................................. 2
Taxation and Assessments .................................... 2
Exemptions .................................................. 6
Borrowing and Use of Credit ................................. 8
Other Income ................................................ 10
• Appropriations and Expenditures ............................. 11
· Provisions Affecting legislation ................................. 11
C Constitutional Amendment or Revision .... . ........................ 14
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• North Carolina
{ ANALYSIS OF CONSTITUTIONAL PROVISIONS AFFECTING
A PUBLIC WELFARE IN NORTH CAROLINAI
_ • I. -Incidence of Responsibility for Welfare Program
A. Beneficent provisions for the poor, the unfortunate and
• . . . . `
orphan, being one of the first duties of a civilized and Christian state,
_ the General Assembly shall, at its first session, appoint and define the
duties of a board of public charities, to whom shall be entrusted the
supervision of all charitable and penal State institutions, and who shall
annually report to the Governor upon their condition, with suggestions
• for their improvement.2
B. There shall also, as soon as practicable, be measures devised
by the State for the establishment of one or more orphan houses, where
destitute orphans may be cared for, educated and taught some business or
trade.5
•
C. It shall be the duty of the Legislature, as soon as prac-
· ticable, to devise means for the education of idiots and inebriates.4
• 1Const1tut1on (1868), including amendments to 1955, as published in M1ch1e•s North
· Carolina Code (1955); with all subsequent amendments to Aprll 1, 1957.
2Const1tut1on, Art. XI, Sec. 7.
The Legislature has the exclusive right in the exercise of the State•s police
power to determine and declare by whom and how the 1nd1gent of the State entitled to
support shall be ascertained, and from what fund and by whom allowances for their
support shall be made. Thus, the Legislature may disburse a part of a fund devoted by
the Constitution in Art. V, Sec. 2 (see p. 2, par. E), to the support of the poor,
• by approprlatlng it directly to a particular class of lndlgent or unfortunate, such
as Confederate veterans and their widows; or the Leglslature may delegate authority
to county officials to provide and care for this particular class, if in its opinion,
their wants may be better supplied through agencies other than ltsel f. Board of Edu-
cation vs. Board of Commissioners, 115 N. C. 579, 18 S. E. 661 (1895).
All powers and functions of a county bear reference to the general State policy.
A county 1s not strictly a municipal corporation but rather an instrumentality of the
State, by means of which the State performs certain of its governmental functions
• within the territorial limits of such county. The State may therefore require the
counties to provide for the care of the lndlgent Sick and poor w1th1n their territorial
limits. Martin vs. Board of Commissioners of wake County, 208 N. C. 554, 180 S. E. 777
(1955).
A contract authorized by the Legislature to permlt a county to contract with a
hospital for the care and maintenance of 1nd1gent sick and poor for 50 years was
held not aga1nst public policy. Ibid.
• See p. 9, footnote 51.
3Const1tut1on, Art. XI, Sec. 8.
4'Constitutlon, Art. XI, Sec. 9.
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2 North Carolina V ·
I. Incidence of Responsibility for Welfare Program——Continued y
1
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D. The General Assembly may provide that indigent deaf—mute, »
blind, and insane of the State shall be cared for at the charge of the t
State.5
E. The proceeds of the State and county capitation tax shall L
be applied to the purposes of education and the support of the poor, but *
in no one year shall more than twenty-five per cents thereof be appro—
priated to the latter purpose.6 ·
_ F. It shall be steadily kept in view by the Legislature and ,
the board of public charities that all penal and charitable institutions
should he made as nearly self—supp0rting as is consistent with the purposes
of their creation.7 g
G. The General Assembly shall, * * * make provision for •
the erection and conduct of a States prison or penitentiary,8 * "·‘ *.
