---
kind: "range"
citation: "31 U.S.C. §§ 6701–6708"
title: "31"
from: "6701"
to: "6708"
count: 8
release: "119-102"
url: "https://uscodex.org/usc/31/6701..6708"
---

# §6701. Payments to local governments

- (a) **Payment and Use.—**
  - (1) **Payment.—** The [Secretary](/usc/31/6720.md?p=a-9) shall pay to each [unit of general local government](/usc/31/6720.md?p=a-1) which qualifies for a payment under this chapter an amount equal to the sum of any amounts allocated to the government under this chapter for each [payment period](/usc/31/6720.md?p=a-2). The [Secretary](/usc/31/6720.md?p=a-9) shall pay such amount out of the Local Government Fiscal Assistance Fund under [section 6702](/usc/31/6702.md).
  - (2) **Use.—** Amounts paid to a [unit of general local government](/usc/31/6720.md?p=a-1) under this section shall be used by that unit for carrying out one or more programs of the unit related to—
    - (A) education to prevent crime;
    - (B) substance abuse treatment to prevent crime; or
    - (C) job programs to prevent crime.
  - (3) **Coordination.—** Programs funded under this title shall be coordinated with other existing Federal programs to meet the overall needs of communities that benefit from funds received under this section.
- (b) **Timing of Payments.—** The [Secretary](/usc/31/6720.md?p=a-9) shall pay each amount allocated under this chapter to a [unit of general local government](/usc/31/6720.md?p=a-1) for a [payment period](/usc/31/6720.md?p=a-2) by the later of 90 days after the date the amount is available or the first day of the [payment period](/usc/31/6720.md?p=a-2) provided that the [unit of general local government](/usc/31/6720.md?p=a-1) has provided the [Secretary](/usc/31/6720.md?p=a-9) with the assurances required by [section 6703(d)](/usc/31/6703.md?p=d).
- (c) **Adjustments.—**
  - (1) **In general.—** Subject to [paragraph (2)](#c-2), the [Secretary](/usc/31/6720.md?p=a-9) shall adjust a payment under this chapter to a [unit of general local government](/usc/31/6720.md?p=a-1) to the extent that a prior payment to the government was more or less than the amount required to be paid.
  - (2) **Considerations.—** The [Secretary](/usc/31/6720.md?p=a-9) may increase or decrease under this subsection a payment to a unit of local government only if the [Secretary](/usc/31/6720.md?p=a-9) determines the need for the increase or decrease, or the unit requests the increase or decrease, within one year after the end of the [payment period](/usc/31/6720.md?p=a-2) for which the payment was made.
- (d) **Reservation for Adjustments.—** The [Secretary](/usc/31/6720.md?p=a-9) may reserve a percentage of not more than 2 percent of the amount under this section for a [payment period](/usc/31/6720.md?p=a-2) for all units of general local government in a [State](/usc/31/6720.md?p=a-4) if the [Secretary](/usc/31/6720.md?p=a-9) considers the reserve is necessary to ensure the availability of sufficient amounts to pay adjustments after the final allocation of amounts among the units of general local government in the [State](/usc/31/6720.md?p=a-4).
- (e) **Repayment of Unexpended Amounts.—**
  - (1) **Repayment required.—** A [unit of general local government](/usc/31/6720.md?p=a-1) shall repay to the [Secretary](/usc/31/6720.md?p=a-9), by not later than 15 months after receipt from the [Secretary](/usc/31/6720.md?p=a-9), any amount that is—
    - (A) paid to the unit from amounts appropriated under the authority of this section; and
    - (B) not expended by the unit within one year after receipt from the [Secretary](/usc/31/6720.md?p=a-9).
  - (2) **Penalty for failure to repay.—** If the amount required to be repaid is not repaid, the [Secretary](/usc/31/6720.md?p=a-9) shall reduce payments in future [payment periods](/usc/31/6720.md?p=a-2) accordingly.
  - (3) **Deposit of amounts repaid.—** Amounts received by the [Secretary](/usc/31/6720.md?p=a-9) as repayments under this subsection shall be deposited in the Local Government Fiscal Assistance Fund for future payments to units of general local government.
- (f) **Expenditure With Disadvantaged Business Enterprises.—**
  - (1) **General rule.—** Of amounts paid to a [unit of general local government](/usc/31/6720.md?p=a-1) under this chapter for a [payment period](/usc/31/6720.md?p=a-2), not less than 10 percent of the total combined amounts obligated by the unit for contracts and subcontracts shall be expended with—
    - (A) [small business concerns](#f-3-A) controlled by [socially and economically disadvantaged individuals](#f-3-B) and women;
    - (B) historically Black colleges and universities and colleges and universities having a student body in which more than 20 percent of the students are Hispanic Americans or Native Americans; and
    - (C) [qualified HUBZone small business concerns](#f-3-C).
  - (2) **Exception.—** [Paragraph (1)](#f-1) shall not apply to amounts paid to a [unit of general local government](/usc/31/6720.md?p=a-1) to the extent the unit determines that the paragraph does not apply through a process that provides for public participation.
  - (3) **Definitions.—** For purposes of this subsection—
    - (A) the term “small business concern” has the meaning such term has under section 3 of the Small Business Act;
    - (B) the term “socially and economically disadvantaged individuals” has the meaning such term has under section 8(d) of the Small Business Act and relevant subcontracting regulations promulgated pursuant to that section; and
    - (C) the term “qualified HUBZone small business concern” has the meaning given that term in section 3(p)[^1] of the Small Business Act ([15 U.S.C. 632(o)](/usc/15/632.md?p=o)[^2]).
- (g) **Nonsupplanting Requirement.—**
  - (1) **In general.—** Funds made available under this chapter to units of local government shall not be used to supplant [State](/usc/31/6720.md?p=a-4) or local funds, but will be used to increase the amount of funds that would, in the absence of funds under this chapter, be made available from [State](/usc/31/6720.md?p=a-4) or local sources.
  - (2) **Base level amount.—** The total level of funding available to a unit of local government for accounts serving eligible purposes under this chapter in the fiscal year immediately preceding receipt of a grant under this chapter shall be designated the “base level account” for the fiscal year in which a grant is received. Grants under this chapter in a given fiscal year shall be reduced on a dollar for dollar basis to the extent that a unit of local government reduces its base level account in that fiscal year.

