(11) the term "Bureau of the Census" means the Bureau of the Census of the Department of Commerce;

(12) the term "taxable income" means taxable income as defined by the internal revenue laws of the United States;

(13) the term "units of government" means all units of local government (including independent school districts and special districts) as such terms are defined and used by the Bureau of the Census;

(14) the term "major municipality" means any municipality with a population of 2,500 or more as reported by the Bureau of the Census;

(15) the term "major township" means any township—

(a) with a population of 2,500 or more as reported by the Bureau of the Census, and

(b) the employment ratio for which is not less than onehalf of the average employment ratio of all major municipalities in such State; and

(16) the term "employment ratio" means a fraction the numerator of which is the total number of employees of any major municipality or major township as reported by the Bureau of the Census and the denominator of which is the population of such governmental unit.

(b) Where appropriate, the definitions in subsection (a) shall be based on the latest published reports of the Department of Commerce, and on the internal revenue laws in effect, on the date of enactment of this Act. The data used in applying these definitions shall be the latest published data referable to the same point or period in time. The Secretary may, by regulation, change or otherwise modify the definitions in subsection (a) in order to reflect any change or modification thereof made subsequent to such date by the Department of Commerce or by a revision of the internal revenue laws.

REVENUE SHARING APPROPRIATION

SEC. 301. (a) There is hereby appropriated for general revenue sharing for the fiscal year beginning July 1, 1971, and for each fiscal year thereafter, an amount, as determined by the Secretary, equal to the percentages provided in subsection (b) of this section multiplied by the total taxable income reported on Federal individual income tax returns for the calendar year for which the latest published statistical data are available from the Department of the Treasury at the beginning of such fiscal year.

(b) For the purposes of subsection (a), the applicable percentage is 0.96 percent for the fiscal year beginning July 1, 1971, and 1.3 percent for each fiscal year thereafter.

(c) Amounts appropriated pursuant to this section shall remain available without fiscal year limitations for the expenditures authorized by this Act.

PAYMENTS TO THE STATES

SEC. 401. (a) For any fiscal year, each State is entitled to an amount as determined by the Secretary, equal to

(1)(i) the amount appropriated for such year pursuant to section 301 plus any amount not distributed during the previous fiscal year pursuant to subsection (b), less

(ii) an amount equal to 10 percent of the sum of the amounts described in subparagraph (i), and

(2) multiplied by the factor for such State.

(b) Except as provided in subsection (f), each State which has filed an alternative formula under section 501(c) shall receive an amount equal to the amount described in subparagraph (a)(1) (ii) multiplied by the factor for such State.

(c) Each State's factor shall be obtained by

(1) multiplying such State's population by its revenue effort, and

(2) dividing the product obtained in paragraph (1) by the sum of such products for all States.

(d) For purposes of subsection (c), the revenue effort of each State for any fiscal year shall be obtained by dividing

(1) the total general revenue derived by such State and all of its units of government by

(2) the total personal income for such State.

(e) The amount determined under subsection (a) of this section shall be paid by the Secretary to each State at such times as the Secretary may determine during any fiscal year, but not less often than once each calendar year quarter. A pro rata portion of the amount described in subsection (b) shall be paid by the Secretary for each calendar year quarter to which an alternative formula applies, at such times as the Secretary may determine during any fiscal year but not less often than once each such quarter.

(f) The District of Columbia shall receive its share of the amount described in subsection (b) notwithstanding the requirements of section 501(c).

(g) All computations and determinations by the Secretary under sections 301 and 401 shall be final and conclusive.

PAYMENTS BY STATES TO LOCAL GOVERNMENTS

SEC. 501. (a) The local governments of each State shall be entitled to receive an amount equal to the payment to such State pursuant to section 401(a) multiplied by a fraction the numerator of which is the sum of the general revenues of all units of government of such State and the denominator of which is the sum of the general revenues of such State and all of its units of government. Such amounts shall be computed by the State on the basis of the latest data available from the Department of Commerce at the beginning of the fiscal year.

(b) Within 30 days after receipt of a payment pursuant to section 401(a), each State shall pay to each of its local governments an amount, computed on the basis of the statistical data used in subsection (a) of this section, equal to

(1) the amount determined under subsection (a) of this section, multiplied by

(2) the ratio of each such local government's general revenue to the total general revenue of all local governments in such State.

(c) To encourage States to take the initiative in strengthening the fiscal position of their local governments and to maximize flexibility in the use of the payments authorized by this Act for meeting the particular needs of differing State and local fiscal systems, the Secretary shall accept an alternative formula for the allocation of funds as required by subsection (a) of this section (and any modification or termination of such formula) if requested by the State, provided such formula (or modification or termination of such formula) is—

(1) enacted by the State in the same manner as authorized in such State's constitution for the enactment of State laws, and

(2) approved by a formal resolution by more than one-half of the governing bodies of each of the following classes of government in such State:

(i) major municipalities,
(ii) counties, and

(iii) major townships.

In each such class of government, approval must be by governing bodies representing a majority of the population in such class. A statement of such formula indicating approval thereof in accordance with this paragraph (including a certification by the Bureau of the Census which enumerates major municipalities, counties, and major townships included in the classes referred to above) shall be filed by the Governor with the Secretary not later than 90 days preceding the first calendar year quarter to which such formula would be applicable. The provisions of such formula shall govern the use of funds allocated by this Act to local governments and shall apply for the next five fiscal years or for any lesser period approved pursuant to this subsection.

(d) Except when a formula has been adopted pursuant to subsection (c), a State's aggregate payments to all of its local governments for such State's fiscal year (from all sources other than amounts received under this Act) shall be an amount which represents not less than the average proportion of such State's general revenues received by its local governments for the three fiscal years of such State next preceding the date of enactment of this Act, unless such State demonstrates to the satisfaction of the Secretary that there has been a transfer from local governments to the State of financial responsibility for the direct support of facilities or services previously the responsibility of local governments.

