§ 5. In ascertaining the power of a county, city, town or village to
contract indebtedness, there shall be excluded:

A. Certificates or other evidences of indebtedness (except serial
bonds of an issue having a maximum maturity of more than two years)
issued for purposes other than the financing of capital improvements and
contracted to be redeemed in one of the two fiscal years immediately
succeeding the year of their issue, and certificates or other evidences
of indebtedness issued in any fiscal year in anticipation of (a) the
collection of taxes on real estate for amounts theretofore actually
levied and uncollected or to be levied in such year and payable out of
such taxes, (b) moneys receivable from the state which have theretofore
been apportioned by the state or which are to be so apportioned within
one year after their issue and (c) the collection of any other taxes due
and payable or to become due and payable within one year or of other
revenues to be received within one year after their issue; excepting any
such certificates or other evidences of indebtedness or renewals thereof
which are not retired within five years after their date of original
issue.

B. Indebtedness heretofore or hereafter contracted to provide for the
supply of water.

C. Indebtedness heretofore or hereafter contracted by any county,
city, town or village for a public improvement or part thereof, or
service, owned or rendered by such county, city, town or village,
annually proportionately to the extent that the same shall have yielded
to such county, city, town or village net revenue; provided, however,
that such net revenue shall be twenty-five per centum or more of the
amount required in such year for the payment of the interest on,
amortization of, or payment of, such indebtedness. Such exclusion shall
be granted only if the revenues of such public improvement or part
thereof, or service, are applied to and actually used for payment of all
costs of operation, maintenance and repairs, and payment of the amounts
required in such year for interest on and amortization of or redemption
of such indebtedness, or such revenues are deposited in a special fund
to be used solely for such payments. Any revenues remaining after such
payments are made may be used for any lawful purpose of such county,
city, town or village, respectively.

Net revenue shall be determined by deducting from gross revenues of
the preceding year all costs of operation, maintenance and repairs for
such year, or the legislature may provide that net revenue shall be
determined by deducting from the average of the gross revenues of not to
exceed five of the preceding years during which the public improvement
or part thereof, or service, has been in operation, the average of all
costs of operation, maintenance and repairs for the same years.

A proportionate exclusion of indebtedness contracted or proposed to be
contracted also may be granted for the period from the date when such
indebtedness is first contracted or to be contracted for such public
improvement or part thereof, or service, through the first year of
operation of such public improvement or part thereof, or service. Such
exclusion shall be computed in the manner provided in this section on
the basis of estimated net revenue which shall be determined by
deducting from the gross revenues estimated to be received during the
first year of operation of such public improvement or part thereof, or
service, all estimated costs of operation, maintenance and repairs for
such year. The amount of any such proportionate exclusion shall not
exceed seventy-five per centum of the amount which would be excluded if
the computation were made on the basis of net revenue instead of
estimated net revenue.

Except as otherwise provided herein, the legislature shall prescribe
the method by which and the terms and conditions under which the
proportionate amount of any such indebtedness to be so excluded shall be
determined and no proportionate amount of such indebtedness shall be
excluded except in accordance with such determination. The legislature
may provide that the state comptroller shall make such determination or
it may confer appropriate jurisdiction on the appellate division of the
supreme court in the judicial departments in which such counties,
cities, towns or villages are located for the purpose of determining the
proportionate amount of any such indebtedness to be so excluded.

The provisions of this paragraph C shall not affect or impair any
existing exclusions of indebtedness, or the power to exclude
indebtedness, granted by any other provision of this constitution.

D. Serial bonds, issued by any county, city, town or village which now
maintains a pension or retirement system or fund which is not on an
actuarial reserve basis with current payments to the reserve adequate to
provide for all current accruing liabilities. Such bonds shall not
exceed in the aggregate an amount sufficient to provide for the payment
of the liabilities of such system or fund, accrued on the date of
issuing such bonds, both on account of pensioners on the pension roll on
that date and prospective pensions to dependents of such pensioners and
on account of prior service of active members of such system or fund on
that date. Such bonds or the proceeds thereof shall be deposited in such
system or fund. Each such pension or retirement system or fund
thereafter shall be maintained on an actuarial reserve basis with
current payments to the reserve adequate to provide for all current
accruing liabilities.

E. Indebtedness contracted on or after January first, nineteen hundred
sixty-two and prior to January first, two thousand thirty-four, for the
construction or reconstruction of facilities for the conveyance,
treatment and disposal of sewage. The legislature shall prescribe the
method by which and the terms and conditions under which the amount of
any such indebtedness to be excluded shall be determined, and no such
indebtedness shall be excluded except in accordance with such
determination.