# §6702. Local Government Fiscal Assistance Fund

- (a) **Administration of Fund.—** The Department of the Treasury has a Local Government Fiscal Assistance Fund, which consists of amounts appropriated to the Fund.
- (b) **Authorization of Appropriations.—** There are authorized to be appropriated to the Fund—
  - (1) $270,000,000 for fiscal year 1996;
  - (2) $283,500,000 for fiscal year 1997;
  - (3) $355,500,000 for fiscal year 1998;
  - (4) $355,500,000 for fiscal year 1999; and
  - (5) $355,500,000 for fiscal year 2000.

  Such sums are to remain available until expended.

- (c) **Administrative Costs.—** Up to 2.5 percent of the amount authorized to be appropriated under [subsection (b)](#b) is authorized to be appropriated for the period fiscal year 1995 through fiscal year 2000 to be available for administrative costs by the [Secretary](/usc/31/6720.md?p=a-9) in furtherance of the purposes of the program. Such sums are to remain available until expended.

# §6703. Qualification for payment

- (a) **In General.—** The [Secretary](/usc/31/6720.md?p=a-9) shall issue regulations establishing procedures under which eligible units of general local government are required to provide notice to the [Secretary](/usc/31/6720.md?p=a-9) of the units’ proposed use of assistance under this chapter. Subject to [subsection (c)](#c), the assistance provided shall be used, in amounts determined by the unit, for activities under, or for activities that are substantially similar to an activity under, 1 or more of the following programs and the notice shall identify 1 or more of the following programs for each such use:
  - (1) The Drug Abuse Resistance Education Program under [section 5122](/usc/31/5122.md) of the Elementary and Secondary Education Act of 1965.
  - (2) The National Youth Sports Program under section 682 of the Community Services Block Grant Act (Public Law 97–35) as amended by section 205, Public Law 103–252.
  - (3) The Gang Resistance Education and Training Program under the Act entitled “An Act making appropriations for the Treasury Department, the United States Postal Service, the Executive Office of the President, and certain Independent [Agencies](/usc/31/1352.md?p=g-2), for the fiscal year ending September 30, 1991, and for other purposes”, approved November 5, 1990 (Public Law 101–509).
  - (4) Programs under title I of the Workforce Innovation and Opportunity Act.
  - (5) Programs under subtitle C of title I of the National and Community Service Act of 1990 ([42 U.S.C. 12571](/usc/42/12571.md) et seq.), as amended.
  - (6) Programs under the School to Work Opportunities Act (Public Law 103–239).
  - (7) Substance Abuse Treatment and Prevention programs authorized under title V or XIX of the Public Health Services Act ([43 U.S.C. 201](https://uscode.house.gov/view.xhtml?req=(/us/usc/t43/s201)) et seq.).[^1]
  - (8) Programs under the Head Start Act ([42 U.S.C. 9831](/usc/42/9831.md) et seq.).
  - (9) Programs under part A or B of [chapter 1](/usc/31/chstI-ch1.md) of title I of the Elementary and Secondary Education Act of 1965.
  - (10) The TRIO programs under part A of title IV of the Higher Education Act of 1965 ([20 U.S.C. 1070](/usc/20/1070.md) et seq.).
  - (11) Programs under the National Literacy Act of 1991.
  - (12) Programs under the Carl D. Perkins Career and Technical Education Act of 2006 ([20 U.S.C. 2301](/usc/20/2301.md) et seq.).
  - (13) The demonstration partnership programs including the community initiative targeted to minority youth under section 203[^1] of the Human Services Reauthorization Act of 1994 (Public Law 103–252).
  - (14) The runaway and homeless youth program and the transitional living program for homeless youth under title III of the Juvenile Justice and Delinquency Prevention Act (Public Law 102–586).
  - (15) After-school activities for school aged children under the Child Care and Development Block Grant Act ([42 U.S.C. 9858](/usc/42/9858.md)[^1] et seq.).
  - (16) The community-based family resource programs under section 401[^1] of the Human Services Reauthorization Act of 1994 (Public Law 103–252).
  - (17) The family violence programs under the Child Abuse Prevention and Treatment Act Amendments of 1984.
  - (18) Job training programs administered by the Department of Agriculture, the Department of Defense, or the Department of Housing and Urban Development.
- (b) **Notice to Agency.—** Upon receipt of notice under [subsection (a)](#a) from an eligible [unit of general local government](/usc/31/6720.md?p=a-1), the [Secretary](/usc/31/6720.md?p=a-9) shall notify the head of the appropriate Federal [agency](/usc/31/1352.md?p=g-2) for each program listed in [subsection (a)](#a) that is identified in the notice as a program under which an activity will be conducted with assistance under this chapter. The notification shall [state](/usc/31/6720.md?p=a-4) that the unit has elected to use some or all of its assistance under this chapter for activities under that program. The head of a Federal [agency](/usc/31/1352.md?p=g-2) that receives such a notification shall ensure that such use is in compliance with the laws and regulations applicable to that program, except that any requirement to provide matching funds shall not apply to that use.
- (c) **Alternative Uses of Funds.—**
  - (1) **Alternative uses authorized.—** In lieu of, or in addition to, use for an activity described in [subsection (a)](#a) and notice for that use under [subsection (a)](#a), an eligible [unit of general local government](/usc/31/6720.md?p=a-1) may use assistance under this chapter, and shall provide notice of that use to the [Secretary](/usc/31/6720.md?p=a-9) under [subsection (a)](#a), for any other activity that is consistent with 1 or more of the purposes described in [section 6701(a)(2)](/usc/31/6701.md?p=a-2).
