Constitution of Nebraska — Article XIII

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XIII-1 State may contract debts; limitation; exceptions.

Reissue Revised Statutes of Nebraska

XIII-1

State may contract debts; limitation; exceptions.

The state may, to meet casual deficits, or failures in the revenue, contract debts never to exceed in the aggregate one hundred thousand dollars, and no greater indebtedness shall be incurred except for the purpose of repelling invasion, suppressing insurrection, or defending the state in war, and provision shall be made for the payment of the interest annually, as it shall accrue, by a tax levied for the purpose, or from other sources of revenue, which law providing for the payment of such interest by such tax shall be irrepealable until such debt is paid; Provided, that if the Legislature determines by a three-fifths vote of the members elected thereto that (1) the need for construction of highways in this state requires such action, it may authorize the issuance of bonds for such construction, and for the payment of the interest and the retirement of such bonds it may pledge any tolls to be received from such highways or it may irrevocably pledge for the term of the bonds all or a part of any state revenue closely related to the use of such highways, such as motor vehicle fuel taxes or motor vehicle license fees and (2) the construction of water retention and impoundment structures for the purposes of water conservation and management will promote the general welfare of the state, it may authorize the issuance of revenue bonds for such construction, and for the payment of the interest and the retirement of such bonds it may pledge all or any part of any state revenue derived from the use of such structures; and provided further, that the Board of Regents of the University of Nebraska, the Board of Trustees of the Nebraska State Colleges, and the State Board of Education may issue revenue bonds to construct, purchase, or otherwise acquire, extend, add to, remodel, repair, furnish, and equip dormitories, residence halls, single or multiple dwelling units, or other facilities for the housing and boarding of students, single or married, and faculty or other employees, buildings and structures for athletic purposes, student unions or centers, and for the medical care and physical development and activities of students, and buildings or other facilities for parking, which bonds shall be payable solely out of revenue, fees, and other payments derived from the use of the buildings and facilities constructed or acquired, including buildings and facilities heretofore or hereafter constructed or acquired, and paid for out of the proceeds of other issues of revenue bonds, and the revenue, fees, and payments so pledged need not be appropriated by the Legislature, and any such revenue bonds heretofore issued by either of such boards are hereby authorized, ratified, and validated. Bonds for new construction shall be first approved as the Legislature shall provide.

Neb. Const. art. XII, sec. 1 (1875);

Transferred by Constitutional Convention, 1919-1920, art. XIII, sec. 1;

Amended 1968, Laws 1967, c. 324, sec. 1, p. 861;

Amended 1970, Laws 1969, c. 428, sec. 1, p. 1448;

Amended 1982, Laws 1982, LB 577, sec. 1.

Section 66-825, R.S.Supp.,1979, which authorizes a plan for the development of alcohol plants and facilities in Nebraska in effect authorizes the State to guarantee payment of bonds authorized to be issued and thus is unconstitutional and void as violation of this section of the constitutional limitation on debt. State ex rel. Douglas v. Thone, 204 Neb. 836, 286 N.W.2d 249 (1979).

A lease agreement between the state and a municipal corporation with annual rental periods does not violate this Article and section of the Nebraska Constitution, when the liability of the state is conditioned upon a legislative appropriation having been made before each rental period begins. Ruge v. State, 201 Neb. 391, 267 N.W.2d 748 (1978).

Act which allowed pledging of fees and charges received by the commission beyond the biennium violated this section. State ex rel. Meyer v. Duxbury, 183 Neb. 302, 160 N.W.2d 88 (1968).

Obligations which are to be paid from revenue subject to appropriation by future Legislatures are subject to the state debt limitation of this section. State ex rel. Meyer v. Steen, 183 Neb. 297, 160 N.W.2d 164 (1968).

Law authorizing city of Omaha to build a bridge and finance it by issuing revenue bonds which are charges solely against revenue to be derived from tolls, was valid. Kirby v. Omaha Bridge Commission, 127 Neb. 382, 255 N.W. 776 (1934).

Under the present Constitution the state indebtedness, except for certain extraordinary contingencies, is limited to $100,000. State ex rel. Bd. of Educ. Lands & Funds v. Stuefer, 66 Neb. 381, 92 N.W. 646 (1902).

XIII-2 Industrial and economic development; powers of counties and municipalities.

Reissue Revised Statutes of Nebraska

XIII-2

Industrial and economic development; powers of counties and municipalities.

