Supplemental Distribution Revenue Sharing Program

Supplemental Distribution Revenue Sharing Program

Request to provide additional funds to avoid prorated reduction

The Supplemental Distribution within the Local Government Half-Cent Sales Tax revenue sharing program has been funded at $592,958 in the annual GAA. The amount is below the $2,335,547 amount resulting from the statutory calculation for the supplemental allocation. As a result, 17 small counties that qualify for the Supplemental distribution have had their allocation prorated down from the $2,335,546 derived from the formula to the $592,958 appropriated in the GAA. The proration results in the “loss” of $1,742,589 of additional funding contemplated by the formula.    

Request – The Legislature is requested to increase that allocation of funding to the Emergency distribution to provide sufficient funding for full funding of the Supplemental Distribution. This can be done by adjusting the % in statute by increasing the distribution to the emergency and supplemental distribution so that the full allocation to the supplemental distribution can be made annually while still allowing the emergency distribution to remain at the current forecast level.  The current full allocation using the formula in section 218.65(8) to the supplemental distribution is $2,335,547 and the amount appropriated from the amount deposited to the Local Government Half-cent Sales Tax Clearing fund pursuant to section 212.20(5)(d)3. is $592,958, leaving a gap of $1,742,589.  Using the August 17, 2021 General Revenue Estimating Conference workpapers, the forecast amount deposited pursuant to s.212.20(5)(d)3. is $$27,900,000 at the current rate of 0.0966%.  In order to generate the additional $1,742,589 to allow for a fully funded supplemental program, the rate need to be increased to 0.1026%.

Further detail and background is provided:

Local Government Financial Information Handbook 2021 – Pages 55 through 73 provide a description, summary and distribution charts for the Local  Government  Half-cent  Sales  Tax Program Sections  202.18(2)(c),  212.20(6),  218.60-.67,  and  409.915,  Florida  Statutes

Authorized  in  1982,  the  Local  Government  Half-cent  Sales Tax  Program  generates the largest  amount  of revenue  for  local  governments among  the state-shared  revenue sources currently  authorized  by  the  Legislature.1 It distributes  a  portion  of state  sales tax  revenue  via  three  separate  distributions  to  eligible  county or  municipal governments. 

The program’s  primary  purpose  is  to  provide  relief from  ad  valorem  and  utility  taxes  in  addition  to  providing counties  and  municipalities  with  revenues  for local programs. The  program  includes three  distributions  of  state  sales tax  revenues collected  pursuant  to  ch.  212,  F.S. 

• The ordinary  distribution  to  eligible  county  and  municipal governments  is  possible  due  to  the  transfer of  8.9744 percent  of  net  sales tax  proceeds  to  the  Local  Government  Half-cent  Sales  Tax  Clearing  Trust  Fund [hereinafter Trust Fund].2 
• The  emergency  and  supplemental  distributions  are  possible  due  to  the  transfer  of 0.0966  percent  of  net  sales tax  proceeds to  the  Trust  Fund.3  The  emergency and  supplemental  distributions  are available to  select  counties that  meet  certain  fiscal-related  eligibility  requirements  or  have  an  inmate  population of  greater  than  seven  percent  of  the  total  county  population,  respectively.

A county  government,  which  meets  certain  criteria,  participates  in  the  monthly  emergency  and  supplemental distributions,  and  such  qualification  is  determined  annually  at the  start of the  fiscal year.

• Participation  in  the emergency  distribution  is dependent  on  the existence  of  a  defined  fiscal  emergency.  The  Legislature  has declared  that  a  fiscal  emergency  exists in  any  county  that  meets  both  conditions  listed  below.

1.  The county  has  a  population  of  65,000  or  less;  and

2.  The monies distributed  to  the  county  government  pursuant  to  s.  218.62,  F.S.,  for the  prior fiscal year were less than  the  current  per  capita limitation,  based  on  the county’s  population.

• Any  county  having  an  inmate  population  greater  than  seven  percent  of  its  total population  is  eligible  for a supplemental  distribution  for that year from  funds  expressly  appropriated  by  the  Legislature  for that purpose. Inmate  population  means  the  latest official state  estimate  of  the  number  of  inmates  and  patients  residing  in institutions  operated  by  the  federal government,  the  Florida  Department of Corrections,  or  the  Florida Department of Children  and  Families.
• At  the beginning  of  each  fiscal  year,  the DOR  calculates  a  supplemental  allocation  for  each  eligible  county equal to  the  current per capita  limitation  pursuant to  s.  218.65(4),  F.S.,  multiplied  by  the  county’s  inmate population.  If monies  appropriated  for the  current year’s  distribution  are  less  than  the  sum  of  the supplemental allocations,  each  eligible  county  receives  a  share  of  the  appropriated  total  that  is  proportional  to  its supplemental  allocation.  Otherwise,  each  eligible  county  receives  an  amount  equal  to  its  supplemental allocation.

Distribution of Local Government Half-cent Sales Tax for the year ending Sept. 1, 2022

• Ordinary distribution – $2,363,675,000 distributed to eligible counties and municipalities.
• Emergency Distribution – $27,307,042 distributed to 20 eligible counties.
• Supplemental Distribution – $592,958 distributed to 17 eligible counties. *,**.

            *Full funding of the supplemental distribution according to the statutory formula would total $2,335,547.

            ** In accordance with the statutes, the supplemental distribution allocation was decreased by $1,742,589 through a proration to the amount appropriated in the GAA. ($592,958)