North Carolina Constitution Article V, Finance
North Carolina Constitution – Article V: Finance
Summary:
Article V of the North Carolina Constitution governs the state’s financial policies, including taxation, public debt, state and local budgeting, and restrictions on public funds use. Its goal is to ensure fiscal responsibility, equity in taxation, and transparency in how public money is collected and spent.
🔹 Section-by-Section Summary:
Section 1 – Power of taxation
The power to levy taxes is vested in the General Assembly.
Taxes must be for public purposes only and must be uniform across similar subjects.
Section 2 – State debt
The state may borrow money only:
For public purposes,
And only if approved by a majority of voters in a statewide referendum,
Except in cases of emergency (e.g., natural disasters) or to refinance existing debt.
Section 3 – State debt not to be contracted except by law
The General Assembly must enact laws to authorize borrowing, and specific conditions and limits must be met.
Section 4 – Credit of the State
The state is prohibited from lending its credit or guaranteeing debts for any person, association, or corporation except as allowed under specific constitutional provisions.
Section 5 – Local government debt
Local governments (cities, counties, etc.) may incur debt only with voter approval, and the debt must not exceed limits set by law.
Section 6 – Lending of credit by local governments
Local governments cannot lend their credit or support private entities, with few exceptions (like aiding in public utilities or economic development).
Section 7 – Drawing of public money
Public funds can only be drawn from the State Treasury by appropriations made by law.
Section 8 – Use of proceeds
Proceeds from taxes or debt must be used only for the purpose for which they were raised.
Section 9 – Income tax
The General Assembly may levy an income tax, but it must be graduated (progressive) and not exceed a certain rate (currently 5.25% under statutory law, though constitutional maximum may differ based on amendments).
Section 10 – Homestead and personal property exemptions
Protects certain amounts of an individual’s property from taxation or seizure, especially the homestead.
Section 11 – Property classified for taxation
The General Assembly may classify property for taxation purposes and must apply uniform rules within each class.
Section 12 – Exemptions from property tax
Certain types of property are exempt from taxation, such as:
Government property
Charitable, educational, and religious institutions
Public burying grounds
🔍 Key Themes:
Accountability: Strict rules on borrowing and use of funds.
Equity: Uniform taxation and clear limits on exemptions.
Transparency: Public approval required for most new debts.
Protection: Certain property rights and public purposes are safeguarded.
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