H. The General Assembly may provide for the erection of houses
of` correction, where vagrants and persons guilty of misdemeanors shall be
restrained and usefully employed.9
I. A house or houses of refuge may be established whenever the °
public interest may require it, for the correction and instruction of
other classes or offenders.1O ·
J. The people have the right to the privilege of education,
and it is the duty of the State to guard and maintain that right.11
•
II. Financial Powers and Limitations
A. Taxation and Assessments
(1) State
(a) The power of taxation shall be exercised ina just ·
and equitable manner, and shall never be surrendered, suspended or con-
tracted away. Taxes on property shall be uniform as to each class of
5Const1tut1on. Art. XI, Sec. 10. •
6Const1tut1on, Art. V. Sec. 2.
The proceeds from the State and county capitation taxes may not be diverted to
any purposes other than those mentioned in this section. wagstaff vs. Central High-
way Commission of Person County, 1'7'7 N. C.354, 99 S. E. 1 (1919). See p. 9, par.
(D), and footnote 31, and Board of Educat1on vs. BoardofComm1ss1oners, p. 1, foot-
note 2.
7Const1tut1on, Art. XI, Sec. 11. •
BConst1tut1on, Art. XI, Sec. 25.
9Const1tut1on, Art. XI, Sec. 4.
1OConst1tut1on, Art. XI, Sec. 5.
uConst1tut1on, Art. I, Sec. 27. .
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North Carolina 3
II. Financial Powers and Limitations—Continued
•
A. Taxation and Assessments——Continued
(1) State——Continued
property taxed.12 Taxes shall be levied only for public purposes, and
• every act levying a tax shall state the object to which it is to be ap- _
plied. The General Assembly may also tax trades,professions, franchises,
and incomes: Provided, the rate of tax on incomes‘shall not in any case
. exceed ten per cent (10%),15 * * *.
V (b) The total of the State and county tax on property
shall not exceed fifteen cents on the one hundred dollars value of prop—
erty, except when the county property tax is levied for a special purpose
and with the special approval of the General Assembly, which may be-done
• by special or general act: Provided, this limitation shall not apply to
taxes levied for the maintenance of the public schools of the State for
 
. 12There ls a fundamental d1st1nct1on between general property taxes which are levied
for revenue purposes for the support of the government, and special assessments which
are imposed only on those owners of property who in respect to such ownership derive
* special benefits from the local improvements for which the assessments are to be
expended, As to the former, the Constitution requires uniformity; the latter do not
come within the constitutional restraints put upon general taxation, and could not
Q be uniform by the very theory on which they are based. Town of Saluda vs. Polk
County. 207 N. C. 180, 176 S. E. 298 (1934).
13Const1tut1on, Art. V, Sec. 3.
The first three sentences of this section were adopted by the electorate at the
• November e1ect1on`1n 1936; they replace former provisions relating ·to taxation of
moneys, credits, and investments by a unlform rule, and real and personal property
according to its true value ln money, with certain exemptions therefrom. The limit
on the rate of taxes on incomes as here set forth was adopted at the same time, 1n
lleu of the former 6-percent llmlt.
An annual privilege tax of $100 on bakers dellverlng bread and $50 on those
delivering cakes, ples, or doughnuts was. held not to be a property tax but a priv-
ilege or license tax and was further held to be unl form and not discriminatory against
G those delivering bread. The court stated: When a classification has been made by
the General Assembly for the purpose of imposing license taxes on all trades, pro-
fessions, franchises, or incomes, solely for ¤•= ·•= =•· revenue, this court will not
hold the classification 1nval1d, unless it shall appear, clearly and unmistakably
that the classification 1s unreasonable and arbitrary, resulting in an unjust dis-
cr1m1nat1on. * =•= =•= A tax is uniform when lt 1s equal upon all persons belonging
to the described class upon which it 1s 1mposed.' Hilton vs. Harris, 207 N. C. 465,
177 S. E. 411 (1934).
• A statute which required from all lumber dealers using the public roads ln
Macon County a privilege or license fee in proportion to the quantity of lumber
hauled was held not to be discriminatory on the ground that the hauling of lumber
had a peculiar propensity for damaging dirt roads, but even 1f this were not so,
•the Legislature can classify vocations and lay a tax of a dlfferent amount upon the
different occvupat1ons.¤ Road Trustees vs. Brown & Company, 159 N. C. 175, 75 S. E.
