California Code, Revenue and Taxation Code - RTC § 536

Any amount paid by the state to reimburse local taxing agencies for loss of revenue resulting from incorrectly allowed exemptions, if not repaid to the state, shall be deducted under Section 12419.5 of the Government Code from the next reimbursement to such agencies.

The county auditor shall notify the State Controller of all incorrectly allowed exemptions for which local taxing agencies have been reimbursed by the state for loss of revenue, and all escape assessments made because thereof.