97.68.
Notwithstanding any other provision of law, in allocating ad valorem property tax revenue allocations for each fiscal year during the fiscal adjustment period, all of the following apply:(a) (1) The total amount of ad valorem property tax revenue otherwise required to be allocated to a county’s Educational Revenue Augmentation Fund shall be reduced by the countywide adjustment amount.
(2) The countywide adjustment amount shall be deposited in a Sales and Use Tax Compensation Fund that shall be established in the treasury of each county.
(b) For purposes of this section, the following definitions apply:
(1) “Fiscal adjustment period” means the period beginning with the 2004–05 fiscal year and continuing through the later of either of the following:
(A) The fiscal year in which the Director of Finance notifies the California Department of Tax and Fee Administration State Board of Equalization pursuant to subdivision (b) of Section 99006 of the Government Code.
(B) The fiscal year in which an additional countywide adjustment amount, as described in subparagraph (B) of paragraph (3) of subdivision (d), is determined.
(2) Except as otherwise provided in subdivision (d), the “countywide adjustment amount” means the combined total revenue loss of the county and each city in the county that is annually estimated by the Director of Finance, based upon the actual amount of sales and use tax revenues transmitted under Section 7204 in that county in the prior fiscal year and any projected growth on that amount for the current fiscal year as determined by the California Department State Board of Tax and Fee Administration and Equalization and reported to the director on or before August 15 of each fiscal year during the fiscal adjustment period, to result for each of those fiscal years from the 0.25-percent reduction in local sales and use rate tax authority applied by Section 7203.1. The director shall adjust the estimates described in this paragraph if the board reports to them him or her any changes in the projected growth in local sales and use tax revenues for the current fiscal year.
(3) “In lieu local sales and use tax revenues” means those revenues that are transferred under this section to a county or a city from a Sales and Use Tax Compensation Fund or an Educational Revenue Augmentation Fund.
(c) Except as otherwise provided in subdivision (d), for each fiscal year during the fiscal adjustment period, in lieu sales and use tax revenues in the Sales and Use Tax Compensation Fund shall be allocated among the county and the cities in the county, and those allocations shall be subsequently adjusted, as follows:
(1) The Director of Finance shall, on or before September 1 of each fiscal year during the fiscal adjustment period, notify each county auditor of that portion of the countywide adjustment amount for that fiscal year that is attributable to the county and to each city within that county.
(2) The county auditor shall allocate revenues in the Sales and Use Tax Compensation Fund among the county and cities in the county in the amounts described in paragraph (1). The auditor shall allocate one-half of the amount described in paragraph (1) in each January during the fiscal adjustment period and shall allocate the balance of that amount in each May during the fiscal adjustment period.
(3) After the end of each fiscal year during the fiscal adjustment period, other than a fiscal year subject to subdivision (d), the Director of Finance shall, based on the actual amount of sales and use tax revenues that were not transmitted for the prior fiscal year, recalculate each amount estimated under paragraph (1) and notify the county auditor of the recalculated amount.
(4) If the amount recalculated under paragraph (3) for the county or any city in the county is greater than the amount allocated to that local agency under paragraph (2), the county auditor shall, in the fiscal year next following the fiscal year for which the allocation was made, transfer an amount of ad valorem property tax revenue equal to this difference from the Sales and Use Tax Compensation Fund to that local agency.
(5) If the amount recalculated under paragraph (3) for the county or any city in the county is less than the amount allocated to that local agency under paragraph (2), the county auditor shall, in the fiscal year next following the fiscal year for which the allocation was made, reduce the total amount of ad valorem property tax revenue otherwise allocated to that city or county from the Sales and Use Tax Compensation Fund by an amount equal to this difference and instead allocate this difference to the county Educational Revenue Augmentation Fund.
(6) If there is an insufficient amount of moneys in a county’s Sales and Use Tax Compensation Fund to make the transfers required by paragraph (4), the county auditor shall transfer from the county Educational Revenue Augmentation Fund an amount sufficient to make the full amount of these transfers.
(d) (1) At such time as the Director of Finance estimates that the notification described in subparagraph (A) of paragraph (1) of subdivision (b) is likely to occur within the subsequent 12 months, the director shall, at the beginning of each subsequent calendar year quarter, determine the month in which the notification will occur.
