Editor's notes.

- In light of the similarity of the provisions, decisions under former Ga. Const. 1976, Art. VII, Sec. III, Para. I and antecedent provisions are included in the annotations for this paragraph. Current provisions on the same subjects and cases construing them now appear in this paragraph and Paragraphs II through IV of this section.

This paragraph was not violated by Ga. L. 1912, p. 230 for discounting the rentals of the Western and Atlantic Railroad. Wright v. Hardwick, 152 Ga. 302, 109 S.E. 903 (1921) (see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

Proper construction of this paragraph and former Ga. Const. 1976, Art. IX, Sec. VI, Para. I (see now Ga. Const. 1983, Art. VII, Sec. IV, Para. III).

- This paragraph and former Ga. Const. 1976, Art. IX, Sec. VI, Para. I (see now Ga. Const. 1983, Art. VII, Sec. IV, Para. III), were each in the Constitution of 1945 when it was adopted. They deal with the same subject matter, namely, "finance, taxation & public debt." They are of equal dignity and to give full force and effect to the will of the people, as thus expressed, they must be construed together, in pari materia. The latter lifts out of the former any inhibition against creation of a debt insofar as creation of a debt is authorized by the latter clause. Any other construction would render one of them meaningless and the Supreme Court will not ascribe to the people an intention to adopt a Constitution containing inconsistent provisions. McLucas v. State Bridge Bldg. Auth., 210 Ga. 1, 77 S.E.2d 531 (1953) (decided under Ga. Const. 1945, Art. IX, Sec. VI, Para. I; see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

This paragraph permits the legislature to authorize debt for any purpose that is consistent with the terms of subparagraph (c). Fuller v. State, 232 Ga. 581, 208 S.E.2d 85 (1974) (see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

An authority, being an agent of the state but not the state, is not restricted by state's debt limitation under this paragraph. Rich v. State, 237 Ga. 291, 227 S.E.2d 761 (1976) (see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

Word "debt" means any obligation of the state to pay money or other thing of value, which obligation arises the very moment that it is undertaken, and continues until discharged by payment. Barwick v. Roberts, 188 Ga. 655, 4 S.E.2d 664 (1939).

Warrant does not evidence a debt on the part of the state. It creates no contract. Harrison v. Hardman, 169 Ga. 435, 150 S.E. 542 (1929).

Effect of tendering executive warrant upon state treasury.

- An executive warrant upon the state treasury, authorizing payment of money in pursuance of an appropriation made by law, is not a contract nor in the nature of a contract, but is only a license or power, and is revocable so long as the payment which it warranted has not been made. Harrison v. Hardman, 169 Ga. 435, 150 S.E. 542 (1929).

Should a fund fail to materialize, whatever rights and privileges purchasers of warrants may have had, had not their obligations against state been so met, are not absolutely extinguished in all respects, but shall continue to exist or remain in abeyance for benefit of holders of corresponding warrants should the specific fund for their payment fail to materialize. No debt is thus created by or on behalf of the state, but as part of consideration for sale and discount of the warrants. The holders in a given contingency are allowed certain rights which other obligees formerly had against the state which had never been entirely extinguished, but had been preserved for such holders upon a contingency. Harrison v. Hardman, 169 Ga. 435, 150 S.E. 542 (1929).

Instance of debt inhibited and invalid pursuant to state Constitution.

- An agreement between the Commissioner of Agriculture and an individual, whereby the Commissioner, in consideration of an assignment to the Commissioner of a number of leases to lands on which the state farm market is located, promises to pay the assignor, in addition to the consideration expressed in the assignment, $100.00 per month for a period of several years, such promise is a debt inhibited by the Constitution, and cannot be enforced, nor would full performance by the assignor of the agreement impose any legal duty on the state or its officials to comply with such invalid contract. Barwick v. Roberts, 188 Ga. 655, 4 S.E.2d 664 (1939).

Section 32-10-9 does not violate the debt restriction and limitation provision of the state Constitution.