40 (1912).
Under this section as lt formerly read (before the 1936 amendment), requlrlng
• that property should be taxed uniformly ••accord1ng to its true value in money,•* it
was held that an lncome Dax was not a tax on property, and further that the Legis-
lature could levy an income tax upon the net profits of a corporatlon in addition
to the tax upon its property; and could tax so much of the net proflts of a foreign
corporation arising from interstate commerce as were properly apportlonable to the
. State. Maxwell vs. Kent—Coffey Manufacturing Company, 204 N. C. 365, 168 S. E. 397
(1933), affirmed Id., 291 U. S. 642, 54 Sup. Ct. 437, 78 L. Ed. 1040 (1934).
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4 North Carolina
II. Financial Powers and Limitations—Continued ` C
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A. Taxation and Assessments-Continued
(1) State——Continued
the term required by article nine, section three, of the Constitution:
Provided, Further, the State tax shall not exceed five cents on the one •
hundred dollars value of` property.14
(c) The General Assembly may levy a capitation tax on
. . . •
every male inhabitant of the State over twenty-one and under fifty years
* of` age, which said tax shall not exceed two dollars, and cities and towns
may levy a capitation tax which shall not exceed one dollar. No other
capitation tax shall be levied. The commissioners of the several counties
_ andof` the cities and towns may exempt from the capitation tax any special
cases on account of`_poverty or infirmity.15 •
(2) Counties
(a) The total of the State and county tax on property
shall not exceed fifteen cents on the one hundred dollars value of` prop-
erty, except when the county property tax is levied for a special purpose
and with the special approval of' the General Assembly, which may be done
by special or general act:16 Provided, this limitation shall not apply
to taxes levied for the maintenance of the public schools of` the State ·
for the term required by article nine, section three, of` the Constitution:
Provided, Further, the State tax shall not exceed five cents on the one
hundred dollars value of` property.17 °
An lnheritance tax 1s not a tax upon property, but 1s a tax upon the privilege
of acquiring property by w1ll or descent. The State ”may tax the privilege, grant
exempt1ons, d1scr1m1nate between relatives and between these and strangers, and 1s
not precluded from the exercise of this power by constitutional provisions requlrlng
un1form1ty and equality of taxat1on.” In re Morr1s' Estate, 138 N. C. 259, 50 S. E. °
682 (1905).
14Const1tut1on, Art. V, Sec. 6.
15Const1tut1on. Art. V, Sec. 1.
This section 1s sel1`—execut1ng. Dixon vs. Board of County Commissioners, 2OO
N. C. 215, 156 S. E. 852 (1931). See p. 2, par. E. The amount of the capltatlon
taxes may not be lncreased beyond the l1m1ts of this section. Wagstaff vs. Central •
Highway Commission of Person County, 177 N. C. 354, 99 S. E. 1 (1919).
16'Fhe "special approval of the General Assembly" required by this section for the
levying of a tax ln excess of the 15—cent limitation, may be expressed by a special
act restricted to one county, or by a general statute giving an option to any county
to avail 1tself of such permission. Board of Commissioners of Surry County vs.
Wachovla Bank & Trust Company, 178 N. C. 170, 100 S. E. 421 (1919). See p. 13, pars.
(4) and (5).
•
lr/Constitution, Art. V, Sec. 6.
This section should be read w1th Art. VII, Sec. 7 (see p. 9, par. (b)) which
provides 1n part that the county, city, or town authorities may not levy or collect
any tax except for necessary expenses, unless by a majority vote of the electors
therein. The county commissioners may levy taxes up to the l1m1t of this section,
and they may also tax 1n excess of the limlts of this section for "spec1al purposes• ·
and on the ”spec1al approval of the General Assembly" witnout a vote o1’ the electors
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North Carolina 5
II. Financial Powers and Limitations-—C0ntinued
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A. Taxation and Assessments——Continued
(2) Counties——Continued
(b) It shall be the duty’ of the commissioners to
I. exercise a general supervision and control of the penal and charitable
institutions, schools, roads, bridges, levying of taxes, and finances of
the county, as may be prescribed by law.18 * * *
• (c) See page 9, par. (b), and footnote 31.
