First, revenue sharing does not have to include just property tax increments. Revenue sharing could include increments of all the taxes currently collected by the state within the region. Or, the pool could consist of all growth in property values since 1990. The bottom line is each formula has its policy and political pluses and minuses. Measuring of tax capacity will depend on the taxes included in the revenue raising element.
Spending is another important issue.
Many have criticized the current shared revenue formula because it rewards spending. One alternative is to base the formula not on spending but on need. Most stressed communities have common variables that create spending pressure above their capacity to raise necessary revenues. Comparing each municipality within a region on each variable would allow for a ranking of relative need in the metro area. Then the gap between need and tax capacity could be measured.