Opinion ID: 821527
Heading Depth: 2
Heading Rank: 1

Heading: 2004 — Proposition 57 and the “Triple Flip”

Text: In 2004, the voters approved Proposition 57, the California Economic Recovery Bond Act, which allowed the state to sell up to $15 billion in bonds to close the state budget deficit. (Gov. Code, § 99050.) In order to create a dedicated revenue source to guarantee repayment of these bonds without raising taxes, the Legislature had passed already section 97.68, a temporary revenue measure that shifts revenue in a three-stage process known as the “Triple Flip.” (Stats. 2003, 5th Ex. Sess. 2003-2004, ch. 2, § 4.1.) In the first “flip,” 0.25 percent 8 As part of the same legislative enactment, Senate Bill No. 1096 (2003-2004 Reg. Sess.) also provided for another one-time-only shift of additional property tax revenues into the county ERAF‟s for the 2004-2005 and 2005-2006 budget years. (Stats. 2004, ch. 211, p. 2280.) 8 of local sales and use tax revenues are diverted to the state for bond repayment. (§§ 97.68, subd. (b)(2), 7203.1, 7204.) In the second “flip,” the lost local sales and use tax revenues are replaced by property tax revenue that would have been placed in the county ERAF but are instead set aside in a Sales and Use Tax Compensation Fund established in each county‟s treasury. (§ 97.68, subds. (a), (c)(1)-(6).) In the final “flip,” any shortfall to schools caused by the reduction of funds to the county ERAF is compensated out of the state‟s general fund. This socalled “Triple Flip” is slated to end once the Recovery Act bonds are repaid. (§§ 97.68, subd. (b)(l), 7203.1; Gov. Code, § 99006, subd. (b).)