- Neither Ga. L. 1953, Jan.-Feb. Sess., p. 626 (see now O.C.G.A. Art. 1, Ch. 10, T. 32), nor the lease contract which the state highway department (now Department of Transportation) made with the State Bridge Building (now Georgia Highway) Authority under and pursuant to Ga. L. 1953, Jan.-Feb. Sess., p. 626, § 8 (see now O.C.G.A. § 32-10-9) for the use of its facilities or services violates the debt restriction and limitation provision of the Constitution. On their face they do not run counter to the Constitution, and the Supreme Court will not attribute to state lawmakers a purpose to circumvent the provisions of that instrument. McLucas v. State Bridge Bldg. Auth., 210 Ga. 1, 77 S.E.2d 531 (1953).

Ga. L. 1953, Jan.-Feb. Sess., p. 626, § 14 (see now O.C.G.A. § 32-10-30), insofar as it authorized issuance of negotiable revenue bonds, did not offend the constitutional provisions. McLucas v. State Bridge Bldg. Auth., 210 Ga. 1, 77 S.E.2d 531 (1953).

Highway Authority's revenue bonds not state obligations or debts.

- While the State Bridge Building (now Georgia Highway) Authority is an instrumentality of the state, it is nevertheless not the state, nor a part of the state, nor an agency of the state. It is a mere creature of the state, having a distinct corporate entity. Its revenue bonds are not obligations or debts of the state, nor a pledge of the credit of the state, but they are payable solely and exclusively from revenue derived from use of its facilities; and the state is not directly, indirectly, or contingently obligated to levy or pledge any form of taxation whatsoever therefor or to make any appropriation for the payment of them, and Ga. L. 1953, Jan.-Feb. Sess., p. 626, § 23 (see now O.C.G.A. § 32-10-39), requires that the bonds, when issued, must contain recitals on their face to this effect. They are first, last, and always a corporate debt of the authority and in no sense a debt of the state. McLucas v. State Bridge Bldg. Auth., 210 Ga. 1, 77 S.E.2d 531 (1953).

Ga. L. 1949, p. 1009 (see now O.C.G.A. Art. 5, Ch. 3, T. 20), forbids any attempt to obligate the state, pledge the state's faith or credit, or donate anything belonging to the state; therefore, neither the article, lease contract executed thereunder, nor the revenue bonds issued pursuant thereto offend constitutional inhibitions against state debts, donations, or pledging the faith and credit of the state. Sheffield v. State Sch. Bldg. Auth., 208 Ga. 575, 68 S.E.2d 590 (1952).

An obligation incurred by the Board of Regents of the University System of Georgia, is not a debt of the state, and therefore is not affected by constitutional limitations upon state indebtedness. State v. Regents of Univ. Sys., 179 Ga. 210, 175 S.E. 567 (1934).

It cannot be said that creation of a debt by the Regents of the University System of Georgia is unconstitutional under this paragraph. Villyard v. Regents of Univ. Sys., 204 Ga. 517, 50 S.E.2d 313 (1948) (see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

Instance of debt contemplated by this paragraph.

- Even though the statute establishing state farmers markets provides that fees shall be charged by the markets and used to pay the expenses of establishing and operating them, since the statute does not prohibit other assets of the state from being used in paying such expenses, a debt for an alleged sale of leases of the land on which the market was situated, constituted a debt as contemplated by this paragraph of the state Constitution. Barwick v. Roberts, 188 Ga. 655, 4 S.E.2d 664 (1939) (see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

Conclusiveness of court judgment validating revenue certificates under Art. 3, Ch. 82, T. 36. - A judgment of the superior court validating revenue certificates under Ga. L. 1957, p. 36, § 1 (see now O.C.G.A. Art. 3, Ch. 82, T. 36), unexcepted to, or affirmed on review, is conclusive against the municipality and the citizens of the municipality upon all questions, including the constitutionality of the statute under which the proceedings are had. Cox v. Georgia Educ. Auth., 225 Ga. 542, 170 S.E.2d 240 (1969).