Notwithstanding any other provision in the Constitution, the Legislature may authorize any county or incorporated city or village, including cities operating under home rule charters, to acquire, own, develop, and lease real and personal property suitable for use by manufacturing or industrial enterprises and to issue revenue bonds for the purpose of defraying the cost of acquiring and developing such property by construction, purchase, or otherwise. The Legislature may also authorize such county, city, or village to acquire, own, develop, and lease real and personal property suitable for use by enterprises as determined by law if such property is located in blighted areas as determined by law and to issue revenue bonds for the purpose of defraying the cost of acquiring and developing or financing such property by construction, purchase, or otherwise. Such bonds shall not become general obligation bonds of the governmental subdivision by which such bonds are issued. Any real or personal property acquired, owned, developed, or used by any such county, city, or village pursuant to this section shall be subject to taxation to the same extent as private property during the time it is leased to or held by private interests, notwithstanding the provisions of Article VIII, section 2, of the Constitution. The acquiring, owning, developing, and leasing of such property shall be deemed for a public purpose, but the governmental subdivision shall not have the right to acquire such property by condemnation. The principal of and interest on any bonds issued may be secured by a pledge of the lease and the revenue therefrom and by mortgage upon such property. No such governmental subdivision shall have the power to operate any such property as a business or in any manner except as the lessor thereof.

Notwithstanding any other provision in the Constitution, the Legislature may also authorize any incorporated city or village, including cities operating under home rule charters, to appropriate such funds as may be deemed necessary for an economic or industrial development project or program subject to approval by a vote of a majority of the registered voters of such city or village voting upon the question. Subject to such vote, funds may be derived from property tax, local option sales tax, or any other general tax levied by the city or village or generated from municipally owned utilities or grants, donations, or state and federal funds received by the city or village subject to any restrictions of the grantor, donor, or state or federal law.

Neb. Const. art. XII, sec. 2 (1875);

Transferred by Constitutional Convention, 1919-1920, art. XIII, sec. 2;

Amended 1972, Laws 1971, LB 688, sec. 1;

Amended 1982, Laws 1982, LB 634, sec. 1;

Amended 1990, Laws 1990, LR 11, sec. 1;

Amended 2010, Laws 2010, LR 297CA, sec. 1.

1. Constitutionality

2. Prior law

3. Miscellaneous

1. Constitutionality

Provisions of section 18-1401 for expenditure of tax money and income from proprietary functions for purchase by a municipality or a county of property for industrial development violate the Constitution, but the provisions for expenditures for other purposes by a municipality or county itself or through private organizations are constitutional. Chase v. County of Douglas, 195 Neb. 838, 241 N.W.2d 334 (1976).

2. Prior law

The public buildings authorized by L.B. 1003, Eighty-second Legislature, First Session (sections 23-2601 to 23-2612), to be used exclusively for public purposes are not works of internal improvement within the meaning of this section. Dwyer v. Omaha-Douglas Public Building Commission, 188 Neb. 30, 195 N.W.2d 236 (1972).

Airport Authority Act did not violate this section. Obitz v. Airport Authority of City of Red Cloud, 181 Neb. 410, 149 N.W.2d 105 (1967).

Industrial Development Act of 1961 was sustained as constitutional under constitutional amendment notwithstanding this section. State ex rel. Meyer v. County of Lancaster, 173 Neb. 195, 113 N.W.2d 63 (1962).

Paving by city of second class is not work of internal improvement requiring submission to electors. Wookey v. City of Alma, 118 Neb. 158, 223 N.W. 953 (1929).

State roads are not works of internal improvement requiring election before donations thereto. State v. Bone Creek Township, 109 Neb. 202, 190 N.W. 586 (1922), rehearing denied 109 Neb. 208, 193 N.W. 767 (1923).

Donations can be made only to aid in works of internal improvement, and a system of waterworks is not a work of internal improvement. Village of Grant v. Sherrill, 71 Neb. 219, 98 N.W. 681 (1904).

Bridges built by county and wholly within it are not works of internal improvement. DeClerq v. Hager, 12 Neb. 185, 10 N.W. 697 (1881).

3. Miscellaneous

A request for injunction is a proper form in which to present the question of unlawful or improper exercise of the power of eminent domain, because the attempt to deprive a private citizen of an estate in his property, if successful, makes the resulting damage irreparable and legal remedies inadequate. Monarch Chemical Works, Inc. v. City of Omaha, 203 Neb. 33, 277 N.W.2d 423 (1979).

The taking of substandard or blighted areas by a city for redevelopment and resale, in accordance with an approved redevelopment plan which is in conformity with a general plan for the municipality as a whole as provided for in these sections, is a proper public use for a municipality. Monarch Chemical Works, Inc. v. City of Omaha, 203 Neb. 33, 277 N.W.2d 423 (1979).

This section does not prohibit a city from using the power of eminent domain to acquire and develop land for manufacturing and industrial sites. Monarch Chemical Works, Inc. v. City of Omaha, 203 Neb. 33, 277 N.W.2d 423 (1979).

This section does not prohibit Legislature from authorizing the electors of a county to vote bonds for poor relief. In re House Roll 284, 31 Neb. 505, 48 N.W. 275 (1891).

