later than 30 days prior to the first entitlement pe-
riod during which it is to apply. 
(d) GOVERNMENTAL DEFINITIONS
AND RELATED 
RULES.—For purposes of this Act— 
(1) UNITS OF LOCAL GOVERNMENT.—The term 
‘‘unit of local government’’ means the government of 
a county, municipality, township, or other unit of 
government below the State which is a unit of gen-
eral government (determined on the basis of the 
same principles as are used by the Bureau of the 
Census for general statistical purposes). Such term 
also means, except for purposes of paragraphs (1), 
(2), (3), (5), (6)(C), and (6)(D) of subsection (b), 
and, except for purposes of subsection (c), the recog-
nized governing body of an Indian tribe or Alaskan 
native village which performs substantial govern-
mental functions. 
(2) CERTAIN AREAS TREATED AS COUNTIES.— 
In any State in which any unit of local government 
(other than a county government) constitutes the 
next level of government below the State government 
level, then, except as provided in the next sentence, 
the geographic area of such unit of government shall 
be treated as a county area (and such unit of gov-
ernment shall be treated as a county government) 
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with respect to that portion of the State’s geo-
graphic area. In any State in which any county area 
is not governed by a county government but contains 
two or more units of local government, such units 
shall not be treated as county governments and the 
geographic areas of such units shall not be treated 
as county areas. 
(3) TOWNSHIPS.—The term ‘‘township’’ in-
cludes equivalent subdivisions of government having 
different designations (such as ‘‘towns’’), and shall 
be determined on the basis of the same principles as 
are used by the Bureau of the Census for general 
statistical purposes. 
(4) UNITS OF LOCAL GOVERNMENT LOCATED IN 
LARGER ENTITY.—A unit of local government shall 
be treated as located in a larger entity if part or all 
of its geographic area is located in the larger entity. 
(5) ONLY PART OF UNIT LOCATED IN LARGER 
ENTITY.—If only part of a unit of local government 
is located in a larger entity, such part shall be treat-
ed for allocation purposes as a separate unit of local 
government, and all computations shall, except as 
otherwise provided in regulations, be made on the 
basis of the ratio which the estimated population of 
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such part bears to the population of the entirety of 
such unit. 
(6) BOUNDARY CHANGES, GOVERNMENTAL RE-
ORGANIZATION, ETC.—If, by reason of boundary line 
changes, by reason of State statutory or constitu-
tional changes, by reason of annexations or other 
governmental reorganizations, or by reason of other 
circumstances, the application of any provision of 
this section to units of local government does not 
carry out the purposes of this title, the application 
of such provision shall be made, under regulations 
prescribed by the Secretary, in a manner which is 
consistent with such purposes. 
SEC. 107. DEFINITIONS AND SPECIAL RULES FOR APPLICA-
TION OF ALLOCATION FORMULAS. 
(a) IN GENERAL.—For purposes of this title— 
(1) POPULATION.—Population shall be deter-
mined on the same basis as resident population is 
determined by the Bureau of the Census for general 
statistical purposes. 
(2) URBANIZED POPULATION.—Urbanized pop-
ulation means the population of any area consisting 
of a central city or cities of 50,000 or more inhab-
itants (and of the surrounding closely settled terri-
tory for such city or cities) which is treated as an 
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urbanized area by the Bureau of the Census for gen-
eral statistical purposes. 
(3) INCOME.—Income means total money in-
come received from all sources, as determined by the 
Bureau of the Census for general statistical pur-
poses. 
(4) 
PERSONAL
INCOME.—Personal 
income 
means the income of individuals, as determined by 
the Department of Commerce for national income 
accounts purposes. 
(5) DATES
FOR
DETERMINING
ALLOCATIONS 
AND ENTITLEMENTS.—Except as provided in regula-
tions, the determination of allocations and entitle-
ments for any entitlement period shall be made as 
of the first day of the third month immediately pre-
ceding the beginning of such period. 
(6) INTERGOVERNMENTAL
TRANSFERS.—The 
intergovernmental transfers of revenue to any gov-
ernment are the amounts of revenue received by that 
government from other governments as a share in fi-
nancing (or as reimbursement for) the performance 
of governmental functions, as determined by the Bu-
reau of the Census for general statistical purposes. 
