2.__Local government disposition.__If a local government collects revenue that exceeds the expenditure limit established for that fiscal year in section 562, subsection 2, the local government shall transfer an amount representing the excess funds to the emergency reserve fund established by the local government pursuant to section 564 at the beginning of the next fiscal year or, if the emergency reserve fund contains the requisite amount of funds, refund the excess funds to the citizens of the local government.

§564.__Emergency reserve fund

The State and each local government shall reserve in an emergency reserve fund the equivalent of 3 months of operating revenue.__Appropriations from the State's emergency reserve fund may be made by a 2/3 vote of the entire elected membership of each House of the Legislature, and appropriations from the emergency reserve fund of a local government may be made by a 2/3 vote of the governing body of the local government.

Sec. 2. 5 MRSA §1513, sub-§1, as corrected by RR 1999, c. 2, §1, is amended to read:

1. Maine Rainy Day Fund. As the first priority before any other transfer After transfers made pursuant to section 563, the State Controller shall at the close of each fiscal year reserve from the unappropriated surplus of the General Fund an amount equal to 1/2 the excess of total General Fund revenues received over accepted estimates in that fiscal year and transfer that amount to the Maine Rainy Day Fund at the beginning of the next fiscal year. Accepted revenue estimates may not be increased after adjournment of each First Regular Session of the Legislature except as provided. For the first year of the biennium, revenue estimates for the 2nd year of the biennium may be adjusted once during the Second Regular Session of the Legislature. Accepted revenue estimates may be increased for other fiscal periods only if an amount not to exceed 1/2 of the increase is transferred by the State Controller to the Rainy Day Fund at the same time from the unappropriated surplus of the General Fund. The fund may not exceed 6% of the total General Fund revenues received in the immediately preceding fiscal year and may not lapse, but remains in a continuing carrying account to carry out the purposes of this section. A reduction in the fund is not necessary in the event the total General Fund