Paying for Planning

This report focuses on state intergovernmental revenue distribution to local governments and the three common approaches to fund distribution during a period of decline in state aid allocation. Municipalities generate the majority of their own general revenue but of the intergovernmental revenue they receive from the state, it can be split into restricted and unrestricted state aid. Unrestricted aid is either lump sum or tax earmarking; the former specified in state law or set by lawmakers during the budget process and the latter a function of tax collections.