(7) DATA USED; UNIFORMITY OF DATA.— 
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(A) GENERAL RULE.—Except as provided 
in subparagraph (B), the data used shall be the 
most recently available data provided by the 
Bureau of the Census or the Department of 
Commerce, as the case may be. 
(B) USE OF ESTIMATES, ETC.—Where the 
Secretary determines that the data referred to 
in subparagraph (A) are not current enough or 
are not comprehensive enough to provide for eq-
uitable allocations, he may use such additional 
data (including data based on estimates) as 
may be provided for in regulations. 
(b) INCOME TAX AMOUNT OF STATES.—For pur-
poses of this title— 
(1) IN GENERAL.—The income tax amount of 
any State for any entitlement period is the income 
tax amount of such State as determined under para-
graphs (2) and (3). 
(2) INCOME
TAX
AMOUNT.—The income tax 
amount of any State for any entitlement period is 15 
percent of the net amount collected from the State 
individual income tax of such State during 2009 or 
(if later) during the last calendar year ending before 
the beginning of such entitlement period. 
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(3) CEILING
AND
FLOOR.—The income tax 
amount of any State for any entitlement period— 
(A) shall not exceed 6 percent, and 
(B) shall not be less than 1 percent, 
of the Federal individual income tax liabilities attrib-
uted to such State for taxable years ending during 
2008 or (if later) during the last calendar year end-
ing before the beginning of such entitlement period. 
(4) STATE INDIVIDUAL INCOME TAX.—The in-
dividual income tax of any State is the tax imposed 
upon the income of individuals by such State and 
described as a State income tax under section 
164(a)(3) of the Internal Revenue Code of 1986. 
(5) FEDERAL INDIVIDUAL INCOME TAX LIABIL-
ITIES.—Federal individual income tax liabilities at-
tributed to any State for any period shall be deter-
mined on the same basis as such liabilities are deter-
mined for such period by the Internal Revenue Serv-
ice for general statistical purposes. 
(c) GENERAL TAX EFFORT OF STATES.— 
(1) IN GENERAL.—For purposes of this title— 
(A) GENERAL TAX EFFORT FACTOR.—The 
general tax effort factor of any State for any 
entitlement period is (i) the net amount col-
lected from the State and local taxes of such 
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State during the most recent reporting year, di-
vided by (ii) the aggregate personal income (as 
defined in paragraph (4) of subsection (a)) at-
tributed to such State for the same period. 
(B) GENERAL TAX EFFORT AMOUNT.—The 
general tax effort amount of any State for any 
entitlement period is the amount determined by 
multiplying— 
(i) the net amount collected from the 
State and local taxes of such State during 
the most recent reporting year, by 
(ii) the general tax effort factor of 
that State. 
(2) STATE AND LOCAL TAXES.— 
(A) TAXES TAKEN INTO ACCOUNT.—The 
State and local taxes taken into account under 
paragraph (1) are the compulsory contributions 
exacted by the State (or by any unit of local 
government or other political subdivision of the 
State) for public purposes (other than employee 
and employer assessments and contributions to 
finance retirement and social insurance sys-
tems, and other than special assessments for 
capital outlay), as such contributions are deter-
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mined by the Bureau of the Census for general 
statistical purposes. 
(B) MOST
RECENT
REPORTING
YEAR.— 
The most recent reporting year with respect to 
any entitlement period consists of the years 
taken into account by the Bureau of the Census 
in its most recent general determination of 
State and local taxes made before the close of 
such period. 
(d) GENERAL TAX EFFORT FACTOR OF COUNTY 
AREA.—For purposes of this title, the general tax effort 
factor of any county area for any entitlement period is— 
(1) the adjusted taxes of the county government 
plus the adjusted taxes of each other unit of local 
government within that county area, divided by 
(2) the aggregate income (as defined in para-
graph (3) of subsection (a)) attributed to that coun-
ty area. 
(e) GENERAL TAX EFFORT FACTOR OF UNIT OF 
LOCAL GOVERNMENT.—For purposes of this title— 
(1) IN GENERAL.—The general tax effort factor 
of any unit of local government for any entitlement 
period is— 
(A) the adjusted taxes of that unit of local 
government, divided by 
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(B) the aggregate income (as defined in 
paragraph (3) of subsection (a)) attributed to 
that unit of local government. 