  - (2) **Notice deemed to describe consistent use.—** Notice by a [unit of general local government](/usc/31/6720.md?p=a-1) that it intends to use assistance under this chapter for an activity other than an activity described in [subsection (a)](#a) is deemed to describe an activity that is consistent with 1 or more of the purposes described in [section 6701(a)(2)](/usc/31/6701.md?p=a-2) unless the [Secretary](/usc/31/6720.md?p=a-9) provides to the unit, within 30 days after receipt of that notice of intent from the unit, written notice (including an explanation) that the use is not consistent with those purposes.
- (d) **General Requirements for Qualification.—** A [unit of general local government](/usc/31/6720.md?p=a-1) qualifies for a payment under this chapter for a [payment period](/usc/31/6720.md?p=a-2) only after establishing to the satisfaction of the [Secretary](/usc/31/6720.md?p=a-9) that—
  - (1) the government will establish a trust fund in which the government will deposit all payments received under this chapter;
  - (2) the government will use amounts in the trust fund (including interest) during a reasonable period;
  - (3) the government will expend the payments so received, in accordance with the laws and procedures that are applicable to the expenditure of revenues of the government;
  - (4) if at least 25 percent of the pay of individuals employed by the government in a public employee occupation is paid out of the trust fund, individuals in the occupation any part of whose pay is paid out of the trust fund will receive pay at least equal to the prevailing rate of pay for individuals employed in similar public employee occupations by the government;
  - (5) all laborers and mechanics employed by contractors or subcontractors in the performance of any contract and subcontract for the repair, renovation, alteration, or construction, including painting and decorating, of any building or work that is financed in whole or in part by a grant under this title, shall be paid wages not less than those determined by the [Secretary](/usc/31/6720.md?p=a-9) of Labor in accordance with sections 3141–3144, [3146](/usc/40/3146.md), and [3147](/usc/40/3147.md) of title 40. The [Secretary](/usc/31/6720.md?p=a-9) of Labor shall have the authority and functions set forth in Reorganization Plan No. 14 of 1950 (15 FR 3176; 64 Stat. 1267) and [section 3145 of title 40](/usc/40/3145.md);
  - (6) the government will use accounting, audit, and fiscal procedures that conform to guidelines which shall be prescribed by the [Secretary](/usc/31/6720.md?p=a-9). As applicable, amounts received under this chapter shall be audited in compliance with the Single Audit Act of 1984;
  - (7) after reasonable notice to the government, the government will make available to the [Secretary](/usc/31/6720.md?p=a-9) and the Comptroller General of the United States, with the right to inspect, records the [Secretary](/usc/31/6720.md?p=a-9) reasonably requires to review compliance with this chapter or the Comptroller General of the United States reasonably requires to review compliance and operations under [section 6718(b)](/usc/31/6718.md?p=b);
  - (8) the government will make reports the [Secretary](/usc/31/6720.md?p=a-9) reasonably requires, in addition to the annual reports required under [section 6719(b)](/usc/31/6719.md?p=b); and
  - (9) the government will spend the funds only for the purposes set forth in [section 6701(a)(2)](/usc/31/6701.md?p=a-2).
- (e) **Review by Governors.—** A [unit of general local government](/usc/31/6720.md?p=a-1) shall give the chief executive officer of the [State](/usc/31/6720.md?p=a-4) in which the government is located an opportunity for review and comment before establishing compliance with [subsection (d)](#d).
- (f) **Sanctions for Noncompliance.—**
  - (1) **In general.—** If the [Secretary](/usc/31/6720.md?p=a-9) decides that a [unit of general local government](/usc/31/6720.md?p=a-1) has not complied substantially with [subsection (d)](#d) or regulations prescribed under [subsection (d)](#d), the [Secretary](/usc/31/6720.md?p=a-9) shall notify the government. The notice shall [state](/usc/31/6720.md?p=a-4) that if the government does not take corrective action by the 60th day after the date the government receives the notice, the [Secretary](/usc/31/6720.md?p=a-9) will withhold additional payments to the government for the current [payment period](/usc/31/6720.md?p=a-2) and later [payment periods](/usc/31/6720.md?p=a-2) until the [Secretary](/usc/31/6720.md?p=a-9) is satisfied that the government—
    - (A) has taken the appropriate corrective action; and
    - (B) will comply with [subsection (d)](#d) and regulations prescribed under [subsection (d)](#d).
  - (2) **Notice.—** Before giving notice under [paragraph (1)](#f-1), the [Secretary](/usc/31/6720.md?p=a-9) shall give the chief executive officer of the [unit of general local government](/usc/31/6720.md?p=a-1) reasonable notice and an opportunity for comment.
  - (3) **Payment conditions.—** The [Secretary](/usc/31/6720.md?p=a-9) may make a payment to a [unit of general local government](/usc/31/6720.md?p=a-1) notified under [paragraph (1)](#f-1) only if the [Secretary](/usc/31/6720.md?p=a-9) is satisfied that the government—
    - (A) has taken the appropriate corrective action; and
    - (B) will comply with [subsection (d)](#d) and regulations prescribed under [subsection (d)](#d).

