Nebraska State Constitution Article XIII-3

Article 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).