Construction and improvement of water and sewage treatment facilities are activities that the Georgia Development Authority was expressly empowered to undertake by Ga. L. 1983, pp. 1024, 1026 and are not germane to the authority's powers as they existed before November 8, 1960; therefore, the state may not incur general obligation debt for these new purposes. Georgia State Fin. & Inv. Comm'n v. State, 253 Ga. 766, 325 S.E.2d 162 (1985).

Cited in State Ports Auth. v. Arnall, 201 Ga. 713, 41 S.E.2d 246 (1947); State v. State Toll Bridge Auth., 210 Ga. 690, 82 S.E.2d 626 (1954); State v. Blasingame, 212 Ga. 222, 91 S.E.2d 341 (1956); Gordon v. Clinkscales, 215 Ga. 843, 114 S.E.2d 15 (1960); Carter v. Burson, 230 Ga. 511, 198 S.E.2d 151 (1973); Sears v. State, 232 Ga. 547, 208 S.E.2d 93 (1974).

Editor's notes.

- In light of the similarity of the provisions, opinions noted under former Ga. Const. 1976, Art. VII, Sec. III, Para. I and antecedent provisions are included in the annotations for this paragraph. Current provisions on the same subjects and opinions construing them now appear in this paragraph and Paragraphs II through IV of this section.

Section 20-2-832 possibly ineffective.

- Former Code 1933, § 32-1302, (see now O.C.G.A. § 20-2-832) was ineffective since adoption of the 1945 Constitution which abolished, by provisions of Ga. Const. 1976, Art. VII, Sec. II, Para. III (see Ga. Const. 1983, Art. VII, Sec. III, Para. II), special or allocated funds and required that all funds of the state be paid into the general fund of the state treasury and appropriated therefrom as required by the Constitution, and this paragraph limited the purposes and the amounts to those therein specified that may be borrowed by the state. 1948-49 Op. Att'y Gen. p. 642.(see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

County board of education authority to expend funds on facility located on property owned by Georgia Education Authority (Schools).

- Since a board of education can expend money to construct a facility and then convey that facility to a public authority, a county board of education is constitutionally authorized to expend funds on a facility that will be located on property owned by the Georgia Education Authority (Schools) since the legal and practical effect is no different; the specific authority in any particular situation will be governed by any local law that might exist. 1975 Op. Att'y Gen. No. 75-51.

Limitations on purposes for issuances of general debt.

- In absence of constitutional authority, the state cannot issue general obligation debt to acquire, construct, develop, extend, or enlarge property of counties or municipalities of the state. 1975 Op. Att'y Gen. No. 75-51.

The state cannot issue general obligation debt with contemplation that title to the financed facility will be given to the county, municipality, or school district because of the constitutional limitation on the purposes for which general obligation debt can be issued. 1975 Op. Att'y Gen. No. 75-51.

Unemployment compensation.

- Payment of unemployment compensation is not a purpose for which public debt may be incurred as set forth in Ga. Const. 1976, Art. VII, Sec. II, Paras. I and II (see Ga. Const. 1983, Art. VII, Sec. III, Paras. I and II). 1982 Op. Att'y Gen. No. 82-35.

Funds of private individuals requiring reimbursement.

- The Department of Transportation could not use funds of private individuals to construct a project and agree to reimburse those individuals at a later date. 1973 Op. Att'y Gen. No. 73-27.

Contractual obligation violated Constitution.

- It is not legal for the Department of Natural Resources or the Parks and Historic Sites Division to incur a contractual obligation with respect to future maintenance of erosion control structures at historic sites. 1965-66 Op. Att'y Gen. No. 65-44.

State park expansion funds.

- Commissioner of the Department of Natural Resources is authorized to request issuance of general obligation bonds and execute any subsequent contracts to effect state park expansion project in accordance with powers otherwise vested in the department. 1982 Op. Att'y Gen. No. 82-12.

