Changing the Intrastate General Revenue Sharing Formula: A Discussion of the Issues

Abstract

The State and Local Fiscal Assistance Act of 1972 appropriated $30.2 billion to be distributed to all state and local governments over a five-year period. Although the Act does not expire until December 1976, congressional debate over its renewal has already begun. This debate has raised a number of issues ranging all the way from philosophical reconsideration of the New Federalism to the question of what constitutes a general purpose government. Much of the discussion concerns the formula used to distribute revenue sharing monies, with questions being raised as to its usefulness in providing funds to those areas with the greatest need for federal aid. Already, doubts about the fairness of the present formula have been expressed by local leaders. A survey conducted by Opinion Research Corporation found that only 63 per cent of all community leaders felt the present formula was fair. Disaggregating these responses by city size indicated that for cities over 500,000, only 51 per cent of the community leaders saw the allocation as equitable.1 These results should not be surprising, given the congressional understanding cf the formula at the time of its passage. To illustrate, perhaps one of the most memorable quotations from the whole debate over revenue sharing came from Representative James C. Cor-