Financial Equalisation Act (FAG) - Purpose and Scope (FAG)

1. This law governs the financial equalization for the districts and the school municipalities.

2. The differences in tax burden within the canton shall not exceed 20%. The total tax burden of the cantonal, district, and municipal school taxes is considered as the basis of 100%. Any applicable property taxes will be taken into account in the calculation.

1. Districts and active school communities are entitled to fiscal equalization contributions under the provisions of this law.

1. The basis for calculating the financial equalization is particularly the tax capacity and the residential population of the districts or school communities.

2. For the tax capacity per person, the possible revenues at 100 tax points (tax rate) are divided by the population of the respective districts or school communities.

3. The determining factor is the population as of December 31st prior to the disbursement year.

4. The calculation data for the financial equalization uses the data from the tax year two years prior.

1. The fiscal capacity per person of financially weak districts is increased up to the average value of all districts by a non-earmarked contribution from the canton.

1. The Reduction of Tax Burden Discrepancies Among the Active School Municipalities is Implemented as Follows

a) The tax capacity per person of financially weak school municipalities is increased up to a maximum of the average of the five financially strongest school municipalities through an unrestricted cantonal contribution.

b) The school municipalities receive a contribution from the canton towards school operations, the amount of which is determined by criteria set by the Great Council through regulations.

c) The canton assumes the entire cost of special schools.

1. In the event of hardship cases, financial equalization contributions may be granted to districts by resolution of the Grand Council.

2. Financial equalization contributions may be granted to inactive school communities for a period of four years by resolution of the National School Commission, provided they exceed the arithmetic mean value of the school tax points of all active school communities.

3. In hardship cases, financial equalization contributions may be granted to active school communities by resolution of the National School Commission, in deviation from the criteria set out in accordance with this law.

4. The maximum total amount of the annual contributions according to Paragraphs 2 and 3 of this Article shall be established by the Grand Council in the ordinance.

1. The Finance Department compiles a list of the expected financial equalization contributions by mid-year for the budgeting of the districts and school communities.

1. Contributions calculated on the basis of this law shall be paid by the canton in quarterly installments at the end of each quarter.

1. The Grand Council shall issue the necessary implementing provisions for this law by way of ordinance.

1. The State Commission grants districts and school communities, which as a result of the introduction of financial disentanglement receive lower or no longer any financial equalization contributions, staggered and decreasing compensation payments for a maximum duration of four years. The Grand Council establishes the key parameters in the regulation.

2. The State Commission determines the tax rates for the districts for the year 2011 based on the preliminary budgets submitted by the districts and taking into account the shifts resulting from the financial disentanglement, and publishes these as a recommendation to the corporations and the eligible voters. It issues the regulations necessary for the determination of the tax rates.

1. This law shall enter into force on January 1, 2003, following its adoption by the Landsgemeinde.