# §6704. State area allocations; allocations and payments to territorial governments

- (a) **Formula Allocation by State.—** For each [payment period](/usc/31/6720.md?p=a-2), the [Secretary](/usc/31/6720.md?p=a-9) shall allocate to each [State](/usc/31/6720.md?p=a-4) out of the amount appropriated for the period under the authority of [section 6702(b)](/usc/31/6702.md?p=b) (minus the amounts allocated to territorial governments under [subsection (e)](#e) for the [payment period](/usc/31/6720.md?p=a-2)) an amount bearing the same ratio to the amount appropriated (minus such amounts allocated under [subsection (e)](#e)) as the amount allocated to the [State](/usc/31/6720.md?p=a-4) under this section bears to the total amount allocated to all [States](/usc/31/6720.md?p=a-4) under this section. The [Secretary](/usc/31/6720.md?p=a-9) shall—
  - (1) determine the amount allocated to the [State](/usc/31/6720.md?p=a-4) under subsection [(b)](#b) or [(c)](#c) of this section and allocate the larger amount to the [State](/usc/31/6720.md?p=a-4); and
  - (2) allocate the amount allocated to the [State](/usc/31/6720.md?p=a-4) to units of general local government in the [State](/usc/31/6720.md?p=a-4) under sections [6705](/usc/31/6705.md) and [6706](/usc/31/6706.md).
- (b) **General Formula.—**
  - (1) **In general.—** For the [payment period](/usc/31/6720.md?p=a-2) beginning October 1, 1994, the amount allocated to a [State](/usc/31/6720.md?p=a-4) under this subsection for a [payment period](/usc/31/6720.md?p=a-2) is the amount bearing the same ratio to $5,300,000,000 as—
    - (A) the population of the [State](/usc/31/6720.md?p=a-4), multiplied by the general tax effort factor of the [State](/usc/31/6720.md?p=a-4) (determined under [paragraph (2)](#b-2)), multiplied by the relative [income](/usc/31/6720.md?p=a-5) factor of the [State](/usc/31/6720.md?p=a-4) (determined under [paragraph (3)](#b-3)), multiplied by the relative rate of the labor force unemployed in the [State](/usc/31/6720.md?p=a-4) (determined under [paragraph (4)](#b-4)); bears to
    - (B) the sum of the products determined under subparagraph (A) of this paragraph for all [States](/usc/31/6720.md?p=a-4).
  - (2) **General tax effort factor.—** The general tax effort factor of a [State](/usc/31/6720.md?p=a-4) for a [payment period](/usc/31/6720.md?p=a-2) is—
    - (A) the net amount of [State and local taxes](/usc/31/6720.md?p=a-3) of the [State](/usc/31/6720.md?p=a-4) collected during the year 1991 as reported by the Bureau of the Census in the publication Government Finances 1990–1991; divided by
    - (B) the total [income](/usc/31/6720.md?p=a-5) of individuals, as determined by the [Secretary](/usc/31/6720.md?p=a-9) of Commerce for national accounts purposes for 1992 as reported in the publication Survey of Current Business (August 1993), attributed to the [State](/usc/31/6720.md?p=a-4) for the same year.
  - (3) **Relative income factor.—** The relative [income](/usc/31/6720.md?p=a-5) factor of a [State](/usc/31/6720.md?p=a-4) is a fraction in which—
    - (A) the numerator is the [per capita income](/usc/31/6720.md?p=a-6) of the United States; and
    - (B) the denominator is the [per capita income](/usc/31/6720.md?p=a-6) of the [State](/usc/31/6720.md?p=a-4).
  - (4) **Relative rate of labor force.—** The relative rate of the labor force unemployed in a [State](/usc/31/6720.md?p=a-4) is a fraction in which—
    - (A) the numerator is the percentage of the labor force of the [State](/usc/31/6720.md?p=a-4) that is unemployed in the calendar year preceding the [payment period](/usc/31/6720.md?p=a-2) (as determined by the [Secretary](/usc/31/6720.md?p=a-9) of Labor for general statistical purposes); and
    - (B) the denominator is the percentage of the labor force of the United States that is unemployed in the calendar year preceding the [payment period](/usc/31/6720.md?p=a-2) (as determined by the [Secretary](/usc/31/6720.md?p=a-9) of Labor for general statistical purposes).
- (c) **Alternative Formula.—** For the [payment period](/usc/31/6720.md?p=a-2) beginning October 1, 1994, the amount allocated to a [State](/usc/31/6720.md?p=a-4) under this subsection for a [payment period](/usc/31/6720.md?p=a-2) is the total amount the [State](/usc/31/6720.md?p=a-4) would receive if—
  - (1) $1,166,666,667 were allocated among the [States](/usc/31/6720.md?p=a-4) on the basis of population by allocating to each [State](/usc/31/6720.md?p=a-4) an amount bearing the same ratio to the total amount to be allocated under this paragraph as the population of the [State](/usc/31/6720.md?p=a-4) bears to the population of all [States](/usc/31/6720.md?p=a-4);
  - (2) $1,166,666,667 were allocated among the [States](/usc/31/6720.md?p=a-4) on the basis of population inversely weighted for [per capita income](/usc/31/6720.md?p=a-6), by allocating to each [State](/usc/31/6720.md?p=a-4) an amount bearing the same ratio to the total amount to be allocated under this paragraph as—
    - (A) the population of the [State](/usc/31/6720.md?p=a-4), multiplied by a fraction in which—
      - (i) the numerator is the [per capita income](/usc/31/6720.md?p=a-6) of all [States](/usc/31/6720.md?p=a-4); and
      - (ii) the denominator is the [per capita income](/usc/31/6720.md?p=a-6) of the [State](/usc/31/6720.md?p=a-4); bears to
    - (B) the sum of the products determined under [subparagraph (A)](#c-2-A) for all [States](/usc/31/6720.md?p=a-4);
  - (3) $600,000,000 were allocated among the [States](/usc/31/6720.md?p=a-4) on the basis of [income](/usc/31/6720.md?p=a-5) tax collections by allocating to each [State](/usc/31/6720.md?p=a-4) an amount bearing the same ratio to the total amount to be allocated under this paragraph as the [income](/usc/31/6720.md?p=a-5) tax amount of the [State](/usc/31/6720.md?p=a-4) (determined under [subsection (d)(1)](#d-1)) bears to the sum of the [income](/usc/31/6720.md?p=a-5) tax amounts of all [States](/usc/31/6720.md?p=a-4);
  - (4) $600,000,000 were allocated among the [States](/usc/31/6720.md?p=a-4) on the basis of general tax effort by allocating to each [State](/usc/31/6720.md?p=a-4) an amount bearing the same ratio to the total amount to be allocated under this paragraph as the general tax effort amount of the [State](/usc/31/6720.md?p=a-4) (determined under [subsection (d)(2)](#d-2)) bears to the sum of the general tax effort amounts of all [States](/usc/31/6720.md?p=a-4);
  - (5) $600,000,000 were allocated among the [States](/usc/31/6720.md?p=a-4) on the basis of unemployment by allocating to each [State](/usc/31/6720.md?p=a-4) an amount bearing the same ratio to the total amount to be allocated under this paragraph as—
    - (A) the labor force of the [State](/usc/31/6720.md?p=a-4), multiplied by a fraction in which—
      - (i) the numerator is the percentage of the labor force of the [State](/usc/31/6720.md?p=a-4) that is unemployed in the calendar year preceding the [payment period](/usc/31/6720.md?p=a-2) (as determined by the [Secretary](/usc/31/6720.md?p=a-9) of Labor for general statistical purposes); and
      - (ii) the denominator is the percentage of the labor force of the United States that is unemployed in the calendar year preceding the [payment period](/usc/31/6720.md?p=a-2) (as determined by the [Secretary](/usc/31/6720.md?p=a-9) of Labor for general statistical purposes)

