This proposed law would regulate the distribution to cities and towns of the Local Aid Fund, which consists of at least 40% of the revenue generated by the state income, sales, and corporate taxes, as well as the balance of the State Lottery Fund.

Subject to appropriation by the legislature, the State Treasurer would distribute the Local Aid Fund to cities and towns on a quarterly basis, and each city or town would receive at least the same amount of local aid it received in the previous fiscal year unless the total Local Aid Fund decreases.

In fiscal year 1992, if there has been any increase over the fiscal year 1989 fund, half of the increase would be distributed in accordance with the distribution formula used for fiscal year 1989, and half would be distributed to each city and town in proportion to its population.

In each year after 1992, if the fund increases, the excess would be distributed through a formula devised by the state Secretary of Administration and Finance, with the advice and consent of the Local Government Advisory Committee. If the fund decreases after 1992, each town or city will have the amount it receives decreased by the same percentage.

This proposed law also requires that the Treasurer publish an annual report about the Local Aid Fund, that the state Auditor publish an annual audit of the Account, and that the Secretary of Administration and Finance issue to each city and town an estimate of funds it will receive from the Local Aid Fund.

Each city or town would be allowed to bring a lawsuit to force distribution of the account, and would be entitled to a late payment fee if distribution is not timely.