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Annual Formula Local Aid

SECTION 9.   (A) Chapter 58 of the General Laws is hereby amended by inserting after section 18B the following section:-
Section 18B 1/2. (a) As used in this section, the following words shall have the following meanings:-
"Equalizing factor", the sum of the income ratio and property wealth ratio for the city or town multiplied by $10.
"Income ratio", the per capita income of the commonwealth divided by the per capita income of the city or town, as most recently determined by the department of revenue.
"Population", the population of the city or town, as most recently estimated by the United States Bureau of the Census.
"Property wealth ratio", the statewide average equalized valuation per capita divided by the equalized property valuation per capita for the city or town, as most recently reported by the commissioner of revenue to the general court under section 10C.
(b)          Subject to appropriation, each city or town shall receive annual formula local aid from the commonwealth. The funds appropriated for this aid in any fiscal year shall be apportioned among the cities and towns by multiplying the equalizing factor for the city or town by the population for the city or town.
(c) Beginning in fiscal year 2015, an amount equal to 25 percent of annual formula local aid under this section shall be transferred to a reserve account for a program of incentive aid for municipalities. The incentive aid program will reward municipalities for meeting incentives focused on strong fiscal management, municipal health care cost management, and local government performance management. The secretary of administrative and finance shall adopt regulations establishing administrative procedures for the incentive aid program, including identifying the specific incentive requirements and a formula for distributing incentive funds to eligible municipalities.

(B) Section 18C of said chapter 58, as appearing in section 116 of chapter 165 of the acts of 2012, is hereby amended by striking out subsection (a) and inserting in place thereof the following subsection:-
(a) In this section, "budgeted aid" shall mean unrestricted aid to cities and towns, including proceeds from the state lottery established under chapter 10, payments in lieu of taxes from the commonwealth to cities and towns under section 17, education aid to cities and towns under chapter 70, and annual formula local aid under section 18B 1/2.

(C) Section 2 of chapter 70 of the General Laws is hereby amended by striking out the definition of "General revenue sharing aid", as amended by section 33 of chapter 194 of the acts of 2011, and inserting in place thereof the following definition:-
"General revenue sharing aid'', the amount of assistance from the commonwealth to be received by a city or town in a fiscal year from the following local aid programs: (1) payments in lieu of taxes for state-owned lands distributed under section 17 of chapter 58, (2) equity aid as defined in this section, (3) the distribution to cities and towns of the balance of the State Lottery and Gaming Fund in accordance with clause (c) of section 35 of chapter 10, and (4) annual formula local aid distributed under section 18B 1/2 of chapter 58.
 
 

Summary:
This section enacts a new formula for distributing supplemental aid to cities and towns, known as "Annual Formula Local Aid". Beginning in fiscal year 2015, in addition to the amount of "Annual Formula Local Aid" provided each year, an amount equal to 25 percent of the appropriated amount will fund an incentive aid program promoting strong fiscal management, municipal health care cost management, and local government performance management.