      bears to

    - (B) the sum of the products determined under [subparagraph (A)](#c-5-A) for all [States](/usc/31/6720.md?p=a-4); and
  - (6) $1,166,666,667 were allocated among the [States](/usc/31/6720.md?p=a-4) on the basis of urbanized population by allocating to each [State](/usc/31/6720.md?p=a-4) an amount bearing the same ratio to the total amount to be allocated under this paragraph as the urbanized population of the [State](/usc/31/6720.md?p=a-4) bears to the urbanized population of all [States](/usc/31/6720.md?p=a-4). In this paragraph, the term “urbanized population” means the population of an area consisting of a central city or cities of at least 50,000 inhabitants and the surrounding closely settled area for the city or cities considered as an urbanized area as published by the Bureau of the Census for 1990 in the publication General Population Characteristics for Urbanized Areas.
- (d) **Income Tax Amount and Tax Effort Amount.—**
  - (1) **Income tax amount.—** The [income](/usc/31/6720.md?p=a-5) tax amount of a [State](/usc/31/6720.md?p=a-4) for a [payment period](/usc/31/6720.md?p=a-2) is 15 percent of the net amount collected during the calendar year ending before the beginning of the [payment period](/usc/31/6720.md?p=a-2) from the tax imposed on the [income](/usc/31/6720.md?p=a-5) of individuals by the [State](/usc/31/6720.md?p=a-4) and described as a [State](/usc/31/6720.md?p=a-4) [income](/usc/31/6720.md?p=a-5) tax under section 164(a)(3) of the Internal Revenue Code of 1986 ([26 U.S.C. 164(a)(3)](/usc/26/164.md?p=a-3)). The [income](/usc/31/6720.md?p=a-5) tax amount for a [payment period](/usc/31/6720.md?p=a-2) shall be at least 1 percent but not more than 6 percent of the United States Government individual [income](/usc/31/6720.md?p=a-5) tax liability attributed to the [State](/usc/31/6720.md?p=a-4) for the taxable year ending during the last calendar year ending before the beginning of the [payment period](/usc/31/6720.md?p=a-2). The [Secretary](/usc/31/6720.md?p=a-9) shall determine the Government [income](/usc/31/6720.md?p=a-5) tax liability attributed to the [State](/usc/31/6720.md?p=a-4) by using the data published by the [Secretary](/usc/31/6720.md?p=a-9) for 1991 in the publication Statistics of [Income](/usc/31/6720.md?p=a-5) Bulletin (Winter 1993–1994).
  - (2) **General tax effort amount.—** The general tax effort amount of a [State](/usc/31/6720.md?p=a-4) for a [payment period](/usc/31/6720.md?p=a-2) is the amount determined by multiplying—
    - (A) the net amount of [State and local taxes](/usc/31/6720.md?p=a-3) of the [State](/usc/31/6720.md?p=a-4) collected during the year 1991 as reported in the Bureau of[^1] Census in the publication Government Finances 1990–1991; and
    - (B) the general tax effort factor of the [State](/usc/31/6720.md?p=a-4) determined under [subsection (b)(2)](#b-2).
- (e) **Allocation for Puerto Rico, Guam, American Samoa, and the Virgin Islands.—**
  - (1) **In general.—**
    - (A) For each [payment period](/usc/31/6720.md?p=a-2) for which funds are available for allocation under this chapter, the [Secretary](/usc/31/6720.md?p=a-9) shall allocate to each [territorial government](#e-3-A) an amount equal to the product of 1 percent of the amount of funds available for allocation multiplied by the applicable territorial percentage.
    - (B) For the purposes of this paragraph, the applicable territorial percentage of a [territory](#e-3-B) is equal to the quotient resulting from the division of the [territorial population](#e-3-C) of such [territory](#e-3-B) by the sum of the [territorial population](#e-3-C) for all [territories](#e-3-B).
  - (2) **Payments to local governments.—** The governments of the [territories](#e-3-B) shall make payments to local governments within their jurisdiction from sums received under this subsection as they consider appropriate.
  - (3) **Definitions.—** For purposes of this subsection—
    - (A) the term “territorial government” means the government of a [territory](#e-3-B);
    - (B) the term “territory” means Puerto Rico, Guam, American Samoa, and the Virgin Islands; and
    - (C) the term “territorial population” means the most recent population for each [territory](#e-3-B) as determined by the Bureau of[^1] Census.

