Barry L. BONENO, Richard D. Sears, Frank L. Frye and Rodger Junk on behalf of themselves and all others similarly situated,
v.
The STATE of North Carolina et al.

Atty. Gen. Rufus L. Edmisten by Asst. Atty. Gen. J. Chris Prather, Raleigh, for the State.

Craige, Brawley, Liipfert & Ross by C. Thomas Ross, Winston-Salem, for plaintiffs-appellants.

ARNOLD, Judge.

As their first assignment of error, plaintiffs argue that G.S. 143-28.1 violates Article III, § 5(3) of the North Carolina Constitution which provides for a balanced budget. We disagree.

The provision to which plaintiffs refer provides that the Governor shall not, in administering the budget, permit a deficit to be incurred by the State on account of total expenditures exceeding total receipts. Plaintiffs apparently argue that the incurring of a contractual obligation constitutes an expenditure within the meaning of this provision. We hold, however, that an expenditure *171 occurs only when funds are disbursed. The statute's authorization of construction and maintenance contracts by the Department of Transportation using "cash flow" financing does not violate the prohibition against incurring a deficit. Only actual expenditures in excess of receipts would violate the provision.

Plaintiffs next contend that G.S. 143-28.1 violates Article V, § 3 of the Constitution which prohibits the General Assembly from contracting debt without voter approval. It is clear that the intent of this provision is to restrict the State's power to borrow money, not its power to enter into long-term contracts. See N.C.Const.Art. V, § 3(3). We find no merit in plaintiffs' arguments to the contrary.

Plaintiffs' remaining contentions, that G.S. 143-28.1 restricts the right of succeeding legislatures to govern, and that it allows the State to execute void contracts, are equally without merit.

The judgment of the trial court is

Affirmed.

MORRIS, C. J., concurs.

BECTON, J., concurs in the result.