` (d) See page 4, par. (c), and page 2, par. E.
(3) Other Local Unitslg
(a) It shall be the dutyof the Legislatureto provide
• by general laws for the organization of cities, towns, and incorporated
villages, and to restrict their power of taxation, assessment, borrowing
money,contracting debts, andloaning their credit,so as to prevent abuses
in assessment and in contracting debts by such municipal corp0rations.2O
n · provided such taxes are for "necessary county expenses." Glenn vs. Board of Comm1s—
sloners of Durham County, 201 N. C. 255, 159 S. E. 459 (1951). For cases def1n1ng
"necessary county expenses," see p. 9, footnote 51.
what constitutes a "speclal purpose" w1th1n the meaning of th1s section 1s a
judlclal question. Glenn vs. Board of Commlssloners of Durham County, 201 N.C. 255,
159 S. E. 459 (1951).
The support of the county home for the aged and lnflrm, county ald and poor
• rellef, and public health are "special purposes" for whlch county taxes may exceed
the limit lmposed by this section. Atlantic Coast L1ne Railway Company vs. Lenoir
County, 200 N. C. 494, 157 S. E. 610 (1951).
Medical treatment and hospital care for the "lndlgent sick and afflicted poor"
is a "speclal purpose" and a necessary county expense. Taxes for such purpose may
exceed the constitutional tax l1m1t,and do not requlre the approvalof the electors.
Martln vs. Board of Commissioners of wake County, 208 N.C. 554, 180 S. E.777 (1955).
' It has been held ln the following instances that the taxes were HOC levied for
• a "speclal purpose": To supplement the general county fund (Norfolk-Southern Rall-
way Company vs. Reld, 187 N.C. 520, 121 S.E. 554 (1924);to provlde for deflciencles
1n the necessary expenses and revenue of certain counties (Director Generalof Rall-
roads vs. Commissioners of Bladen County, 178 N.C. 449, 101 S.E. 91 (1919));to meet
"the other current expenses" of a county uicertaln years (wllllamsvs. Craven County
Commissloners. 119 N. C. 520, 26 S. E. 150 (1896)).
18Const1tut1on, Am. vu, sec. 2.
Counties are not regarded as munlclpal corporations In the strict legal sense,
° but as lnstrumentalities of the State,created and organized for the more convenient
administration of government;and ln the exerclseof ordinary governmental functions,
they are subject practically to the unlimited control of the Legislature, unless
restricted by constltutlonal provision. O·Neal vs.Jennette, 190 N.C. 96, 129 S. E.
184 (1925).
19The Leglslature has full power to create taxing districts for special governmental A
purposes, and ls not restricted to towns, counties, or other political subdivisions
• of the State. Thus,1t may create a school district within the limits of a town with
powerto lssue bonds for the purpose of establishing educational facilities. Hammond
vs. McRae, 182 N. C. 747, 110 S. E. 102 (1921).
2OConst1tut1on, Art. VIII, Sec. 4.
Th1s section imposes on the Legislature "a moral obl1gat1on" or duty to pass
· general laws relating to the organization of cltles and towns, leaving lt to the
discretion ofthe Legislature to enactspeclal laws as the needsof the municipalities
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6 North Carolina ,
II. Financial Powers and Limitations-—Continued
•
A. Taxation and Assessments-—Continued
(3) Other Local Units—Continued
(b) See page 9, par. (b), and footnote 31.
