Counties; Constitutional Debt Limitation

Subject:

Requested By: Dr. Sarah T. Morrow, Secretary Department of Human Resources

Questions: May a county, under the circumstances set forth in the opinion, procure a loan from the State Public Assistance Contingency Fund (N.C.G.S. 108-54.1) without securing approval on the qualified voters of the county, as provided in Article V, Section 4 of the North Carolina Constitution?

 

1.  
2. Is a debt incurred pursuant to Article V, Section 4(2)(a)-(e) subject to the two-thirds limitation imposed by Article V, Section 4(2)(f)?

    

Conclusions: A county may procure a loan under such circumstances: (a) if such loan will not violate the provisions of Article V, Section 4(2)(f); or (b) if the Governor determines the existence of an emergency under the provisions of Article V, Section 4(2)(e) of the Constitution.

 

1.  
2. No.

    

The letter requesting this opinion states that several counties are unable to pay the county share of Medicaid (Ch. 108, Art. 2, Part 5, N.C.G.S) because the 1978 Session of the North Carolina General Assembly increased the percentage that counties must pay from fifteen (15%) percent to thirty-five (35%) percent of the non-federal share. Inquiry is made whether, in view of the provisions of Article V, Section 4 of the North Carolina Constitution, loans can be made to such counties without such loans being approved by the qualified voters of the respective counties.

The provisions of Subsection (2) of Article V, Section 4 of the Constitution, which are particularly applicable here, read as follows:

"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 to exceed 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."

Since the inquiry, as made, does not contemplate a loan within the provisions of Article V, Section 4(2)(f) (which permits authorization of debt without voter approval if the local unit’s indebtedness does not exceed two-thirds of the amount by which the unit’s outstanding indebtedness was reduced during the next preceding fiscal year), it is assumed that the counties involved would not qualify under such provision. The question, then, is whether the loan could be made under one or more of the other five exceptions appearing in Section 4(2).

It is our opinion that Section 4(2)(e) is the only exception, if applicable, that meets the circumstances of the inquiry. Section 4(2)(e) is an exception designed "to meet emergencies immediately threatening the public health or safety, as conclusively determined in writing by the Governor."

A further inquiry is whether a loan made pursuant to any exception appearing in Section 4(2)(a)-(e) will be unconstitutional if it exceeds the limitation imposed by Section 4(2)(f). We conclude that the two-thirds limitation set forth in Section 4(2)(f) does not apply to a loan made pursuant to Section 4(2)(a)-(e). Section 4(2)(f) exempts from voter approval debt incurred "for purposes authorized by general laws uniformly applicable throughout the State" so long as such debt does not exceed the two-thirds limitation. As is clear from Article XIV, Section 3 of the Constitution, "general laws uniformly applicable" are laws enacted by the General Assembly, not constitutional provisions. Thus, Section 4(2)(f) applies to debts authorized by laws enacted by the General Assembly, and not to debts specifically authorized by the Constitution.

We conclude, therefore, that upon determination in writing by the Governor, in an appropriate situation, of an emergency immediately threatening the public health or safety, a loan may be made to a county or counties from the State Public Assistance Contingency Fund without approval by the voters of the county or counties and that such loan would not be subject to the two-thirds limitation imposed by Article V, Section 4(2)(f) of the Constitution.

Rufus L. Edmisten Attorney General

Henry T. Rosser Assistant Attorney General