1225 of this title, divided by the population of that State.

(C) Limitation.

The amount allocated to any unit of local government under this section for any entitlement period shall not exceed 50 percent of the sum of (i) such government's adjusted taxes, and (ii) the intergovernmental transfers of revenue to such government (other than transfers to such government under this subchapter).

(D) Entitlement less than $200, or governing body waives entitlement.

If (but for this subparagraph) the entitlement of any unit of local government below the level of the county government

(i) would be less than $200 for any entitlement period ($100 for an entitlement period of 6 months), or

(ii) is waived for any entitlement period by the governing body of such unit, then the amount of such entitlement for such period shall (in lieu of being paid to such unit) be added to, and shall become a part of, the entitlement for such period of the county government of the county area in which such unit is located.

(7) Adjustment of entitlement.

(A) In general.

In adjusting the allocation of any county area or unit of local government, the Secretary shall make any adjustment required under paragraph (6) (B) first, any adjustment required under paragraph (6) (C) next, and any adjustment required under paragraph (6) (D) last.

(B) Adjustment for application of maximum or minimum per capita entitlement.

The Secretary shall adjust the allocations made under this section to county areas or to units of local governments in any State in order to bring those allocations into compliance with the provisions of paragraph (6) (B). In making such adjustments he shall make any necessary adjustments with respect to county areas before making any necessary adjustments with respect to units of local government.

(C) Adjustment for application of limitation.

In any case in which the amount allocated to a unit of local government is reduced under paragraph (6) (C) by the Secretary, the amount of that reduction

(i) in the case of a unit of local government (other than a county government), shall be added to and increase the allocation of the county government of the county area in which it is located, unless (on account of the application of paragraph (6)) that county government may not receive it, in which case the amount of the reduction shall be added to and increase the entitlement of the State government of the State in which that unit of local government is located; and

(ii) in the case of a county government, shall be added to and increase the entitlement of the State government of the State in which it is located.

(c) Special allocation rules. (1) Optional formula.

A State may by law provide for the allocation of funds among county areas, or among units of local government (other than county governments), on the basis of the population multiplied by the general tax effort factors of such areas or units of local government, on the basis of the population multiplied by the relative income factors of such areas or units of local government, or on the basis of a combination of those two factors. Any State which provides by law for such a variation in the allocation formula provided by subsection (a) of this section, or by paragraphs (2) and (3) of subsection (b) of this section, shall notify the Secretary of such law not later than 30 days before the beginning of the first entitlement period to which such law is to apply. Any such law shall

(A) provide for allocating 100 percent of the aggregate amount to be allocated under subsection (a) of this section; or under paragraphs (2) and (3) of subsection (b) of this section; (B) apply uniformly throughout the State; and

(C) apply during the period beginning on the first day of the first entitlement period to which it applies and ending on December 31, 1976. (2) Certification.

Paragraph (1) shall apply within a State only if the Secretary certifies that the State law complies with the requirements of such paragraph. The Secretary shall not certify any such law with respect to which he receives notification later than 30 days prior to the first entitlement period during which it is to apply.

(d) Governmental definitions and related rules.
For purposes of this chapter-
(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 general 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) of this section, and, except for purposes of subsection (c) of this section. the recognized governing body of an Indian tribe or Alaskan native village which performs substantial governmental 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 government shall be treated as a county government) with respect to that portion of the State's geographic 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" includes 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 treated 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 such part bears to the population of the entirety of such unit.

(6) Boundary changes, governmental reorganization, etc.

If, by reason of boundary line changes, by reason of State statutory or constitutional 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 subchapter, the application of such provision shall be made, under regulations prescribed by the Secretary, in a manner which is consistent with such purposes.

(Pub. L. 92-512, title I, § 108, Oct. 20, 1972, 86 Stat. 924.)

CODIFICATION

"This chapter", referred to in subsec. (d), read in the original "this title" meaning title I of Pub. L. 92-512, which is classified to this chapter and sections 6017A and 6687 of Title 26, Internal Revenue Code.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1221, 1226, 1243 of this title.

§ 1228. Definitions and special rules for application of allocation formulas.

(a) In general.

For purposes of this subchapter

(1) Population.

Population shall be determined on the same basis as resident population is determined by the Bureau of the Census for general statistical purposes.

(2) Urbanized population.

Urbanized population means the population of any area consisting of a central city or cities of 50,000 or more inhabitants (and of the surrounding closely settled territory for such city or cities) which is treated as an urbanized area by the Bureau of the Census for general statistical purposes. (3) Income.

Income means total money income received from all sources, as determined by the Bureau of the Census for general statistical purposes.

(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 regulations, the determination of allocations and entitlements for any entitlement period shall be made as of the first day of the third month immediately preceding the beginning of such period.

(6) Intergovernmental transfers.