# §6705. Local government allocations

- (a) **Indian Tribes and Alaskan Natives Villages.—** If there is in a [State](/usc/31/6720.md?p=a-4) an Indian tribe or Alaskan native[^1] village having a recognized governing body carrying out substantial governmental duties and powers, the [Secretary](/usc/31/6720.md?p=a-9) shall allocate to the tribe or village, out of the amount allocated to the [State](/usc/31/6720.md?p=a-4) under [section 6704](/usc/31/6704.md), an amount bearing the same ratio to the amount allocated to the [State](/usc/31/6720.md?p=a-4) as the population of the tribe or village bears to the population of the [State](/usc/31/6720.md?p=a-4). The [Secretary](/usc/31/6720.md?p=a-9) shall allocate amounts under this subsection to Indian tribes and Alaskan native[^1] villages in a [State](/usc/31/6720.md?p=a-4) before allocating amounts to units of general local government in the [State](/usc/31/6720.md?p=a-4) under [subsection (c)](#c). For the [payment period](/usc/31/6720.md?p=a-2) beginning October 1, 1994, the [Secretary](/usc/31/6720.md?p=a-9) shall use as the population of each Indian tribe or Alaskan native[^1] village the population for 1991 as reported by the Bureau of Indian Affairs in the publication Indian Service Population and Labor Force Estimates (January 1991). In addition to uses authorized under [section 6701(a)(2)](/usc/31/6701.md?p=a-2), amounts allocated under this subsection and paid to an Indian tribe or Alaskan native[^1] village under this chapter may be used for renovating or building prisons or other correctional facilities.
- (b) **Newly Incorporated Local Governments and Annexed Governments.—** If there is in a [State](/usc/31/6720.md?p=a-4) a [unit of general local government](/usc/31/6720.md?p=a-1) that has been incorporated since the date of the collection of the data used by the [Secretary](/usc/31/6720.md?p=a-9) in making allocations pursuant to sections [6704 through 6706](/usc/31/6704..6706.md) and [6708](/usc/31/6708.md), the [Secretary](/usc/31/6720.md?p=a-9) shall allocate to this newly incorporated local government, out of the amount allocated to the [State](/usc/31/6720.md?p=a-4) under [section 6704](/usc/31/6704.md), an amount bearing the same ratio to the amount allocated to the [State](/usc/31/6720.md?p=a-4) as the population of the newly incorporated local government bears to the population of the [State](/usc/31/6720.md?p=a-4). If there is in the [State](/usc/31/6720.md?p=a-4) a [unit of general local government](/usc/31/6720.md?p=a-1) that has been annexed since the date of the collection of the data used by the [Secretary](/usc/31/6720.md?p=a-9) in making allocations pursuant to sections [6704 through 6706](/usc/31/6704..6706.md) and [6708](/usc/31/6708.md), the [Secretary](/usc/31/6720.md?p=a-9) shall pay the amount that would have been allocated to this local government to the [unit of general local government](/usc/31/6720.md?p=a-1) that annexed it.
- (c) **Other Local Government Allocations.—**
  - (1) **In general.—** The [Secretary](/usc/31/6720.md?p=a-9) shall allocate among the units of general local government in a [State](/usc/31/6720.md?p=a-4) (other than units receiving allocations under [subsection (a)](#a)) the amount allocated to the [State](/usc/31/6720.md?p=a-4) under [section 6704](/usc/31/6704.md) (as that amount is reduced by allocations under [subsection (a)](#a)). Of the amount to be allocated, the [Secretary](/usc/31/6720.md?p=a-9) shall allocate a portion equal to ½ of such amount in accordance with [section 6706(1)](/usc/31/6706.md?p=1), and shall allocate a portion equal to ½ of such amount in accordance with [section 6706(2)](/usc/31/6706.md?p=2). A [unit of general local government](/usc/31/6720.md?p=a-1) shall receive an amount equal to the sum of amounts allocated to the unit from each portion.
  - (2) **Ratio.—** From each portion to be allocated to units of local government in a [State](/usc/31/6720.md?p=a-4) under [paragraph (1)](#c-1), the [Secretary](/usc/31/6720.md?p=a-9) shall allocate to a unit an amount bearing the same ratio to the funds to be allocated as—
    - (A) the population of the unit, multiplied by the general tax effort factor of the unit (determined under [paragraph (3)](#c-3)), multiplied by the [income](/usc/31/6720.md?p=a-5) gap of the unit (determined under [paragraph (4)](#c-4)), bears to
    - (B) the sum of the products determined under [subparagraph (A)](#c-2-A) for all units in the [State](/usc/31/6720.md?p=a-4) for which the [income](/usc/31/6720.md?p=a-5) gap for that portion under [paragraph (4)](#c-4) is greater than zero.
  - (3) **General tax effort factor.—**
    - (A) Except as provided in [subparagraph (C)](#c-3-C), the general tax effort factor of a [unit of general local government](/usc/31/6720.md?p=a-1) for a [payment period](/usc/31/6720.md?p=a-2) is—
      - (i) the adjusted taxes of the unit; divided by
      - (ii) the total [income](/usc/31/6720.md?p=a-5) attributed to the unit.
    - (B) If the amount determined under subparagraphs [(A)(i)](#c-3-A-i) and [(ii)](#c-3-A-ii) for a [unit of general local government](/usc/31/6720.md?p=a-1) is less than zero, the general tax effort factor of the unit is deemed to be zero.
    - (C)
      - (i) Except as otherwise provided in this subparagraph, for the [payment period](/usc/31/6720.md?p=a-2) beginning October 1, 1994, the adjusted taxes of a [unit of general local government](/usc/31/6720.md?p=a-1) are the taxes imposed by the unit for public purposes (except employee and employer assessments and contributions to finance retirement and social insurance systems and other special assessments for capital outlay), as determined by the Bureau of the Census for the 1987 Census of Governments and adjusted as follows:
        - (I) Adjusted taxes equals total taxes times a fraction in which the numerator is the sum of unrestricted revenues and revenues dedicated for spending on education minus total education spending and the denominator is total unrestricted revenues.
        - (II) Total taxes is the sum of property tax; general sales tax; alcoholic beverage tax; amusement tax; insurance premium tax; motor fuels tax; parimutuels tax; public utilities tax; tobacco tax; other selective sales tax; alcoholic beverage licenses, amusement licenses; corporation licenses, hunting and fishing licenses; motor vehicle licenses; motor vehicle operator licenses; public utility licenses; occupation and business licenses, not elsewhere classified; other licenses, individual [income](/usc/31/6720.md?p=a-5) tax; corporation net [income](/usc/31/6720.md?p=a-5) tax; death and gift tax; documentary and stock transfer tax; severance tax; and taxes not elsewhere classified.