(c) * * "F cities and towns may levy a capitation •
tax which shall not exceed one dollar.21 * * °?‘
V (d) In each township there shall be biennially elected,
. . . . 0
by the qualified voters thereof, a clerk and two Justices of the peace,
who shall constitute a board of trustees, and shall, under the supervision
· of the county commissioners, have control of the taxes and finances, roads
and bridges of the townships, as may be prescribed by law.22 =¢= * =i°
B. Exemptions
•
(1) state
(a) Property belonging to the State, ’?‘ * * shall
be exempt from taxation. The General Assembly may exempt cemeteries and
property held for educational, scientific, literary, charitable, or reli-
gious purposes; also wearing apparel, arms for muster, household and •
kitchen furniture, the mechanical and agricultural implements ofmechanics
and farmers; libraries and scientific instruments, or any other personal ·
property, to a value not exceeding three hundred dollars. "The General
Assembly may exempt from taxation not exceeding one thousand dollars
($1,000.00) in value of property held and used as the place of residence •
of the owner."23
(b) * * * the rate of tax on incomes shall not in
any case exceed ten per cent (10%),24 and there shall be allowed the
may require. Kornegay vs. City of Goldsboro, 180 N. C. 441, 105 S. E. 187 (1920). .
In holding that a school district does not come within the purview of this sec-
tion the court upheld the validity of a local act authorizing the Issuance of school
bonds by a county, which act placed no limit upon the amount of indebtedness that
might be incurred. Felmet vs. Commissioners of Buncombe County, 186 N. C. 251, 119
S. E. 353 (1923).
21Const1tut1on, Art. V, Sec. 1. -
For further provisions of this section, see p. 4, par. (c), and footnote 15. ·
22Const1tut1on, Art. VII, Sec. 5.
It is the duty of the county commissioners to divide the county into districts,
which districts shall have corporate powers for the necessary purposes of local gov-
ernment, and be known as townships. Art. VII, Secs. 3 and 4.
2'3ConstItut1on. Art. V, Sec. 5.
with the exception of the provision as to exemption from taxation of State or
munlclpally owned property, which is self-executing and mandatory upon the Legisla- •
ture, all other property Is subject to taxation, In whole or ln part or not at all,
w1th1ntheI,eg1slature's discretion. Statutes exempting specific property from tax-
ation, because of the purposes for which It is used, should be strictly construed.
The last sentence of this section was adopted by the electorate at the November
election, 1936. See Publlc Laws of North Carolina (1935), p. 745.
24'See p. 2, par. (a),and p. 3, footnote 13. ·
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North Carolina 7
II. Financial Powers and Limitations——Continued
~•
B. Exemptions——Continued
(1) state—c¤¤t1¤uea
z 4. Following exemptions, to be deducted f`rom the amount of` annual incomes,
to—wit: f'or married man with a wife living with him, or to a widow or
widower having minor child or children, natural or adopted, not less than
• $2,000; to all other persons not less than $1,000, and there may he allowed
` other deductions (not including living expenses) so that only net incomes
are taxed. 25
(2) Counties and Other Local Units
• (a) Property belonging to * * ’?‘ municipal corpora—
tions, shall be exempt from taxati0n.26 * * *
(h) The General Assembly may levy a capitation tax
on every male inhabitant of` the State over twenty—one and under fifty
` years of` age, ’?° * * and cities and towns may levy a capitation tax
° * * *. The commissioners of the several counties and of the cities and
towns may exempt from the capitation tax any special cases on account of`
· poverty or infi rmi ty.27
• 25Constltut1on, Art. V, Sec. 3, as amended 1936.
z6Constltut1on, Art. V, Sec. 5.
Under a statute exempting from taxation municipal or State owned property when
used exclusively for public purposes, lt was held that property acquired by amun1c1—
Dality in a tax foreclosure proceeding and used by lt for rental purposes was not
exempt from county taxes on the ground that this section of the Constitution ex-
empting State and munlclpally owned property does not apply where the property ls
used in a business or proprietary capacity. Town of Benson vs. Johnston County, 209
' N. C. 751, 185 S. E. 6 (*1936).
A statute levylng an excise tax upon all distributors of gasoline and lncludlng
a munlclpallty wlthln the definition ••d1str1butor¤ was held valld as to a munici-
pality using the gasoline solely for governmental purposes on the ground that the
exemption as to munlclpalltles provlded ln this section applies only to taxes on
property, and does not extend to excise taxes. Stedman vs. Clty of wlnston-Salem,
204 N. C. 203, 167 S. E. B13 (1933).
It was held that a drainage dlstrlct is not a municipal corporation within the
° meaning of this section. Board of Drainage Commissioners of Muddy Creek Drainage
District vs. webb & Company, 160 N. C. 594, 76 S. E. 552 (1912).
