State funds distributed to a local public library or a regional library as grants-in-aid shall not be expended for construction, repair or debt reduction, but state funds so received by a local public library or a regional library shall be expended or encumbered as authorized during the calendar year received even though not included in any budget of expenditures for such year. Funds expended in violation of this section may thereafter be withheld from later state grants-in-aid to the local public library or the regional library even though such withholding be made in a different fiscal year.
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