        - (III) Unrestricted revenues is the sum of total taxes and intergovernmental revenue from Federal Government, general revenue sharing; intergovernmental revenue from Federal Government, other general support; intergovernmental revenue from Federal Government, other; intergovernmental revenue from [State](/usc/31/6720.md?p=a-4) government, other general support; intergovernmental revenue from [State](/usc/31/6720.md?p=a-4) government, other; intergovernmental revenue from local governments, other general support; intergovernmental revenue from local governments, other; miscellaneous general revenue, property sale-housing and community development; miscellaneous general revenue, property sale-other property; miscellaneous general revenue, interest earnings on investments; miscellaneous general revenue, fines and forfeits; miscellaneous general revenue, rents; miscellaneous general revenues, royalties; miscellaneous general revenue, donations from private sources; miscellaneous general revenue, net lottery revenue (after prizes and administrative expenses); miscellaneous general revenue, other miscellaneous general revenue; and all other general charges, not elsewhere classified.
        - (IV) Revenues dedicated for spending on education is the sum of elementary and secondary education, school lunch; elementary and secondary education, tuition; elementary and secondary education, other; higher education, auxiliary enterprises; higher education, other; other education, not elsewhere classified; intergovernmental revenue from Federal Government, education; intergovernmental revenue from [State](/usc/31/6720.md?p=a-4) government, education; intergovernmental revenue from local governments, interschool system revenue; intergovernmental revenue from local governments, education; interest earnings, higher education; interest earnings, elementary and secondary education; miscellaneous revenues, higher education; and miscellaneous revenues, elementary and secondary education.
        - (V) Total education spending is the sum of elementary and secondary education, current operations; elementary and secondary education, construction; elementary and secondary education, other capital outlays; elementary and secondary education, to [State](/usc/31/6720.md?p=a-4) governments; elementary and secondary education, to local governments, not elsewhere classified; elementary and secondary education, to counties; elementary and secondary education, to municipalities; elementary and secondary education, to townships; elementary and secondary education, to school districts; elementary and secondary education, to special districts; higher education-auxiliary enterprises, current operations; higher education-auxiliary enterprises, construction; higher education, auxiliary enterprises, other capital outlays; other higher education, current operations; other higher education, construction; other higher education, other capital outlays; other higher education, to [State](/usc/31/6720.md?p=a-4) government; other higher education, to local governments, not elsewhere classified; other higher education, to counties; other higher education, to municipalities; other higher education, to townships; other higher education, to school districts; other higher education, to special districts; education assistance and subsidies; education, not elsewhere classified, current operations; education, not elsewhere classified, construction[^2] education, not elsewhere classified, other capital outlays; education, not elsewhere classified, to [State](/usc/31/6720.md?p=a-4) government; education, not elsewhere classified, to local governments, not elsewhere classified; education, not elsewhere classified, to counties; education, not elsewhere classified, to municipalities; education, not elsewhere classified, to townships; education, not elsewhere classified, to school districts; education, not elsewhere classified, to special districts; and education, not elsewhere classified, to Federal Government.
        - (VI) If the amount of adjusted taxes is less than zero, the amount of adjusted tax shall be deemed to be zero.
        - (VII) If the amount of adjusted taxes exceeds the amount of total taxes, the amount of adjusted taxes is deemed to equal the amount of total taxes.
      - (ii) The [Secretary](/usc/31/6720.md?p=a-9) shall, for purposes of [clause (i)](#c-3-C-i), include that part of sales taxes transferred to a [unit of general local government](/usc/31/6720.md?p=a-1) that are imposed by a county government in the geographic area of which is located the [unit of general local government](/usc/31/6720.md?p=a-1) as taxes imposed by the unit for public purposes if—
        - (I) the county government transfers any part of the revenue from the taxes to the [unit of general local government](/usc/31/6720.md?p=a-1) without specifying the purpose for which the [unit of general local government](/usc/31/6720.md?p=a-1) may expend the revenue; and
        - (II) the chief executive officer of the [State](/usc/31/6720.md?p=a-4) notifies the [Secretary](/usc/31/6720.md?p=a-9) that the taxes satisfy the requirements of this clause.
      - (iii) The adjusted taxes of a [unit of general local government](/usc/31/6720.md?p=a-1) shall not exceed the maximum allowable adjusted taxes for that unit.
      - (iv) The maximum allowable adjusted taxes for a [unit of general local government](/usc/31/6720.md?p=a-1) is the allowable adjusted taxes of the unit minus the excess adjusted taxes of the unit.
      - (v) The allowable adjusted taxes of a unit of general government is the greater of—
        - (I) the amount equal to 2.5, multiplied by the [per capita adjusted taxes of all units of general local government of the same type](#c-3-C-vii-I) in the [State](/usc/31/6720.md?p=a-4), multiplied by the population of the unit; or
        - (II) the amount equal to the population of the unit, multiplied by the sum of the adjusted taxes of all units of municipal local government in the [State](/usc/31/6720.md?p=a-4), divided by the sum of the populations of all the units of municipal local government in the [State](/usc/31/6720.md?p=a-4).
      - (vi) The excess adjusted taxes of a [unit of general local government](/usc/31/6720.md?p=a-1) is the amount equal to—
        - (I) the adjusted taxes of the unit, minus
        - (II) 1.5 multiplied by the allowable adjusted taxes of the unit;