In a later case where a statute created the Morehead City Port Commission, a
corporation for the purpose of constructing and maintaining terminals to facilitate
water transportation, and exempted its bonds from State and municipal taxation, the
court upheld the exemption without reference to the webb Company case (case immediately
preceding). "for the reason that the property of the port commission will be held and
• the bonds will be issued solely for public purposes.•· webb vs. Port Commission of
Morehead City: 205 N. C. 663, 172 S. E. 377 (1934). See p. 6, footnote 23.
A hospital organized as a business corporation but accepting charity patients
was held not to be exempt from taxation under a statute exempting the property of
charitable associations or of hospltals used exclusively for charitable purposes.
Salisbury Hospital, Incorporated vs. Rowan County, 205 N. C. B, 169 S. E. 605 (1933).
· 27Const1tut1on, Art. V, Sec. 1.
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8 North Carolina
II. Financial Powers and Limitations-Continued I 
•
C. Borrowing and Use of Credit
(1) State
(a) The General Assembly shall have the power to con-
tract debts and to pledge the faith and credit of the State * * * for V
the following purposes: °
"To fund or refund a valid existing debt;
"To borrow in anticipation of the collection of ·
’ taxes due and payable within the fiscal year to an amount not exceeding
fifty per centum of such taxes;
"To supply a casual deficit;
. "To suppress riots or insurrections, or to repel
invasions.
"For any purpose other than these enumerated, the •
General Assembly shall have no power, during any biennium, to contract
new debts on behalf of the State to an amount in excess of two-thirds of
the amount by which the·State's outstanding indebtedness shall have been
reduced duringthe next preceding biennium, unless the subjectbe submitted
to a vote of the people of the State; * * *. In any election held in •
the State * * * under the provisions of this section, the proposed
I indebtedness must be approved by a majority of those who shall vote there- ·
z On_n28 =.‘= =‘; =.‘=
(b) * * * And the General Assembly shall have no
power to give or lend the credit of the State in aid of any person, asso- •
ciation, or corporation, except to aid in the completion of such railroads
as may be unfinished at the time of the adoption of this Constitution, or
in which the State has a direct pecuniary interest, unless the subject be
submitted to a direct vote of the people of the State, and be approved by
a majority of those who shall vote thereon.29 •
(2) Counties and Other Local Units
(a) The General Assembly shall have the power * * *
to authorize counties and municipalities to contract debts and pledge
their faith and credit for the following purposes:
—-j~ . •‘
280
onstltutlon, Art. V, Sec. 4.
So much of Art. V, Sec. 4, as ls set forth in par. (a), (State), above, was
adopted by the electorate in November 1936. See Public Laws of North Carolina
(1935), p. 271.
z9Const1tut1on, Art. V, Sec. 4.
It was held that neither the credit of the State nor the municipality of More-
head Clty was pledged 1n a1d of the ••Port Commission of Morehead City, •* a corporation *
created by statute for the governmental purpose of constructing and maintaining
transportation terminals, where the statute provlded that bonds issued by the corpo-
ration should be payable only out of revenues derived from the operation of the
terminals and solely on the credit of the corporation. webb vs. Port Commission of
Morehead Clty, 205 N. C. 663, 172 S. E. 3'7'7 (1934).
See p. 9, footnote 31.
•

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North Carolina 9
II. Financial Powers and Limitations-Continued
l•
C. Borrowing and Use of Credit-—Continued
(2) Counties and Other Local Units-—Continued
• "To fund or refund a valid existing debt;
"To borrow in anticipation of the collection of
taxes due and payable within the fiscal year to an amount not exceeding
·• fifty per centum of such taxes;
° VTo supply a casual deficit;
”To suppress riots or insurrections, or to repel
invasions.
