Two new bills would require aviation fuel retailers to provide
sales data to the state, information that is needed for
California to comply with federal rules dictating how tax revenue
from those sales is used. The efforts come from both the
Governor’s Administration (budget
trailer bill language) and from Senator Mike McGuire
(SB
988), who chairs the Senate Governance and Finance Committee.
These efforts matter to counties because the federal government’s
new interpretation of a decades-old rule could disrupt funding
for both local general fund taxes as well as funding received
from the state for a wide variety of health, human service,
transportation, and public safety programs.
The bills are similar, but Senator McGuire’s bill includes a
requirement that the Department of Tax and Fee Administration
calculate the amount of tax revenue attributable to the various
pieces of the sales tax (e.g. 1991 realignment, 2011 realignment,
and the local Bradley-Burns) and report that information to
counties, cities, and others that would be affected.
In 2014, the Federal Aviation Administration (FAA) ruled that
state and local governments must spend the proceeds
of any aviation-related tax – those derived
from excise taxes and local sales taxes – on airport
uses only. The state has repeatedly argued that
California spends at least the appropriate amount on airports,
but that much of it comes from other sources, while much of the
funding received from the sales and use tax on aviation fuels are
dedicated to other purposes, including Prop. 172 for local public
safety, the various realignments, and a variety of local add-on
taxes for special purposes. That structure has reportedly been
accepted from other states, but so far the FAA has insisted that
the color of the money matters, and the proceeds of taxes on
aviation fuels must be spent directly for airport purposes.
CSAC has been working with the California Department of Finance
and, through our federal lobbyists at Paragon Government
Relations, with Congress to either get this rule interpretation
reversed or minimize the effect on county revenues.
