Full History of Municipal Revenue Sharing in Alaska
Excerpted from House Research Agency Request 87.073
“History of Municipal Assistance and Revenue Sharing”

Overview:

• Revenue Sharing started in 1969, long before oil revenue.
  
  
• Revenue Sharing was a bigger percent of the State budget in 1969 than it was last year.
  
  
• In 1979 the Legislature ended sharing the Gross Business Receipts Tax with municipalities in exchange for a promise to replace the revenue with equivalent “Municipal Assistance”.

1969 to 1980 - State Revenue Sharing Program: SRS came into being on July 1, 1969 with the passage of HB 350 (Chapter 95, SLA 1969). Its five purposes were:

1. Help ease fiscal problems facing local governments.
2. Stabilize or reduce local property taxes.
3. Encourage local governments to provide adequate levels of public services.
4. Inject a measure of budget planning and stability into local governments.
5. Improve allocation of State funds by sharing them with local governments.

Approximately 75% of the funds were distributed on a per capita basis for services provided, and 25% based on other criteria (e.g. miles of road maintained). The categories and evolution of the program are shown in the table below:

Comparison of State Revenue Sharing in FY 70 to FY 80
Category of Service Provided	1970	1980
Police	$5.00/capita	$12.00/capita
Fire Protection	$2.50/capita	$7.50/capita
Road Maintenance	$1,000/mile	$1,500/mile
Air/water Pollution	$1.00/capita	$2.00/capita
Land Use Planning	$1.00/capita	$2.00/capita
Ice Roads	NA	$900/mile
Parks and Recreation	NA	$5.00/capita
Transportation Facilities	NA	$5.00/capita
Health Services	NA	$5.00/capita
Hospital (/ facility)	NA	$25,000 to $75,000
Health Facilities	NA	$1,000/bed, $4,000/facility
Hospital Construction	NA	$2,500/bed
TOTAL Revenue Sharing	$2.0 million	$26.9 million
TOTAL / Capita Sharing	$9.50/capita	$35.50/capita

1979 - “Municipal Assistance” Program created to replace municipal share of the Gross Business Receipts tax: Until 1979, the State shared 20% of the Gross Business Tax Receipts generated in each municipality. When the State repealed its tax on January 1, 1979, the State promised to replace the lost revenues to municipalities. Revenues were distributed with a “hold harmless” amount (based on what each municipality received in 1978), plus a per capita distribution.

1980 - Revised State Revenue Sharing Programs: HB 192 (Chapter 155, SLA 1980) repealed and replaced the “per capita” revenue sharing program primarily with an “equalization” revenue sharing program. Key elements of the new State Revenue Sharing Program are:

1. All “per capita” type categories were abolished except Roads, Fire Protection and Health Facilities. Road revenue sharing was increased to $2500 / mile
2. A “minimum entitlement” was created to protect the smallest municipalities.
3. A cost of living differential was established.
4. The majority of funds were distributed under an “equalization” formula that takes into account: population; local tax base; and actual local tax effort.

1997 - “Municipal Assistance” changed to “Safe Communities”: The Municipal Assistance Program did not direct how the money was to be used by municipal governments. The Safe Communities Program directs that revenues be allocated to various public safety and health services in priority order. However, a municipality may allocate the funding to other public services.

2004 – All Revenue Sharing Programs eliminated

• Local property taxes have gone up 29% in the last six years largely due to revenue sharing cuts, underfunding education inflation, and state/federal mandates.
• Over 40 small communities have ended or severely cut key municipal services including police, fire, road maintenance, etc.
• In 2005 alone at least 10 small communities have closed their doors.