(a) A public library assistance grant under AS 14.56.310(a)(1) may be a basic grant or a per capita grant. A basic grant may not be more than $7,000 for each service outlet of the public library in any one fiscal year. The amount of a basic grant must be equally matched by local money, the fair value of volunteer labor, or a combination of local money and volunteer labor. If the amount available for public library assistance grants during a fiscal year is not sufficient to fully fund basic grants for all eligible libraries, the amount available shall be prorated so that the amount of basic grants for all eligible libraries is reduced by the same percentage. After payment of basic grants to all eligible libraries during a fiscal year, any amount remaining for public library assistance grants shall be distributed as per capita grants to each library that received a basic grant. The amount of the per capita grants shall be based on the population of the municipality or unincorporated community served by each of the libraries.

(b) State money granted to a library under AS 14.56.300 - 14.56.340 may not be used to supplant local money equal to local expenditures for that library in fiscal year 1980, as adjusted annually by the commissioner to conform approximately to changes in the United States Department of Labor Bureau of Labor Statistics consumer price index for Anchorage, Alaska. A library that uses state money to supplant local money forfeits eligibility for grants under AS 14.56.300 - 14.56.340 for two years.