A BILL TO BE ENTITLED
AN ACT to amend the constitution of north carolina to limit the ability of the governor to withhold local reimbursements.
The General Assembly of North Carolina enacts:
SECTION 1.  Article III, Section 5(3) of the North Carolina Constitution reads as rewritten:
"(3)	Budget. The Governor shall prepare and recommend to the General Assembly a comprehensive budget of the anticipated revenue and proposed expenditures of the State for the ensuing fiscal period. The budget as enacted by the General Assembly shall be administered by the Governor.
The total expenditures of the State for the fiscal period covered by the budget shall not exceed the total of receipts during that fiscal period and the surplus remaining in the State Treasury at the beginning of the period. To insure that the State does not incur a deficit for any fiscal period, the Governor shall continually survey the collection of the revenue and shall effect the necessary economies in State expenditures, after first making adequate provision for the prompt payment of the principal of and interest on bonds and notes of the State according to their terms, whenever he determines that receipts during the fiscal period, when added to any surplus remaining in the State Treasury at the beginning of the period, will not be sufficient to meet budgeted expenditures. This section shall not be construed to impair the power of the State to issue its bonds and notes within the limitations imposed in Article V of this Constitution, nor to impair the obligation of bonds and notes of the State now outstanding or issued hereafter.
The General Assembly recognizes that it has required units of local government to adopt and maintain annual balanced budgets and take other steps to assure financially sound operations. Accordingly, the General Assembly finds that in order to satisfy those statutory requirements and provide adequate services to their citizens, units of local government must be able to rely on the funds and local revenue sources the General Assembly has provided.
In exercising the powers contained in this subsection, the Governor shall not withhold from distribution funds that have been collected by the State on behalf of local governments or funds that the General Assembly has appropriated, earmarked, or otherwise committed to local governments unless, after making adequate provision for the prompt payment of principal of and interest on bonds and notes of the State according to their terms, the Governor has exhausted all other sources of revenue of the State including surplus remaining in the treasury at the beginning of the fiscal period. The intent of this paragraph is that debt service be paid first, local government second, and then other appropriations.
This subsection does not authorize the Governor to withhold revenues from taxes levied by units of local governments and collected by the State. The General Assembly recognizes that under Section 19 of Article I of this Constitution and under the Due Process Clause of the United States Constitution, the State is prohibited from taking local tax revenue."
SECTION 2.  The amendment set out in this act shall be submitted to the qualified voters of the State at a statewide election to be held on the Tuesday after the first Monday in November of 2006, which election shall be conducted under the laws then governing elections in the State. Ballots, voting systems, or both may be used in accordance with Chapter 163 of the General Statutes. The question to be used in the voting systems and ballots shall be:
"[ ] FOR	[ ] AGAINST
Constitutional amendment limiting the ability of the Governor to withhold local reimbursement."
SECTION 3.  If a majority of the votes cast on the question are in favor of the amendment set out in this act, the State Board of Elections shall certify the amendment to the Secretary of State and shall enroll the amendment so certified among the permanent records of that office. If approved, the amendment set out in this act becomes effective January 1, 2007.
SECTION 4.  This act is effective when it becomes law.