The state will allocate funds to counties on July 7. The State Controller will transfer the scheduled amounts to counties for deposit in the county Sales and Use Tax Compensation Fund. Counties then have 60 days to allocate DOF stipulated amounts to the county and each city in the county per a provided schedule.
In 2004, California voters approved Proposition 57, authorizing the sale of economic recovery bonds and imposing a new state sales and use tax of 0.25 percent to repay the bonds. To maintain revenue neutrality, the local sales and use tax rate for counties and cities decreased from 1 percent to 0.75 percent. These rates went into effect July 1, 2004, and returned to their prior levels on Jan. 1, 2016. Every fiscal year since 2004-05 property tax revenues were provided to counties and cities through the triple flip. The triple flip allocations starting in 2004-05 offset the reduction in sales and use tax revenues for taxable sales during the period of July 1, 2004 through June 30, 2015. The triple flip letter sent on Sept. 1, 2015 covered taxable sales for the period of April 1, 2015 through June 30, 2015.
The July 7 final payment is needed to offset the reduction in sales and use tax revenues for taxable sales between July 1, 2015 and Dec. 31, 2015 as well as to true up the triple flip amounts for the April 1, 2015 through June 30, 2015 period.
A complete explanation of the sales-and-use tax triple flip and this unwind process may be found at CaliforniaCityFinance.com