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

Summary

For each payment period the Secretary must split the available money between the territories and the States. The territories get a share equal to 1 percent of the funds times each territory’s share of the territories’ population. The territories are Puerto Rico, Guam, American Samoa, and the Virgin Islands. Territorial governments decide how to pass their money to local governments. After the territories’ shares are taken out, the Secretary gives the remaining money to the States. For each State the Secretary figures two possible amounts and gives the larger one. One method gives the State a share of $5,300,000,000 based on the State’s population multiplied by three factors: a 1991 tax-versus-income measure, a relative income factor (U.S. per-capita income divided by the State’s per-capita income), and a relative unemployment factor (the State’s unemployment rate divided by the U.S. rate in the year before the payment period). The other method adds up six pots of money ($1,166,666,667; $1,166,666,667; $600,000,000; $600,000,000; $600,000,000; $1,166,666,667) and divides each pot among States by different measures such as population, population inversely weighted by per-capita income, income tax collections, the general tax effort measure, unemployment, and 1990 urbanized population. “Income tax amount” means 15% of a State’s individual income tax collections for the year before the payment period, but it must be at least 1% and no more than 6% of the U.S. individual income tax liability attributed to that State. The State then passes its money to local governments under the program’s rules.