QUALIFICATIONS

SEC. 601. Participation by a State in the program established by this Act shall constitute a waiver by the State of its immunity from suit by its local governments pursuant to this Act. The Governor shall, on behalf of the State and any local government which may receive any payments pursuant to this Act, give to the Secretary such assurances as he may require that such State and its local governments will

(a) use such payments for its governmental purposes;

(b) use such fiscal and accounting procedures as may be necessary to assure (1) proper accounting for payments received by such State and its local governments, and (2) proper disbursement of amounts to which the local governments are entitled;

(c) provide to the Secretary or his representatives, on reasonable notice, access to, and the right to examine, any books, documents, papers, or records as he may reasonably require for the purposes of reviewing compliance with this Act; and

(d) make such reports to the Secretary as he may reasonably require, including any computations made pursuant to section 501.

POWERS OF THE SECRETARY

SEC. 701. (a) The Secretary is authorized to prescribe reasonable rules and regulations for carrying out the provisions of this Act and to request from any Federal agency statistical data and reports and

such other information which he may deem necessary to carry out his functions under this Act, and each Federal agency is authorized to furnish such statistical data and reports and other information to the Secretary to the extent permitted by law.

(b) If the Secretary determines that a State has failed to comply substantially with any provision of this Act, other than section 1101, or any rule or regulation issued pursuant thereto,

(1) he may refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted; or (2) after giving reasonable notice and opportunity for a hearing to the Governor of such State, he shall notify the Governor that if such State fails to take corrective action within 60 days from the date of such notification, further payments to such State in excess of the amounts to which the local governments of such State are entitled under section 501 shall be withheld for the remainder of the fiscal year and for any subsequent fiscal year 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. In the case of the failure of the State to comply, for a period in excess of 6 months after the expiration of the 60-day notice, the Secretary shall forthwith cancel any payments withheld pursuant to this paragraph for the current and for any subsequent fiscal year and shall reapportion and pay such cancelled payments to all other States then entitled to receive payments under section 401 in proportion to the original installments paid to such States for the fiscal year to which such cancelled payments pertain. Such payments to all other States shall be considered payments made pursuant to section 401.

(c) If a payment to a State is withheld or cancelled pursuant to this section, the Secretary shall continue to pay to such State the amount to which the local governments of such Štate are entitled, as determined pursuant to section 501, and such State shall continue to distribute such amounts among its local governments pursuant to section 501.

(d) When a matter is referred to the Attorney General pursuant to subsection (b)(1), 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.

(e) The Governor shall be responsible to the Secretary for determining that local governments within his State have complied with the provisions of this Act, other than section 1101, and the rules and regulations issued pursuant thereto. If, after giving reasonable notice. and an opportunity for a hearing to the chief executive officer of a local government of such State, the Governor determines that such local government has failed to comply substantially with any provision of this Act, other than section 1101, or any rule or regulation issued pursuant thereto, the Governor shall forthwith notify such local government that if it fails to take corrective action within 60 days from the date of such notification, further payments to it under this Act will be withheld for the remainder of the fiscal year and for any subsequent fiscal year until such time as he is satisfied that appropriate corrective action has been taken and that there will no longer be any failure to comply. The Governor shall forthwith notify the Secretary of his action.

(f) In the event of a failure by such local government to comply for a period in excess of 6 months after the expiration of a 60-day notice issued by the Governor pursuant to a determination under subsection (e), the Governor shall forthwith cancel any payments withheld for the current and for any subsequent fiscal year and shall reapportion and pay such cancelled payments to all other local governments of such State then entitled to receive payments pursuant to section 501, in proportion to the original payments made to such local governments for the fiscal year to which the cancelled payments pertain.

JUDICIAL REVIEW

SEC. 801. (a) Any State or local government which receives a 60-day notice under section 701 may, within 60 days after receiving such notice, file with the United States Court of Appeals for the circuit in which such State or local government is located, or in the United States Court of Appeals for the District of Columbia, a petition for review of the Secretary's action. A copy of the petition shall forthwith be transmitted to the Secretary; a copy shall also forthwith be transmitted to the Attorney General, who shall represent the Secretary in any litigation.

(b) The Secretary shall file in the court the record of the proceeding on which he based his action, as provided in section 2112 of Title 28, United States Code. No objection to the action of the Secretary shall be considered by the court unless such objection has been urged before the Secretary.

(c) The Court shall have jurisdiction to affirm or modify the action of the Secretary or to set it aside in whole or in part. The findings of fact by the Secretary, if supported by substantial evidence, shall be conclusive. However, if any finding is not supported by substantial evidence, the Court may remand the case to the Secretary to take further evidence, and the Secretary may thereupon make new or modified findings of fact and may modify his previous actions. He shall certify to the Court the record of any further proceedings. Such new or modified findings of fact shall likewise be conclusive if supported by substantial evidence.

(d) The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification, as provided in section 1254 of Title 28, United States Code.

(e) In the event that judicial proceedings are instituted pursuant to this section, the Secretary shall after the expiration of the 6-month period provided in sections 701 (b) or 701 (f), or the point in time when any judicial decision becomes final and the time for appeal or rehearing has expired, whichever period is later, cancel, reapportion and pay any payments withheld pursuant to section 701 for the current and for any subsequent fiscal years.

(f) For purposes of this section, the term "Secretary" means the Secretary of the Treasury or the Governor of a State, whichever is appropriate.

REPORT BY THE SECRETARY

SEC. 901. The Secretary shall report to the President of the United States and the Congress as soon as is practicable after the end of the fiscal year on the operation of this Act during the preceding fiscal

year.