        except that if this amount is less than zero then the excess adjusted taxes of the unit is deemed to be zero.

      - (vii) For purposes of this subparagraph—
        - (I) the term “per capita adjusted taxes of all units of general local government of the same type” means the sum of the adjusted taxes of all [units of general local government of the same type](#c-3-C-vii-II) divided by the sum of the populations of all [units of general local government of the same type](#c-3-C-vii-II); and
        - (II) the term “units of general local government of the same type” means all townships if the [unit of general local government](/usc/31/6720.md?p=a-1) is a township, all municipalities if the [unit of general local government](/usc/31/6720.md?p=a-1) is a municipality, all counties if the [unit of general local government](/usc/31/6720.md?p=a-1) is a county, or all unified city/county governments if the [unit of general local government](/usc/31/6720.md?p=a-1) is a unified city/county government.
  - (4) **Income gap.—**
    - (A) Except as provided in [subparagraph (B)](#c-4-B), the [income](/usc/31/6720.md?p=a-5) gap of a [unit of general local government](/usc/31/6720.md?p=a-1) is—
      - (i) the number which applies under [section 6706](/usc/31/6706.md), multiplied by the [per capita income](/usc/31/6720.md?p=a-6) of the [State](/usc/31/6720.md?p=a-4) in which the unit is located; minus
      - (ii) the [per capita income](/usc/31/6720.md?p=a-6) of the geographic area of the unit.
    - (B) If the amount determined under [subparagraph (A)](#c-4-A) for a [unit of general local government](/usc/31/6720.md?p=a-1) is less than zero, then the relative [income](/usc/31/6720.md?p=a-5) factor of the unit is deemed to be zero.
- (d) **Small Government Allocations.—** If the [Secretary](/usc/31/6720.md?p=a-9) decides that information available for a [unit of general local government](/usc/31/6720.md?p=a-1) with a population below a number (of not more than 500) prescribed by the [Secretary](/usc/31/6720.md?p=a-9) is inadequate, the [Secretary](/usc/31/6720.md?p=a-9) may allocate to the unit, in lieu of any allocation under [subsection (b)](#b) for a [payment period](/usc/31/6720.md?p=a-2), an amount bearing the same ratio to the total amount to be allocated under [subsection (b)](#b) for the period for all units of general local government in the [State](/usc/31/6720.md?p=a-4) as the population of the unit bears to the population of all units in the [State](/usc/31/6720.md?p=a-4).

# §6706. Income gap multiplier


For purposes of determining the [income](/usc/31/6720.md?p=a-5) gap of a [unit of general local government](/usc/31/6720.md?p=a-1) under section 6705(b)(4)(A),[^1] the number which applies is—

- (1) 1.6, with respect to ½ of any amount allocated under [section 6704](/usc/31/6704.md) to the [State](/usc/31/6720.md?p=a-4) in which the unit is located; and
- (2) 1.2, with respect to the remainder of such amount.

# §6707. State variation of local government allocations

- (a) **State Formula.—** A [State](/usc/31/6720.md?p=a-4) government may provide by law for the allocation of amounts among units of general local government in the [State](/usc/31/6720.md?p=a-4) on the basis of population multiplied by the general tax effort factors or [income](/usc/31/6720.md?p=a-5) gaps of the units of general local government determined under sections [6705(a)](/usc/31/6705.md?p=a) and [(b)](/usc/31/6705.md?p=b)[^1] or a combination of those factors. A [State](/usc/31/6720.md?p=a-4) government providing for a variation of an allocation formula provided under sections [6705(a)](/usc/31/6705.md?p=a) and [(b)](/usc/31/6705.md?p=b)[^1] shall notify the [Secretary](/usc/31/6720.md?p=a-9) of the variation by the 30th day before the beginning of the first [payment period](/usc/31/6720.md?p=a-2) in which the variation applies. A variation shall—
  - (1) provide for allocating the total amount allocated under sections [6705(a)](/usc/31/6705.md?p=a) and [(b)](/usc/31/6705.md?p=b);[^1] and
  - (2) apply uniformly in the [State](/usc/31/6720.md?p=a-4).
- (b) **Certification.—** A variation by a [State](/usc/31/6720.md?p=a-4) government under this section may apply only if the [Secretary](/usc/31/6720.md?p=a-9) certifies that the variation complies with this section. The [Secretary](/usc/31/6720.md?p=a-9) may certify a variation only if the [Secretary](/usc/31/6720.md?p=a-9) is notified of the variation at least 30 days before the first [payment period](/usc/31/6720.md?p=a-2) in which the variation applies.

# §6708. Adjustments of local government allocations

- (a) **Maximum Amount.—** The amount allocated to a [unit of general local government](/usc/31/6720.md?p=a-1) for a [payment period](/usc/31/6720.md?p=a-2) may not exceed the adjusted taxes imposed by the [unit of general local government](/usc/31/6720.md?p=a-1) as determined under [section 6705(b)(3)](/usc/31/6705.md).[^1] Amounts in excess of adjusted taxes shall be paid to the Governor of the [State](/usc/31/6720.md?p=a-4) in which the unit of local government is located.
- (b) **De Minimis Allocations to Units of General Local Government.—** If the amount allocated to a [unit of general local government](/usc/31/6720.md?p=a-1) (except an Indian tribe or an Alaskan native[^2] village) for a [payment period](/usc/31/6720.md?p=a-2) would be less than $5,000 but for this subsection or is waived by the governing authority of the [unit of general local government](/usc/31/6720.md?p=a-1), the [Secretary](/usc/31/6720.md?p=a-9) shall pay the amount to the Governor of the [State](/usc/31/6720.md?p=a-4) in which the unit is located.
- (c) **Use of Payments to States.—** The Governor of a [State](/usc/31/6720.md?p=a-4) shall use all amounts paid to the Governor under subsections [(a)](#a) and [(b)](#b) for programs described in [section 6701(a)(2)](/usc/31/6701.md?p=a-2) in areas of the [State](/usc/31/6720.md?p=a-4) where are located the units of general local government with respect to which amounts are paid under [subsection (b)](#b).
- (d) **De Minimis Allocations to Indian Tribes and Alaskan Native Villages.—**
  - (1) **Aggregation of de minimis allocations.—** If the amount allocated to an Indian tribe or an Alaskan native[^2] village for a [payment period](/usc/31/6720.md?p=a-2) would be less than $5,000 but for this subsection or is waived by the chief elected official of the tribe or village, the amount—
    - (A) shall not be paid to the tribe or village (except under [paragraph (2)](#d-2)); and
    - (B) shall be aggregated with other such amounts and available for use by the Attorney General under [paragraph (2)](#d-2).
  - (2) **Use of aggregated amounts.—** Amounts aggregated under [paragraph (1)](#d-1) for a [payment period](/usc/31/6720.md?p=a-2) shall be available for use by the Attorney General to make grants in the [payment period](/usc/31/6720.md?p=a-2) on a competitive basis to Indian Tribes[^3] and Alaskan native[^2] village[^4] for—
    - (A) programs described in [section 6701(a)(2)](/usc/31/6701.md?p=a-2); or
    - (B) renovating or building prisons or other correctional facilities.