ARTICLE 11 SUBSTITUTE A

RELATING TO STATE AID

SECTION 1. Section 42-61.2-7 of the General Laws in Chapter 42-61.2 entitled “Video Lottery Terminal” is hereby amended to read as follows:

42-61.2-7. Division of revenue. – (a) Notwithstanding the provisions of section 42-61-15, the allocation of net terminal income derived from video lottery games is as follows:

(1) For deposit in the general fund and to the state lottery commission fund for administrative purposes: Net terminal income not otherwise disbursed in accordance with subdivisions (a)(2) through (a)(5) herein;

(2) To the licensed video lottery retailer: (a) Lincoln Greyhound Park twenty-eight and eighty-five hundredths percent (28.85%) minus seven hundred sixty - seven thousand six hundred eighty - seven dollars ($767,687); (b) Newport Jai Ali twenty-six percent (26%) minus three hundred eighty - four thousand nine hundred ninety - six dollars ($384,996);

(3) (i) To the technology providers who are not a party to the Master Contract as set forth and referenced in Public Law 2003, Chapter 32, seven percent (7%) of the net terminal income of the provider's terminals.; The lottery commission shall implement an incentive structure for the providers for Fiscal Year 2004 only, based on machine performance, not to exceed eight and one-half percent (8.5%) of net terminal income of the provider's terminals. The lottery commission shall present this incentive structure in a report to the speaker of the house, the president of the senate and the governor, at least ninety (90) days prior to implementation of the incentive structure;

(ii) To contractors who are a party to the Master Contract as set forth and referenced in Public Law 2003, Chapter 32, all sums due and payable under said Master Contract.;

(iii) Notwithstanding subsections (i) and (ii) above, there shall be subtracted proportionately from the payments to technology providers the sum of six hundred twenty - eight thousand seven hundred thirty - seven dollars ($628,737);

(4) To the city or town in which the licensed video retailer is licensed: one percent (1%); provided, however, beginning January 1, 2005, the town of Lincoln shall receive one and one quarter percent (1.25%); and

(5) Unclaimed prizes and credits shall remit to the general fund of the state;

(6) Payments into the state's general fund specified in subdivisions (a)(1) and (a)(6) shall be made on an estimated monthly basis. Payment shall be made on the tenth day following the close of the month except for the last month when payment shall be on the last business day.

(b) Provided, however, that for the fiscal year commencing July 1, 1993 and subsequent fiscal years, the sum of five million dollars ($5,000,000) to the extent possible shall be contributed to the distressed communities relief program, pursuant to § 45-13-12, to be distributed according to the formula and the contributions shall be as follows:

(1) One million one hundred fifty-two thousand six hundred eighty-three dollars ($1,152,683) of the net terminal income due retailers under subdivision (a)(2) shall be deposited as general revenues as follows: Lincoln Greyhound Park seven hundred sixty-seven thousand, six hundred eighty-seven dollars ($767,687) and Newport Jai Alai Fronton three hundred eighty-four thousand nine hundred ninety-six dollars ($384,996).

(2) Six hundred and twenty-eight thousand seven hundred and thirty-seven dollars ($628,737) of the net terminal income due the technology providers under subsection (a)(3) shall be deposited as general revenues.

(3) Three million dollars ($3,000,000) from the state general revenue fund.

SECTION 2. Section 45-13-12 of the General Laws in Chapter 45-13 entitled “State Aid” is hereby amended to read as follows:

45-13-12. Distressed communities relief fund. – (a) There is established a fund to provide state assistance to those Rhode Island cities and towns which have the highest property tax burdens relative to the wealth of taxpayers.

(b) Establishment of indices. Four (4) indices of distress shall be established to determine eligibility for the program. Each community shall be ranked by each distress index and any community which falls into the lowest fifteen percent (15%) twenty percent (20%) of at least three (3) of the four (4) indices shall be eligible to receive assistance. The four (4) indices are established as follows:

(1) Percent of tax levy to full value of property. This shall be computed by dividing the tax levy of each municipality by the full value of property for each municipality. For the 1990-91 fiscal year, tax levy and full value shall be as of the assessment date December 31, 1986.

