§ 12. Except the debts or refunding debts specified in sections 9, 10\nand 13 of this article, all debts contracted by the state and each\nportion of any such debt from time to time so contracted shall be\nsubject to the following rules:\n 1. The principal of each debt or any portion thereof shall either be\npaid in equal annual installments or in installments that result in\nsubstantially level or declining debt service payments such as shall be\nauthorized by law, or, in the alternative, contributions of principal in\nthe amount that would otherwise be required to be paid annually shall be\nmade to a sinking fund.\n 2. When some portions of the same debt are payable annually while\nother portions require contributions to a sinking fund, the entire debt\nshall be structured so that the combined amount of annual installments\nof principal paid and/or annual contributions of principal made in each\nyear shall be equal to the amount that would be required to be paid if\nthe entire debt were payable in annual installments.\n 3. When interest on state obligations is not paid at least annually,\nthere shall also be contributed to a sinking fund at least annually, the\namount necessary to bring the balance thereof, including income earned\non contributions, to the accreted value of the obligations to be paid\ntherefrom on the date such contribution is made, less the sum of all\nrequired future contributions of principal, in the case of sinking fund\nobligations, or payments of principal, in the case of serial\nobligations. Notwithstanding the foregoing, nothing contained in this\nsubdivision shall be deemed to require contributions for interest to\nsinking funds if total debt service due on the debt or portion thereof\nin the year such interest is due will be substantially the same as the\ntotal debt service due on such debt or portion thereof in each other\nyear or if the total amount of debt service due in each subsequent year\non such debt or portion thereof shall be less than the total debt\nservice due in each prior year.\n 4. The first annual installment on such debt shall be paid, or the\nfirst annual contribution shall be made to a sinking fund, not more than\none year, and the last installment shall be paid, or contribution made\nnot more than forty years, after such debt or portion thereof shall have\nbeen contracted, provided, however, that in contracting any such debt\nthe privilege of paying all or any part of such debt prior to the date\non which the same shall be due may be reserved to the state in such\nmanner as may be provided by law.\n 5. No such debt shall be contracted for a period longer than that of\nthe probable life of the work or purpose for which the debt is to be\ncontracted, or in the alternative, the weighted average period of\nprobable life of the works or purposes for which such indebtedness is to\nbe contracted. The probable lives of such works or purposes shall be\ndetermined by general laws, which determination shall be conclusive.\n 6. The money arising from any loan creating such debt or liability\nshall be applied only to the work or purpose specified in the act\nauthorizing such debt or liability, or for the payment of such debt or\nliability, including any notes or obligations issued in anticipation of\nthe sale of bonds evidencing such debt or liability.\n 7. Any sinking funds created pursuant to this section shall be\nmaintained and managed by the state comptroller or an agent or trustee\ndesignated by the state comptroller, and amounts in sinking funds\ncreated pursuant to this section, and earnings thereon, shall be used\nsolely for the purpose of retiring the obligations secured thereby\nexcept that amounts in excess of the required balance on any\ncontribution date and amounts remaining in such funds after all of the\nobligations secured thereby have been retired shall be deposited in the\ngeneral fund.\n 8. No appropriation shall be required for disbursement of money, or\nincome
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