Bill Would Modernize Disparity Grants

Legislation introduced this session by Delegate Andrew Serafini, HB 914, seeks to eliminate a statutory cap placed on a wealth based program that would generate additional revenue for a number of counties.  As reported by the Herald-Mail:

The Disparity Grant was created in the early 1990s to give counties that have low revenue from income tax an opportunity to get state aid.

According to the formula used to calculate the grant, counties with per capita income tax less than 75 percent of the state average would be eligible for a grant.

The amount of the grant depended on the per capita income tax revenue of a county with jurisdictions with lower income tax revenues getting a higher share of the grant.

When the cost of the grant grew to $120 million in 2010, the state froze the grant money for the future at 2010 levels.

This action has left some counties receiving less state grant money than otherwise specified through the formula  and other counties, who now meet the program eligibility criteria, being excluded from the program altogether.

According to the Department of Legislative Services’ Overview of State Aid to Local Governments, eleven jurisdictions would receive an additional $34.4 million if this cap were not in place.

HB 914 would remove the cap placed on the disparity grant program and phase in the additional grant to be received over 5 years, 20% per year, beginning in FY 2015.  Eligible counties would receive full program funding in FY 2019.

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