(2) Per capita income. This shall be the most recent estimate reported by the U.S. department of commerce, bureau of the census.

(3) Percent of personal income to full value of property. This shall be computed by multiplying the per capita income above by the most recent population estimate as reported by the U.S. department of commerce, bureau of the census, and dividing the result by the full value of property.

(4) Per capita full value of property. This shall be the full value of property divided by the most recent estimate of population by the U.S. department of commerce, bureau of the census.

(c) Distribution of funds. Funds shall be distributed to each eligible community on the basis of the community's tax levy relative to the total tax levy of all eligible communities. For the fiscal year 1990-91, the reference year for the tax levy shall be the assessment date of December 31, 1988. For each fiscal year thereafter, the reference year and the fiscal year shall bear the same relationship.

Any newly qualifying community shall be paid fifty percent (50%) of current law requirements the first year it qualifies. The remaining fifty percent (50%) shall be distributed to the other distressed communities proportionately. When any community falls out of the distressed community program, it shall receive a one-time payment of fifty percent (50%) of the prior year requirement exclusive of any reduction for first year qualification. The community shall be considered a distressed community in the fall-out year.

(d) Appropriation of funds. The state of Rhode Island shall appropriate to eligible communities the sum of five million dollars ($5,000,000) plus the collections from the real estate conveyance tax pursuant to section 44-25-1(c) which have been deposited as general revenues. Provided, however, in fiscal years 2004 and 2005 the State of Rhode Island shall distribute to eligible communities the funds appropriated to the distressed communities relief program in the annual appropriation act, including collections from the video lottery terminal revenue pursuant to section 42-61.2-7(b).

(e) Payments. Payments shall be made to eligible communities each March from amounts collected pursuant to section 44-25-1(c) during the period July 1 to December 31 and in August from collections during the period January 1 to June 30. Provided, however, in fiscal years 2004 and 2005 payments shall be made to eligible communities as follows: fifty percent (50%) in August of each fiscal year and fifty percent (50%) in the following March of each fiscal year.

SECTION 3. Chapter 45-13 of the General Laws entitled "State Aid" is hereby amended by adding thereto the following section:

45-13-14. Adjustments to tax levy, assessed value, and full value when computing state aid. – (a) Whenever the director of administration computes the relative wealth of municipalities for the purpose of distributing state aid in accordance with title 16 and the provisions of section 45-13-12, he or she shall base it on the full value of all property except:

(1) that exempted from taxation by acts of the general assembly and reimbursed under section 45-13-5.1 of the general laws, which shall have its value calculated as if the payment in lieu of tax revenues received pursuant to section 45-13-5.1 of the general laws, has resulted from a tax levy;

(2) that whose tax levy or assessed value is based on a tax treaty agreement authorized by a special public law or by reason of agreements between a municipality and the economic development corporation in accordance with section 42-64-20 prior to May 15, 2005, which shall not have its value included;

(3) that whose tax levy or assessed value is based on tax treaty agreements or tax stabilization agreements in force prior to May 15, 2005, which shall not have its value included;

(4) that which is subject to a payment in lieu of tax agreement in force prior to May 15, 2005;

(5) any other property exempt from taxation under state law; or

(6) any property subject to chapter 44-27, taxation of Farm, Forest, and Open Space Land.

(b) The tax levy of each municipality and fire district shall be adjusted for any real estate and personal property exempt from taxation by act of the general assembly by the amount of payment in lieu of property tax revenue anticipated to be received pursuant to section 45-13-5.1 of the general laws relating to property tax from certain exempt private and state properties, and for any property subject to any payment in lieu of tax agreements, any tax treaty agreements or tax stabilization agreements in force after May 15, 2005, by the amount of the payment in lieu of taxes pursuant to such agreements.

(c) Fire district tax levies within a city or town shall be included as part of the total levy attributable to that city or town.

(d) The changes as required by subdivisions (a) through (c) shall be incorporated into the computation of entitlements effective for distribution in fiscal year 2007-2008 and thereafter.

SECTION 4. This article shall take effect as of July 1, 2005.