The state or regional tax money is the taxpayers’ money - including individual residents and other entities like companies or cities. It’s a rhetorical trick to pretend the money somehow belongs to the benevolent and powerful state, who forcefully collected this money in the first place. As such, I don’t think a city “owes” something back to the state. If the state had certain expectations, the time to have decided that was half a century ago, in the form of contractual obligations.