This chapter may be cited as the "Municipal Government Capital Improvement Act."

It is the desire of the state to assist in the restoration and improvement of municipal government buildings, roads, streets and other facilities, and to promote the health, safety and public welfare of the citizens of the state. The making available in the manner provided in this chapter of appropriated moneys to assist the financing of much needed capital improvement projects will assist municipal government services and promote the welfare and prosperity of the people of the state.

As used in this chapter, the following words and phrases shall have the following respective meanings:

(1) FISCAL YEAR. The fiscal year of the state as may from time to time be provided by law.

(2) FUND. The "Municipal Government Capital Improvement Fund."

(3) FUND CAPITAL. All assets of the "fund."

(4) STATE. The State of Alabama.

(5) TRUST FUND. "The Alabama Trust Fund" created by Amendment Number 450 of the Constitution of Alabama, 1901.

(6) TRUST INCOME. The net income received by the state, subsequent to the transfer of the initial trust capital by the State Treasurer to the board of trustees of the trust fund, from the investment and reinvestment of all assets of the trust fund, determined in accordance with the provisions of Amendment Number 450 of the Constitution of Alabama, 1901. "Trust income" does not include income which becomes part of the trust capital of the trust fund.

For the continuing benefit of the State of Alabama and the citizens thereof, there is hereby created the "Municipal Government Capital Improvement Fund" which shall be funded and administered in accordance with the provisions of this chapter.

Beginning October 1, 1986, in addition to all other appropriations heretofore or hereafter made there is hereby annually appropriated from the General Fund of the state to the Municipal Government Capital Improvement Fund an amount equal to 10 percent of the trust income at such time as the trust income received by the state in the preceding fiscal year equals or exceeds $60,000,000. In any fiscal year in which the trust income received by the state in the preceding fiscal year falls below $60,000,000, no funds shall be appropriated to the Municipal Government Capital Improvement Fund until such time as the trust income equals or exceeds $60,000,000.

The fund capital shall be distributed to the incorporated municipalities of the state and shall be paid on April 15 of the fiscal year for which each annual appropriation is made as follows:

(1) Each incorporated municipality in the state with a population of less than 1,000 shall receive $1,000; each incorporated municipality in the state with a population of 1,000 or more shall receive $2,500.

(2) The residue of the portion to be paid to the incorporated municipalities in the state shall be distributed among the incorporated municipalities in the state on the basis of the ratio of the population of each such municipality to the total population of all the incorporated municipalities in the state according to the next preceding federal decennial census, or in the case of a municipality incorporated subsequent to the said federal decennial census, the official census taken upon incorporation.

Each municipality shall upon receipt of its share deposit same in a special account and shall not commingle such funds with other revenues of the municipality. The share of each municipality shall be expended solely for capital improvements and the renovation of capital improvements determined by the municipal governing body. The governing body of each municipality may use such share to finance bond or warrant issues for capital improvements and the renovation of capital improvements and may pledge such share to retire the principal and interest of such bonds or warrants.

The State Comptroller shall make all allocations of funds and shall make the distribution and payments thereof pursuant to such allocations provided for in this chapter.