Agenda - Council - 05/13/1980 - Laserfiche WebLink

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league of minnesota oi ies April 21, 1980 TO: FROM: City Offices _~/~~ ~ Don S1 ater~'], ~'-~ RE: Federal Revenue Sharing - Proposed Formula Changes The Carter administration has proposed several changes in the formula by which revenue sharing funds are allocated among local governmenta. The specific changes proposed are as follows: Under the current formula, no local unit can receive a per capita distribution greater than 145% of the average per capita amount for the state. The adminis- tration proposes to raise this to 175%. Currently no local unit can receive a per capita distribution less than 20% of the average per capita amount for the state. The administration proposal would lower this to 10%. Currently, revenue sharing cannot comprise more than 50% of a local unit's budget. The administration's proposal would lower this to 25%. The administration proposes to reduce each recipient's tax effort factor by 1% for each percentage point by · which its per capita income exceeds 115% of the state average. (The state per capita income is $4,825. Thus this provision would affect units with a PCI of $5,549 or more.) The administration proposes to reduce each recipient's tax effort factor such that it cannot count more than the equivalent of 250% of the state average for similar governments of taxes collected per capita. In addition to these formula changes, the administration also proposes to add $500 million to the local government share, which is currently $6 billion. The $500 million would be available for two years and is supposed to cushion the effect of other budget cuts. 300 hanovar building, 480 cedar street, saint paul. minnesota 55101 [t~i I 2) 222-28~ 1