Summary:

 Senate Bill 243 (SB 243) creates the All Cities and Counties Fund, directing a portion of gross receipts tax revenue to municipalities and counties. The bill establishes a formula-based distribution system, ensuring funds are equitably allocated based on population and county revenue levels. The bill takes effect on July 1, 2025. 

Legislation Overview:

 Senate Bill 243 (SB 243) establishes the All Cities and Counties Fund in the state treasury and directs the Taxation and Revenue Department (TRD) to distribute a portion of gross receipts tax revenue to municipalities and counties.

The bill outlines two separate formulas for municipality and county distributions. The formula for municipalities considers municipal population and county revenue levels, ensuring municipalities in lower-income counties receive larger proportional distributions. The county formula uses county population and equalized gross receipts tax revenue to balance allocations across rural and urban areas.

TRD must calculate distribution amounts annually and certify allocations to the state treasurer by October 1 each year. The state treasurer must transfer funds to municipalities and counties by November 1. The bill ensures that distributions are based on objective, pre-determined formulas.

The fund receives 8% of net receipts attributable to the gross receipts tax distributable to the general fund. The formula ensures funding stability, preventing disproportionate allocations to any single jurisdiction.

Implications
SB 243 creates a dedicated revenue source for municipalities and counties, ensuring predictable funding for local services. By basing distributions on population and equalized tax revenue, the bill balances funding disparities between high-revenue and low-revenue jurisdictions.

The formula-based approach reduces political discretion in funding decisions, making distributions more transparent and equitable. However, shifting 8% of net gross receipts tax revenue from the general fund to local governments may reduce state budget flexibility for other priorities.

Counties and municipalities will benefit from increased financial certainty, allowing them to plan infrastructure projects, public safety initiatives, and social services more effectively. However, the formula may be subject to revisions in future years if funding levels do not adequately address local needs.

The bill places additional administrative responsibilities on TRD and the state treasurer, requiring annual certification and reporting of distributions. While the bill reduces political influence in local funding decisions, it may also increase reliance on formula-driven allocations, which may not always align with rapidly changing economic conditions in individual counties. 

Current Law:

 Under current law, gross receipts tax revenue is distributed to municipalities and counties through a combination of local option tax distributions, direct appropriations, and discretionary funding. There is no dedicated statewide fund ensuring equalized distributions across all counties and municipalities. SB 243 establishes a formalized, formula-based system, reducing year-to-year uncertainty in local government revenue streams.