The 2011 Legislature, operating under the shadow of a suspicious $240-million budget deficit, flat lined entitlement payments for cities, towns and counties for the current two-year fiscal cycle. House Bill 495 also revised the formula for calculating the annual growth factor that is applied to entitlement payments. The new law bases the growth factor on the collection of gambling, motor vehicle, beer, liquor and financial institutions tax revenues over the most recent three-year period. It also considers personal and corporate income tax collections. Current estimates indicate that cities can expect a growth factor of 3% to 3.5% in the fiscal year that begins July 1, 2013.
Recommendation: Cities will work in 2013 to assure that the growth factor is applied as provided by the 2011 entitlement bill.