---
kind: "range"
citation: "31 U.S.C. §§ 6704–6708"
title: "31"
from: "6704"
to: "6708"
count: 5
release: "119-102"
url: "https://uscodex.org/usc/31/6704..6708"
---

# §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.