Funding for this program was eliminated from the FY 2004 State Budget

The State Revenue Sharing (SRS) program, administered by the Department of Community and Economic Development (Commerce), provides financial assistance to municipalities, eligible unincorporated communities, and eligible volunteer fire departments to help fund public services. These services include education, water and sewer, police, road maintenance, health care and fire protection.

In 1980, the State Revenue Sharing Program was revised from the "categorical aid program" implemented in 1969 into the current program which includes two accounts from which payments are distributed: the Tax Equalization Account and the Municipal Services Account. The Tax Equalization Account rewards municipalities for generating revenue by distributing money on the basis of a formula that includes locally generated revenues, property values and population, and provides for a minimum entitlement for municipalities of $25,000, plus a geographic cost of living adjustment. The Municipal Services Account provides money to municipalities for public and ice road maintenance, health facilities, and hospitals. The Municipal Services Account also provides funding to unincorporated communities and volunteer fire departments in the unorganized borough.

Who is eligible to receive State Revenue Sharing payments?

An eligible applicant must be either an incorporated municipality, an unincorporated community within the unorganized borough, or a volunteer fire department within the unorganized borough. Only unincorporated communities located within the unorganized borough are eligible, and they must have either a non-profit corporation or Native village council that will agree to receive and spend the payment. Additionally, only volunteer fire departments registered with the State Fire Marshal serving areas outside an incorporated municipality are eligible.

How does an entity qualify for payment?

Depending on whether the applicant is a municipality, unincorporated community, or volunteer fire department, the requirements vary. However, all applicants must apply using forms provided by Commerce by November 1, in order to preserve the right to appeal the entitlement determination; otherwise, no later than December 1 (3 AAC 130.011).

• For a municipality to qualify for a State Revenue Sharing payment, it must submit an approved application, a copy of its current year operating budget, and its audit or certified financial statement from two years ago to Commerce (3 AAC 130.021(a), (b)(1), (b)(2)). In addition, the municipality must have conducted an election during the preceding state fiscal year and reported the results to Commerce, held regular meetings and maintained a record of the proceedings, and must have codified its ordinances (AS 29.60.290).
• An unincorporated community must submit an approved application, program budget, and funding agreement resolution in a form approved by Commerce (3 AAC 130.021(b)(3) and (f)). In addition, the applicant must agree to dedicate the money for public purposes, hold a public meeting to discuss the use of the funds and agree not to discriminate in provision of the public service (3 AAC 130.055).
• A volunteer fire department (VFD) must submit an approved application and program budget in a form approved by Commerce (3 AAC 130.021(b)(4) and (f)). In addition, a VFD must be registered with the State Fire Marshal and agree to spend 20% of the funds received on fire protection services (3 AAC 130.054).

What are the application deadlines?

Commerce mails the State Revenue Sharing applications to eligible applicants on July 31. The filing deadline for applications is November 1, if an entity wants to preserve the right to appeal the entitlement determination, or no later than December 1 of the computation year. Applicant budgets and certified financial statements are due the following June 30, except a municipality operating under a calendar fiscal year must file a certificate of estimated locally generated revenue by January 10, of the computation year (3 AAC 130.011).

How are community populations determined for State Revenue Sharing?

On January 15, the department notifies each municipality in writing of its preliminary population determination for the upcoming Revenue Sharing program year. These are population estimates by the State Demographer, Department of Labor and Workforce Development (Labor), and are based largely on Alaska Permanent Fund Dividend applications, Internal Revenue Service records, and other administrative information.

Although not required, a community may conduct its own population census as evidence that Labor's estimate does not accurately reflect the population. If a municipality chooses to conduct a local census, it must follow department standards and submit all required documentation by April 1. Commerce publishes local census instructions annually in the "Head Count Census Manual" and the "Housing Unit Method Manual" (see "Publications" below.) An extension of the deadline may be requested in writing. The Director of the Division of Community and Regional Affairs may approve or deny the municipality's request for population adjustment (AS 29.60.020 and 3 AAC 130.010-150.)

When are State Revenue Sharing payments made?

State Revenue Sharing payments are made on July 31 of each fiscal year, if the application and other required documentation is submitted on time (AS 29.60.310).

What can State Revenue Sharing payments be used for?

Generally, state revenue sharing funds may be spent on any public purpose for which the recipient is legally authorized to spend. If claimed in the application, however, at least 20% of the funds received by a municipality for road maintenance must be spent for that service, and 100% of the funds received for health services must be spent on that service. Unincorporated communities may spend their payment on any public purpose, while volunteer fire departments must spend their payment on fire protection services (3 AAC 130.052, .053, .054 and .055).

The purpose of the State Revenue Sharing Program is to help finance the delivery of local services and to "assure that no municipality suffers impoverishment of necessary public services, relative to other municipalities, because of the chance location of taxable wealth in the state." (Chapter 155, SLA 1980)

Despite the 79% reduction in funding to this program over the years ($60,350,000 in FY 85 to $12,855,200 in FY 02), this program still represents a significant source of funding for many of Alaska's communities, especially the smaller rural communities. Recent studies show that 25 cities rely on state revenue sharing for over 20% of their operating budgets (with a high of over 71%).

