Sec. B-2. 30-A MRSA §709 is enacted to read:

§709.__State assumption of participating municipalities' county

tax obligation

1.__Annual reimbursement.__The State shall annually reimburse a municipal service district formed under chapter 112 for that share of any tax apportioned pursuant to section 706 to participating municipalities that comprise the municipal service district for the net cost of supporting district attorneys'

services, court rents and services, jails, and registries of probate and deeds that have been paid by the municipal service district on their behalf.

2.__Duration.__The obligation to make annual reimbursements to a municipal service district begins in the year following the year in which a municipality forms a municipal service district.__ The reimbursement provided under this section must be paid from and transferred to municipal service districts from the Municipal Service District Fund established in chapter 112-A.

Sec. B-3. 30-A MRSA c. 112-A is enacted to read:

CHAPTER 112-A

MUNICIPAL SERVICE DISTRICT FUND

§2141.__Municipal Service District Fund

1.__Establishment.__The Municipal Service District Fund, referred to in this chapter as "the fund," is established as a dedicated, special revenue account to provide a financial incentive for municipalities to voluntarily form municipal service districts in accordance with chapter 112 to capture cost savings attributable to operations of local government and school systems that are assumed by municipal service districts as defined in section 2111.__The Treasurer of State shall administer the fund.

2.__Transfers to the fund.__For 5 consecutive years, beginning in or after fiscal year 2004-05, the Treasurer of State shall transfer to the fund from the General Fund an amount equal to, and in addition to, the sum of that due to each participating municipality in each municipal service district created pursuant to chapter 112 notified of eligibility in accordance with subsection 3, pursuant to Title 36, section 661, subsection 4, as a consequence of Title 36, section 662.__The Treasurer of State