The intergovernmental transfers of revenue to any government are the amounts of revenue received by that government from other governments as a share in financing (or as reimbursement for) the performance of governmental functions, as determined by the Bureau of the Census for general statistical purposes.

(7) Data used; uniformity of data. (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 equitable 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 purposes of this subchapter(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 paragraphs (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 1972 or (if later) during the last calendar year ending before the beginning of such entitlement period.

(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 attributed to such State for taxable years ending during 1971 or (if later) during the last calendar year ending before the beginning of such entitlement period.

(4) State individual income tax.

The individual 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 Title 26.

(5) Federal individual income tax liabilities.

Federal individual income tax liabilities attributed to any State for any period shall be determined on the same basis as such liabilities are determined for such period by the Internal Revenue Service for general statistical purposes.

(c) General tax effort of States.

(1) In general.

For purposes of this subchapter

(A) General tax effort factor.

The general tax effort factor of any State for any entitlement period is (i) the net amount collected from the State and local taxes of such State during the most recent reporting year, divided by (ii) the aggregate personal income (as defined in paragraph (4) of subsection (a) of this section) attributed 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 systems, and other than special assessments for capital outlay), as such contributions are determined 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 subchapter, 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 paragraph (3) of subsection (a) of this section) attributed to that county area.

(e) General tax effort factor of unit of local government.

For purposes of this subchapter

(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

(B) the aggregate income (as defined in paragraph (3) of subsection (a) of this section) 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 exacted by such government for public purposes (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.

(ii) adjusted (under regulations prescribed by the Secretary) by excluding an amount equal to that portion of such compulsory contributions which is properly allocable 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 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 subchapter, 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 income 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 denominator of which is the per capita income of the geographic area of that unit of local government. For purposes of this subsection, per capita income shall be determined on the basis of income as defined in paragraph (3) of subsection (a) of this section. (g) Allocation rules for five factor formula.

For purposes of section 1225 (b) (3) of this title

(1) Allocation on basis of population.

Any allocation among the States on the basis of population shall be made by allocating to each State an amount which bears the same ratio to the total amount to be allocated as the population of such State bears to the population of all the States. (2) Allocation on basis of urbanized population.

Any allocation among the States on the basis of urbanized population shall be made by allocating to each State an amount which bears the same ratio to the total amount to be allocated as the urbanized population of such State bears to the urbanized population of all the States.

(3) Allocation on basis of population inversely weighted for per capita income.

Any allocation among the States on the basis of population inversely weighted for per capita income shall be made by allocating to each State an amount which bears the same ratio to the total amount to be allocated as

(A) the population of such State, multiplied by a fraction the numerator of which is the per capita income of all the States and the denominator of which is the per capita income of such State, bears to

(B) the sum of the products determined under subparagraph (A) for all the States.

(4) Allocation on basis of income tax collections. Any location among the States on the basis of income tax collections shall be made by allocating to each State an amount which bears the same ratio to the total amount to be allocated as the income tax amount of such State bears to the sum of the income tax amounts of all the States. (5) Allocation on basis of general tax effort.

Any allocation among the States on the basis of general tax effort shall be made by allocating to each State an amount which bears the same ratio to the total amount to be allocated as the general tax effort amount of such State bears to the sum of the general tax effort amounts of all the States. (Pub. 92-512, title I, § 109, Oct. 20, 1972, 86 Stat. 928.)

SUBCHAPTER II-ADMINISTRATIVE

PROVISIONS

§ 1241. Reports on use of funds; publication. (a) Reports on use of funds.

Each State government and unit of local government which receives funds under subchapter I of this chapter shall, after the close of each entitlement period, 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.

(b) Reports on planned use of funds.

Each State government and unit of local government which expects to receive funds under subchapter I of this chapter for any entitlement period beginning on or after January 1, 1973, 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 reports shall be in such form and detail as the Secretary may prescribed and shall be submitted at such time before the beginning of the entitlement period as the Secretary may prescribe.

(c) Publication and publicity of reports.

Each State government and unit of local government shall have a copy of each report submitted by it under subsection (a) or (b) of this section published in a newspaper which is published within the State and has general circulation within the geographic area of that government. Each State government and unit of local government shall advise the news media of the publication of its reports pursuant to this subsection. (Pub. L. 92-512, title I, § 121, Oct. 20, 1972, 86 Stat. 931.)

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1243 of this title. § 1242. Nondiscrimination provision. (a) In general.

No person in the United States shall on the ground of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with funds made available under subchapter I of this chapter. (b) Authority of Secretary.