Applications and Forms

• Commerce, FY 05 City Budget Manual and Forms (Adobe Acrobat)
• Commerce, FY 04 Certified Financial Statement Manual

Publications

• Commerce, Nonprofit Community Association Handbook
• Commerce, FY 05 Head Count Census Manual; Instructions and Reporting Forms for Adjusting Population
• Commerce, FY 05 Housing Unit Method; Instructions and Reporting Forms for Adjusting Population
• Legislative Research, Report on North Slope Borough Population, January 2002 (1 MB Adobe Acrobat)
• Commerce, Local Government Handbook - Financial Management - Budgeting
• Commerce, Model Financial Record Keeping System, Chapter 1

Web Sites

• Alaska Department of Public Safety, State Fire Marshal
• Commerce, Revenue Sharing Programs
• Alaska Legislature "Folio Infobase" - The Current Alaska Statutes
• Alaska Legislature "Folio Infobase" - The Alaska Administrative Code
• Alaska Department of Law

Other Resources

• Commerce, FY 02 Municipal Final SRS Payments
• Commerce, FY 02 Unincorporated Final SRS Payments
• Commerce, FY 02 Volunteer Fire Final SRS Payments
• Commerce, SRS Funding History Chart (FY 1970 - FY 2002)
• Energy Assistance Payments
• National Forest Receipts Payments

Alaska Statutes

• AS 29.60.010 - State equalization of tax resources for municipal services, formula for computing tax unit entitlement, definitions of locally generated revenue
• AS 29.60.020 - Determination of population
• AS 29.60.030 - Determination of millage rate equivalent
• AS 29.60.040 - Reports, financial reporting period, budget
• AS 29.60.050 - Limitation on computation and use of payments
• AS 29.60.060 - Tax equalization account, allocation
• AS 29.60.070 - Administration, adoption of regulations, content of regulations
• AS 29.60.080 - Definitions
• AS 29.60.100 - State aid to municipalities for roads, entitlement formula, ice roads, waterways
• AS 29.60.120 - State aid to municipalities and other eligible recipients for health facilities and hospitals, certification requirements, definition of health facility
• AS 29.60.130 - State aid to volunteer fire departments not in organized municipality, state fire marshal approval
• AS 29.60.140 - State aid to unincorporated communities, qualified entity, waiver of sovereign immunity
• AS 29.60.150 - Population determination
• AS 29.60.160 - Area cost-of-living differential, formula, determination of differential areas
• AS 29.60.170 - Municipal services account, distribution
• AS 29.60.180 - Regulations, minimum qualification standards
• AS 29.60.280 - Allocation and distribution
• AS 29.60.290 - Qualification for minimum payment, election, regular meetings, budget, codified ordinances, determination of differential areas, determination of minimum payment
• AS 29.60.300 - Proration of payments, formula
• AS 29.60.310 - Time of payment

Alaska Administrative Code

See Alaska Administrative Code:

• 3 AAC 130.011 - Application for state aid filing deadline
• 3 AAC 130.021 - Financial reports, budget, audit or financial statement,
• 3 AAC 130.042 - Population determination, determination methods,
• 3 AAC 130.043 - Request for adjustment of population determination, request deadline,
• 3 AAC 130.044 - Appeal of population determination to the commissioner
• 3 AAC 130.052 - Standards for payments of state aid to municipalities for roads, 20% expenditure, map requirement
• 3 AAC 130.053 - Standards for payments of state aid to municipalities and other eligible recipients for health facilities and hospitals, 20% expenditure requirement
• 3 AAC 130.054 - Standards for payments of state aid to volunteer fire departments not in an organized municipality, 20% expenditure requirement
• 3 AAC 130.055 - Standards for payments of state aid to unincorporated communities, dedication to public purpose, meeting and notice requirements, non-discrimination requirement
• 3 AAC 130.061 - Standards for payment of state aid under former AS 29.90
• 3 AAC 130.071 - Standards for minimum payments under AS 29.60.290
• 3 AAC 130.072 - Violation of payment standard
• 3 AAC 130.092 - Full and true assessed property value determination, determination deadline, appeal, appeal deadline, judicial review
• 3 AAC 130.093 - Determination of social unit
• 3 AAC 130.094 - Determination of most qualified entity, appeal, appeal deadline
• 3 AAC 130.097 - Determination of millage rate equivalent and data elements
• 3 AAC 130.102 - Appeal of determination to the commissioner, appeal deadline
• 3 AAC 130.112 - Notice of entitlement
• 3 AAC 130.113 - Request for recalculation of entitlements, request deadline
• 3 AAC 130.121 - Overpayment and adjustment
• 3 AAC 130.122 - Underpayment and adjustment, adjustment request deadline
• 3 AAC 130.131 - Incorporation or dissolution of an applicant, eligibility
• 3 AAC 130.135 - Waiver for good cause
• 3 AAC 130.150 - Definitions

Revised 10/1/02