”For any purpose other than these enumerated,
• * * * the General Assembly shall have no power·to authorize counties or
municipalities to contract debts, and counties and municipalities shall
not contract debts, during any fiscal year, to an amount exceeding two-
thirds of the amount by which the outstanding indebtedness ofthe partic-
ular county or municipality shall have been reduced during the next pre-
. ceding fiscal year, unless the subject be submitted to a vote of the
• . . . . .
people of the particular county or municipality. In any election held
* * * ‘in any county or municipality under the provisions of this sec-
· tion, the proposed indebtedness must be approved by a majority of those
who shall vote thereon.”3O * * *
_ (b) No county, city, town, or other municipal corpo-
• . . . . .
ration 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 by a. vote of the majority of
the qualified voters therein.51
(c) See page 5, par. (b).
  W
(d) See page 5, par. (a), and page 6, par. (d).
3OConstltut1on, Art. V, Sec. 4.
So much otArt. V,Sec. 4,as ls set forthln par.(a), (C0unt1es),p.B, was adopted
. by the electorateln November 1956. SeePubl1c Laws of North Carollna (1935). p. 271.
31Const1tut1on, Art. VII, Sec. 7.
In construlng th1s section with Art. V, Sec. 6 (see p. 3, par. (b)) providing
for an exception to the tax llmlt which may be imposed by counties for speclal pur-
poses, It was held ¤•(1) that for necessary expenses the munlclpal authorities may
levy a tax up to the constitutional limitation without a vote of the people and '
without legislative permission; (2) that for necessary expenses they may exceed the
constitutional limitation by leglslatlve authority, without a vote of the people;
° and (5) thatrorpurposes other than necessary expenses a tax cannotbelevled elther
within or in excess of the constitutional llmltatlon except by a vote or the people
under Special legislative authority * * *. Henderson vs.C1ty or wllmlngton, 191
N. C. 269, 132 S. E. 25 (1926).* Thls ls a clearand accurate statement of the prin-
clplesof constitutional law applicable to municipal taxatlonln this state.¤ Burle-
· son vs. Board o1' Alderman of Town of Spruce Pines, 200 N. C. Z0, 156 S. E. 241 (1930).
See p. 4, footnote 17.
•

 O
2
10 North Carolina ‘
II. Financial Powers and Limitations-—Continued ‘
•
I). Uther Income
(1) The proceeds of all lands that have been or hereafter
may be granted by the United States to this State, and not otherwise ap-
propriated by this State or the United States; also all moneys, stocks,
•
The term "necessary expense"as used ln this section includes law and fact, and
• ls a question forjudlclal determination. Henderson vs. City of Wilmington, 191 N. C. U
269, 152 S. E. 25 (1926). This case includes an extended review of authorities pre-
senting general and specific definitions of the term.
The maintenance of a home for the support of the indigent aged and infirm is a V
necessary county expense. Board of Commissioners of Caldwell County vs. Sidney
- Spltzer, 175 N. C. 147, 91 S. E. 707 (1917).
The construction and repair of bridges and roads are necessary county expenses.
Barbour vs. Wake County, 197 N. C. 514, 148 S. E. 470 (1929).
A publ1c hospltal is not a necessary expense of a town within the meaning of U
this section; therefore, bonds Issued by a town for the construction and maintenance
of a hospltal must have the approval of the qualified voters and legislative author-
ization. Armstrong vs. Board of Commissioners of Gaston County, 185 N. C. 405, 11*7
S. li. 588 (1925); Burleson vs. Board of Aldermen of Town of Spruce Pines, 200 1;. C.
50, 156 S. Ii. 241 (1950).
A county board of education which contracted with certain mutual fire insurance
companies for Insurance on a school building by the payment of a fixed premium with
a further contingent liability not to exceed an amount equal to the fixed premium •
was held not to have loaned its credit to a private corporation within the meaning
of th1s sectlon and Art. V, Sec. 4 (see p. 8, par. (b)) prohibiting the State from
lending Its credlt ln ald of any person, association, or corporation without an ap- ·
proval of a majority of the electors. The court stated that the contract was in
effect a purchase of the Insurance, asa necessary county expense for the pr