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property tax from schools and community colleges to cities and counties. The 2005-06 Budget Act also includes the accelerated repayment of all of the VLF revenue that the local governments did not receive in 2003-04 due to the suspension of the VLF backfill, which was not required to be paid until fiscal year 2006-07. Among the measures in the fiscal year 2005-06 State budget affecting local governments are the following: Vehicle License Fee Backfill. The State has enacted Vehicle License Fee reductions for the current and prior fiscal years, but under the law authorizing these reductions, the State is required to "backfill" local governments for their revenue losses resulting from the lowered rates, and the Vehicle License Fee rate must be increased whenever there are insufficient moneys in the State general fund to pay for the backfill. The fiscal year 2004-05 and fiscal year 2005-06 State budgets deleted the requirement for backfill payments and, instead, provided that the amount of the backfill requirement will be met by an increase in the property tax allocation to cities and counties. Property Tax Shift to the ERAF. The budget included a $1.3 billion shift of local government property taxes to the ERAF. The budget apportioned the $1.3 billion among cities ($350 million), counties ($350 million), special districts ($350 million) and redevelopment agencies ($250 million) and limited the $1.3 billion ERAF transfer to fiscal year 2004-05 and fiscal year 2005-06. The City's share of this additional shift of property taxes was $1.2 million General Fund and $975,619Redevelopment in fiscal year 2005-06. Deferral of Mandate Reimbursement. The budget defers reimbursement to counties, cities and special districts for State mandates (Le., State-mandated requirements that local agencies must carry out without regard to the timing of State reimbursement of the costs of those mandates). Other Measures. In addition to the ERAF shift, the budget contained numerous other changes that r€duce local government funds or increase local costs, including the elimination of booking fee subventions. Triple Flip. The City anticipates that property tax revenue could be an increasingly significant portion of City revenues, and that sales tax revenues could be an increasingly smaller portion of City revenues, at least over the next few fiscal years, because of legislation, commonly referred to as the "Triple Flip," which was submitted to the voters on March 2, 2004, as part of a bond initiative formally known as the "California Economic Recovery Act." This act authorized the issuance of $15 billion in bonds to finance the fiscal year 2002-03 and fiscal year 2003-04 State budget deficits, which are payable from a fund established by the redirection of tax revenues through the Triple Flip. Currently, $11.3 billion of the $15 billion authorization has been sold, with the remaining authorization being held in reserve to assist in defraying any future State budget deficits. Under the "Triple Flip" one-quarter of local governments' one percent share of the sales tax imposed on taxable transactions within their jurisdiction is redirected to the State. In an effort to eliminate the adverse impact of the sales tax revenue redirection on local government, the legislation provides for property taxes in the ERAF to be redirected to local government. Because the ERAF moneys were previously earmarked for schools, the legislation provides for schools to receive other state general fund revenues. It is expected that the swap of sales taxes for property taxes would terminate once the deficit financing bonds were repaid. The "Triple Flip" -35-