XIII-3 Credit of state; exception.

Reissue Revised Statutes of Nebraska

XIII-3

Credit of state; exception.

The credit of the state shall never be given or loaned in aid of any individual, association, or corporation, except that the state may guarantee or make long-term, low-interest loans to Nebraska residents seeking adult or post high school education at any public or private institution in this state. Qualifications for and the repayment of such loans shall be as prescribed by the Legislature.

Neb. Const. art. XII, sec. 3 (1875);

Transferred by Constitutional Convention, 1919-1920, art. XIII, sec. 3;

Amended 1968, Laws 1967, c. 321, sec. 1, p. 855.

1. Laws violating prohibition on extending credit

2. Laws not violating prohibition

3. Miscellaneous

1. Laws violating prohibition on extending credit

Act providing for the reimbursement of funds to depositors of failed industrial loan and investment companies violated this provision. Haman v. Marsh, 237 Neb. 699, 467 N.W.2d 836 (1991).

Provisions of section 18-1401 for expenditure of tax money and income from proprietary functions for purchase by a municipality or a county of property for industrial development violate the Constitution, but the provisions for expenditures for other purposes by a municipality or county itself or through private organizations are constitutional. Chase v. County of Douglas, 195 Neb. 838, 241 N.W.2d 334 (1976).

Statute offering bounty to provide for the encouragement of the manufacture of sugar and chicory violated this section. Oxnard Beet Sugar Co. v. State, 73 Neb. 66, 105 N.W. 716 (1905).

2. Laws not violating prohibition

The Nebraska Hospital-Medical Liability Act neither implies nor mandates any state obligation or extension of credit for claims under the excess liability fund. Prendergast v. Nelson, 199 Neb. 97, 256 N.W.2d 657 (1977).

Nebraska Clean Waters Commission Act did not violate this section. State ex rel. Meyer v. Duxbury, 183 Neb. 302, 160 N.W.2d 88 (1968).

Industrial Development Act of 1961 was sustained as constitutional under constitutional amendment notwithstanding this section. State ex rel. Meyer v. County of Lancaster, 173 Neb. 195, 113 N.W.2d 63 (1962).

Statute creating pensions to firemen does not contravene this section. State ex rel. Haberlan v. Love, 89 Neb. 149, 131 N.W. 196 (1911).

3. Miscellaneous

This provision prevents the state or any of its governmental subdivisions from extending the state's credit to private enterprise; it is designed to prohibit the state from acting as a surety or guarantor of the debt of another. Japp v. Papio-Missouri River NRD, 273 Neb. 779, 733 N.W.2d 551 (2007).

The state's credit is inherently the power to levy taxes and involves the obligation of its general fund. Haman v. Marsh, 237 Neb. 699, 467 N.W.2d 836 (1991).

Prohibition against loaning of credit applies to the state and all political subdivisions thereof. State ex rel. Beck v. City of York, 164 Neb. 223, 82 N.W.2d 269 (1957).

Section was intended to prevent the state from extending its credit to private enterprises. United Community Services v. Omaha Nat. Bank, 162 Neb. 786, 77 N.W.2d 576 (1956).

XIII-4 Nonprofit enterprise development; powers of counties and municipalities.

Reissue Revised Statutes of Nebraska

XIII-4

Nonprofit enterprise development; powers of counties and municipalities.

Notwithstanding any other provision in this Constitution, the Legislature may authorize any county, city, or village to acquire, own, develop, and lease or finance real and personal property, other than property used or to be used for sectarian instruction or study or as a place for devotional activities or religious worship, to be used, during the term of any revenue bonds issued, only by nonprofit enterprises as determined by law and to issue revenue bonds for the purpose of defraying the cost of acquiring and developing or financing such property by construction, purchase, or otherwise. Such bonds shall not become general obligation bonds of the governmental subdivision by which such bonds are issued, and such governmental subdivision shall have no authority to impose taxes for the payment of such bonds. Notwithstanding the provisions of Article VIII, section 2, of this Constitution, the acquisition, ownership, development, use, or financing of any real or personal property pursuant to the provisions of this section shall not affect the imposition of any taxes or the exemption therefrom by the Legislature pursuant to this Constitution. The acquiring, owning, developing, and leasing or financing of such property shall be deemed for a public purpose, but the governmental subdivision shall not have the right to acquire such property for the purposes specified in this section by condemnation. The principal of and interest on any bonds issued may be secured by a pledge of the lease and the revenue therefrom and by mortgage upon such property. No such governmental subdivision shall have the power to operate any such property as a business or in any manner except as the lessor thereof.

Neb. Const. art. XIII, sec. 4 (2010); Adopted 2010, Laws 2010, LR295CA, sec. 1.