(2) ADJUSTED TAXES.— 
(A) IN GENERAL.—The adjusted taxes of 
any unit of local government are— 
(i) the compulsory contributions ex-
acted by such government for public pur-
poses (other than employee and employer 
assessments and contributions to finance 
retirement and social insurance systems, 
and other than special assessments for 
capital outlay), as such contributions are 
determined by the Bureau of the Census 
for general statistical purposes, and 
(ii) adjusted (under regulations pre-
scribed by the Secretary) by excluding an 
amount equal to that portion of such com-
pulsory contributions which is properly al-
locable to expenses for education. 
(B) CERTAIN SALES TAXES COLLECTED BY 
COUNTIES.—In any case where— 
(i) a county government exacts sales 
taxes within the geographic area of a unit 
of local government and transfers part or 
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all of such taxes to such unit without 
specifying the purposes for which such unit 
may spend the revenues, and 
(ii) the Governor of the State notifies 
the Secretary that the requirements of this 
subparagraph have been met with respect 
to such taxes, 
then the taxes so transferred shall be treated as 
the taxes of the unit of local government (and 
not the taxes of the county government). 
(f) RELATIVE INCOME FACTOR.—For purposes of 
this title, the relative income factor is a fraction— 
(1) in the case of a State, the numerator of 
which is the per capita income of the United States 
and the denominator of which is the per capita in-
come of that State; 
(2) in the case of a county area, the numerator 
of which is the per capita income of the State in 
which it is located and the denominator of which is 
the per capita income of that county area; and 
(3) in the case of a unit of local government, 
the numerator of which is the per capita income of 
the county area in which it is located and the de-
nominator of which is the per capita income of the 
geographic area of that unit of local government. 
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For purposes of this subsection, per capita income shall 
be determined on the basis of income as defined in para-
graph (3) of subsection (a). 
TITLE II—ADMINISTRATIVE 
PROVISIONS 
SEC. 201. REPORTS ON USE OF FUNDS; PUBLICATION. 
(a) REPORTS ON USE OF FUNDS.—Each State gov-
ernment and unit of local government which receives funds 
under title I shall, after the close of each entitlement pe-
riod, submit a report to the Secretary setting forth the 
amounts and purposes for which funds received during 
such period have been spent or obligated. Such reports 
shall be in such form and detail and shall be submitted 
at such time as the Secretary may prescribe. The Sec-
retary shall establish a publicly accessible website for pur-
poses of this Act and shall post such reports on that 
website. 
(b) REPORTS ON PLANNED USE OF FUNDS.—Each 
State government and unit of local government which ex-
pects to receive funds under title I for any entitlement 
period beginning on or after October 1, 2009 shall submit 
a report to the Secretary setting forth the amounts and 
purposes for which it plans to spend or obligate the funds 
which it expects to receive during such period. Such re-
ports shall be in such form and detail as the Secretary 
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may prescribe and shall be submitted at such time before 
the beginning of the entitlement period as the Secretary 
may prescribe. 
SEC. 202. MISCELLANEOUS PROVISIONS. 
(a) ASSURANCES TO THE SECRETARY.—In order to 
qualify for any payment under title I for any entitlement 
period beginning on or after October 1, 2009, a State gov-
ernment or unit of local government must establish (in 
accordance with regulations prescribed by the Secretary, 
and, with respect to a unit of local government, after an 
opportunity for review and comment by the Governor of 
the State in which such unit is located) to the satisfaction 
of the Secretary that— 
(1) it will establish a trust fund in which it will 
deposit all payments it receives under title I; 
(2) it will use amounts in such trust fund (in-
cluding any interest earned thereon while in such 
trust fund) during such reasonable period or periods 
as may be provided in such regulations; 
(3) in the case of a unit of local government, 
it will use amounts in such trust fund (including any 
interest earned thereon while in such trust fund) 
only for priority expenditures (as defined in section 
103(a)), and will pay over to the Secretary (for de-
posit in the general fund of the Treasury) an 
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