The state may incur general obligation debt for construction of highways; however, the Department of Transportation is not authorized to incur this debt on behalf of the state because the constitutional amendment gives this power only to the Financing and Investment Commission. 1973 Op. Att'y Gen. No. 73-27.

The Board of Regents cannot contract debts or obligations on behalf of the state in violation of this paragraph of the Constitution. 1948-49 Op. Att'y Gen. p. 141.(see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

Obligations running on accounts not prohibited. While this paragraph prohibits the state or its agencies from contracting debts except for certain specified purposes, it does not and could not prohibit incurrence of obligations on running account. 1948-49 Op. Att'y Gen. p. 350.

A repurchase agreement transaction can be an authorized investment of Teachers Retirement System, Employees' Retirement System, and Georgia State Financing and Investment Commission so long as the transaction is intended by the parties to be a sale and repurchase of securities on terms under which such securities might normally be sold, the documents supporting the transaction adequately record that intention of the parties, and the securities involved are those in which the state entity is otherwise authorized to invest. 1979 Op. Att'y Gen. No. 79-62.

Imprudent for state agencies to execute multi-year installment purchase agreements.

- While it is not apparent on the face of multi-year installment purchase agreements that a state agency is being asked to pledge the credit in an impermissible manner, the totality of the provisions typically contained in such agreements indicate that they could be construed in their essence to constitute a debt; as such a debt is not one of those authorized by the state Constitution under this paragraph, it is imprudent for state agencies to execute agreements which create such obligations. 1978 Op. Att'y Gen. p. 267.(see Ga. Const. 1983, Art. VII, Sec. IV, Para. I).

Department of Medical Assistance (now Department of Community Health) may not forbear collection of overpayments made to providers. 1980 Op. Att'y Gen. No. 80-89.

Entering into and payment pursuant to enforceable contract for prepayment of professional services is not unlawful. 1981 Op. Att'y Gen. No. 81-29.

Contract to prepay for professional services does not constitute loan of credit.

- Prohibition against loaning credit of state does not prevent state department from entering into enforceable contract to prepay for professional services and to make payment according to such contract. By entering into contract to prepay for professional services one does not promise to make a loan but promises to pay in advance in return for a promise by the other party to perform a service. The payment is not a loan but the satisfaction of an obligation for services to be provided. 1981 Op. Att'y Gen. No. 81-29.

Contract clause requiring state agency to indemnify and hold harmless a private corporation violates paragraph.

- Indemnify and hold harmless clause in proposed contract, under which clause a state agency would indemnify a private corporation, constitutes both a gratuity and a pledge of state's credit and thus falls within the prohibitions contained in Ga. Const. 1976, Art. III, Sec. VIII, Para. XII (see Ga. Const. 1983, Art. III, Sec. VI, Para. VI) and this paragraph. 1980 Op. Att'y Gen. No. 80-67.

State agency or public official cannot hold federal government harmless for claims against it.

- Any attempt by a state agency or public official to hold the federal government harmless for claims against it would be an unconstitutional attempt to pledge the credit of the sovereign State of Georgia and, therefore, ultra vires. 1980 Op. Att'y Gen. No. U80-34.

Am. Jur. 2d.

- 72 Am. Jur. 2d, States, Territories, and Dependencies, § 83 et seq.

C.J.S.

- 81A C.J.S., States, §§ 365 et seq., 446 et seq.

ALR.

- Power of Legislature to add to or make more onerous the conditions or limitations prescribed by Constitution upon incurring public debts, 106 A.L.R. 231.

Right to call governmental bonds in advance of their maturity, 109 A.L.R. 988.

What are "necessary expenses" within exception in constitutional or statutory provision requiring vote of people to authorize contracting of debt by municipality, county, or other political body, or limiting amount of such indebtedness, 113 A.L.R. 1202.

Presumptions and burden of proof as to violation of or compliance with public debt limitation, 16 A.L.R.2d 515.