AG 1993 03 15 - Laserfiche WebLink

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SECTION D. 1, PROPOSED LEGISLATION OF CONCERN Local Financial Security (Cont.) The specific provisions of the proposed bill are as follows: The bill would convert the system for funding the state-collected local revenues from annual appropriation to the prior method of earmarking certain taxes, effective beginning with the 1993-94 fiscal year. Local units would receive ali of the revenue formerly distfibuted~ less the S29 million loss of growth for the 1991-93 biennium (i.e., cap local loss frbm freeze on growth). To avoid. ~a $160 million one-time loss in state revenue resulting from converting back to the old sy'st~m, the following adjustments would be made: Ao Intangibles Tax ~ Instead of distributing in August the proceeds of the tax collected during the preceding April as under the old system, the bill would move this distribution to the next June (the bulk of fiscal year collections are in by April .30). For the first year, 103% of Jul7 1-April 30 revenues would be ea.rmarked, less the 513.4 million impact from the growth freeze. The 10.3% earmar-ldng factor for the 10-month period would be equivalent to 100% for 12 months. For future years, a May 1-April 30 distribution year would be used and the S13.4 million '.vould be subtracted from the distributable amount. To mitigate the cash- flow problem for local units, 60% of the $190 million of ~nventory tax reimbursement would be moved from April back to August. Beer and Wine Tax - The bill would provide that the state go back to the prior system of distributing quarterly a specific share of the prior quarter's net state excise tax collections. The percentage earmarked would be the same as the prior system. Co Franchise Tax on Utility Gross Receir)ts - The bill would use the same method as for the beer and wine tax, subtracting out each year $15.4 million for the cost of the growth freeze. This represents a shift from an annual di'stribution to quarterly. The earm~king share would be the same as under the prior system. We believe that this legislation represents a significant effort to deal with problems created for local governments as a result of the necessary actions undertaken to bring the state th. rough its recent budget difficulties, actions that left the state in a far better situation than that affecting other states; but that created a great deal of (we hope temporary) insecurity in local revenue sources. We hope you will reinforce our support for this legislation by communicating with members of the General Assembly to help them understand its importance and the problems it attempts to solve. If you have any questions, please do not hesitate to contact our office. 1)-2