§6704 State Area Allocations; Allocations and Payments to Territorial Governments

Summary

The Secretary must split the money available under the law among the states and the four territories. First the Secretary sets aside the parts for Puerto Rico, Guam, American Samoa, and the Virgin Islands. The rest is divided among the states. For each state the Secretary figures two amounts and gives the state the larger one. The money a state gets is then passed to its local governments. For the payment period starting October 1, 1994, one way to figure a state’s share uses a $5,300,000,000 pot. Each state’s share is based on its population multiplied by a tax-effort factor, a relative income factor, and a relative unemployment rate, compared to the same calculation for all states. The other way adds six separate pots: $1,166,666,667 by population; $1,166,666,667 by population weighted inversely by per-person income; $600,000,000 by state income tax collections; $600,000,000 by general tax effort; $600,000,000 by unemployment (labor force times relative unemployment rate); and $1,166,666,667 by urbanized population (areas with central cities of at least 50,000, per the 1990 census). The “income tax amount” for a state is 15 percent of its net individual income tax collections for the prior calendar year, subject to a floor of 1 percent and a ceiling of 6 percent of the federal individual income tax liability attributed to the state (using 1991 data). The “general tax effort amount” uses 1991 state and local tax collections and the tax-effort factor based on 1991 and 1992 data.