Whenever the Secretary determines that a State government or unit of local government has failed to comply with subsection (a) of this section or an applicable regulation, he shall notify the Governor of the State (or, in the case of a unit of local government, the Governor of the State in which such unit is located) of the noncompliance and shall request the Governor to secure compliance. If within a reasonable period of time the Governor fails or refuses to secure compliance, the Secretary is authorized (1) to refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted; (2) to exercise the powers and functions provided by title VI of the Civil Rights Act of 1964; or (3) to take such other actions as may be provided by law.

(c) Authority of Attorney General.

When a matter is referred to the Attorney General pursuant to subsection (b) of this section, or whenever he has reason to believe that a State government or unit of local government is engaged in a pattern or practice in violation of the provisions of this section, the Attorney General may bring a civil action in any appropriate United States district court for such relief as may be appropriate, including injunctive relief. (Pub. L. 92-512, title I, § 122, Oct. 20, 1972, 86 Stat. 932.)

REFERENCES IN TEXT

Title VI of the Civil Rights Act of 1964, referred to in subsec. (b), is classified to section 2000d et seq. of Title 42, The Public Health and Welfare.

§ 1243. Miscellaneous provisions. (a) Assurance to the Secretary.

In order to qualify for any payment under subchapter I of this chapter for any entitlement period

beginning on or after January 1, 1973, a State government 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 subchapter I of this chapter,

(2) it will use amounts in such trust fund (including 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 1222 (a) of this title), and will pay over to the Secretary (for deposit in the general fund of the Treasury) an amount equal to 110 percent of any amount expended out of such trust fund in violation of this paragraph, unless such amount is promptly repaid to such trust fund (or the violation is otherwise corrected) after notice and opportunity for corrective action;

(4) it will provide for the expenditure of amounts received under subchapter I of this chapter only in accordance with the laws and procedures applicable to the expenditure of its own revenues;

(5) it will

(A) use fiscal, accounting, and audit procedures which conform to guidelines established therefor by the Secretary (after consultation with the Comptroller General of the United States).

(B) provide to the Secretary (and to the Comptroller General of the United States), on reasonable notice, access to, and the right to examine, such books, documents, papers, or records as the Secretary may reasonably require for purposes of reviewing compliance with this chapter (or, in the case of the Comptroller General, as the Comptroller General may reasonably require for purposes of reviewing compliance and operations under subsection (c) (2) of this section), and

(C) make such annual and interim reports (other than reports required by section 1241 of this title) to the Secretary as he may reasonably require;

(6) all laborers and mechanics employed by contractors or subcontractors in the performance of work on any construction project, 25 percent or more of the costs of which project are paid out of its trust fund established under paragraph (1), will be paid wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended, and that with respect to the labor standards specified in this paragraph the Secretary of Labor shall act in accordance with Reorganization Plan Numbered 14 of 1950 and section 276c of Title 40;

(7) individuals employed by it whose wages are paid in whole or in part out of its trust fund established under paragraph (1) will be paid wages which are not lower than the prevailing rates of pay for persons employed in similar public occupations by the same employer; and

(8) in the case of a unit of local government as defined in the second sentence of section 1227 (d) (1) of this title (relating to governments of Indian tribes and Alaskan native villages), it will expend funds received by it under subchapter I of this chapter for the benefit of members of the tribe or village residing in the county area from the allocation of which funds are allocated to it under section 1227(b) (4) of this title. Paragraph (7) shall apply with respect to employees in any category only if 25 percent or more of the wages of all employees of the State government or unit of local government in such category are paid from the trust fund established by it under paragraph (1).

(b) Withholding of payments.

If the Secretary determines that a State government or unit of local government has failed to comply substantially with any provision of subsection (a) of this section or any regulations prescribed thereunder, after giving reasonable notice and opportunity for a hearing to the Governor of the State or the chief executive officer of the unit of local government, he shall notify the State government or unit of local government that if it fails to take corrective action within 60 days from the date of receipt of such notification further payments to it will be withheld for the remainder of the entitlement period and for any subsequent entitlement period until such time as the Secretary is satisfied that appropriate corrective action has been taken and that there will no longer be any failure to comply. Until he is satisfied, the Secretary shall make no further payments of such amounts.

(c) Accounting, auditing, and evaluation. (1) In general.

The Secretary shall provide for such accounting and auditing procedures, evaluations, and reviews as may be necessary to insure that the expenditures of funds received under subchapter I of this chapter by State governments and units of local government comply fully with the requirements of this chapter. The Secretary is authorized to accept and audit by a State of such expenditures of a State government or unit of local government if he determines that such audit and the audit procedures of that State are sufficiently reliable to enable him to carry out his duties under this chapter.

(2) Comptroller General shall review compliance.

The Comptroller General of the United States shall make such reviews of the work as done by the Secretary, the State governments, and the units of local government as may be necessary for the Congress to evaluate compliance and operations under this chapter.

(Pub. L. 92-512, title I, § 123, Oct. 20, 1972, 86 Stat. 932.)