(2) (A) In the calendar year quarter in which the Director of Finance determines that the notification described in subparagraph (A) of paragraph (1) of subdivision (b) will occur within either the current or subsequent quarter, the director shall revise the countywide adjustment amount described in subdivision (c) for the current fiscal year such that the countywide adjustment amount is calculated only through the quarter in which the director gives notification pursuant to subparagraph (A) of paragraph (1) of subdivision (b). The director, when appropriate, may revise the countywide adjustment amount described in subdivision (c) for the subsequent fiscal year such that the countywide adjustment amount described in subdivision (c) is calculated only through the quarter in which the director gives notification pursuant to subparagraph (A) of paragraph (1) of subdivision (b).
(B) If the determination regarding the notification described in subparagraph (A) is revised, the countywide adjustment amount calculated in subparagraph (A) for either the current or the subsequent fiscal year shall be recalculated such that the countywide adjustment amount described in subdivision (c) is calculated only through the quarter in which the Director of Finance gives notification pursuant to subparagraph (A) of paragraph (1) of subdivision (b).
(3) (A) After the end of the revenue exchange period, the Director of Finance shall do both of the following:
(i) Provide to the Controller, with a copy to the Joint Legislative Budget Committee, a schedule providing for a transfer from the Fiscal Recovery Fund, established pursuant to Section 99008 of the Government Code, to the Sales and Use Tax Compensation Fund of either of the following amounts:
(I) An amount equal to the local sales and use tax revenue not received by the county and each city in the county during the revenue exchange period as a result of the 0.25-percent reduction in local sales and use tax authority applied by Section 7203.1 minus the sum of all countywide adjustment amounts deposited during the revenue exchange period, as determined by the director. This amount shall be summed over all counties.
(II) If the amount summed over all counties in subclause (I) is greater than the difference between the balance in the Fiscal Recovery Fund and an amount sufficient to cover the estimated costs associated with closing the Fiscal Recovery Fund, then a proportion shall be calculated equal to the proportion between the amount in subclause (I) summed over all counties and an amount equal to the difference between the balance in the Fiscal Recovery Fund and an amount sufficient to cover the estimated costs associated with closing the Fiscal Recovery Fund. The amount calculated under this subclause is equal to the product of the amount calculated in subclause (I) and the proportion calculated in this subclause.
(ii) Provide a schedule to the auditor of each county of the amounts calculated under clause (i).
(B) If the amount provided for in the schedule required pursuant to clause (i) of subparagraph (A) is the amount that is described in subclause (II) of clause (i) of subparagraph (A), an amount equal to the difference between the amount that is described in subclause (I) of clause (i) of subparagraph (A) and the amount that is described in subclause (II) of clause (i) of subparagraph (A) shall constitute an additional countywide adjustment amount to be applied in the manner prescribed in subdivision (a) for either the current or subsequent fiscal year, as determined by the director.
(4) The Controller shall transfer, from the Fiscal Recovery Fund to the Sales and Use Tax Compensation Fund for each county, the amount specified for that county in the schedule provided by the Director of Finance pursuant to clause (i) of subparagraph (A) of paragraph (3).
(5) Within 60 days of the transfer by the Controller of revenues from the Fiscal Recovery Fund to the Sales and Use Tax Compensation Fund for each county, each county auditor shall allocate revenue to the county and each city in the county per the schedule provided by the Director of Finance pursuant to clause (ii) of subparagraph (A) of paragraph (3).
(6) For purposes of this subdivision, “revenue exchange period” has the same meaning as defined in subdivision (b) of Section 7203.1.
(e) For the 2005–06 fiscal year and each fiscal year thereafter, the amounts determined under subdivision (a) of Section 96.1, or any successor to that provision, may not reflect any portion of any property tax revenue allocation required by this section for a preceding fiscal year.
(f) This section may not be construed to do any of the following:
(1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2, clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.3, or Article 4 (commencing with Section 98), had this section not been enacted. The allocation made pursuant to subdivisions (a) and (c) shall be adjusted to comply with this paragraph.
(2) Require an increased ad valorem property tax revenue allocation to a community redevelopment agency.
(3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in a county.
(g) Existing tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies shall be deemed to be temporarily modified to account for the reduced sales and use tax revenues, resulting from the temporary reduction in the local sales and use tax rate, with those reduced revenues to be replaced in kind by property tax revenue from a Sales and Use Tax Compensation Fund or an Educational Revenue Augmentation Fund, on a temporary basis, as provided by this section.