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Alaska's communities would get a cut of the state's oil wealth - at least while oil prices remain high - under legislation approved Tuesday by the state House.

The bill, which passed 33-2, sets up a structure for distributing a maximum of $60 million a year to local governments. The amount could ratchet up and down depending on the price of oil.

It's less than Gov. Sarah Palin's proposed $75 million payout to communities for the coming fiscal year, but community representatives have spoken in favor of the measure because it assures continued funding beyond 2009.

"Is it as much as we asked for? Perhaps no. But certainly from where we came from a couple of years ago, this is great," said Kathy Wasserman, executive director of the Alaska Municipal League.

The bill re-establishes in law a program similar to the municipal assistance and revenue sharing program that former Gov. Frank Murkowski axed in 2003.

Payments to communities began almost 40 years ago - before the first oil flowed from Prudhoe Bay - as a way to strengthen local governments. But funding went into a steady downward spiral after peaking at $141 million in the mid 1980s. Murkowski cut the program in 2003 after oil prices tanked and replaced it with $17 million in one-time federal funds.

The yearly payments hit bottom in 2005 with a $6 million appropriation for rural energy assistance. Last year lawmakers distributed $66.5 million to help local communities with retirement and energy costs.

The bill that passed Tuesday was hammered out between House and Senate leaders and would establish a revenue sharing fund that will be kick-started with a $180 million appropriation in this year's supplemental budget.

It will be replenished by a percentage of state revenues from oil when the price is more than $60 a barrel. One-third of the fund will be distributed annually.

"There's a stair-stepping of three years in order to give communities ample time to adjust to any reduction in the program," said Sen. Lyman Hoffman, D-Bethel. "But if prices rose there would be a rapid replacement of those dollars."

If fully funded, the program would distribute payments of $480,000 to unified city and borough governments, $384,000 to unified boroughs, $96,000 to cities, $32,000 for unincorporated communities in unorganized boroughs and $20,000 to unincorporated communities in organized boroughs.