COUNTY

oF SAN MATEO COUNTY MANAGER

'S OFF

I CE December

8, 2015 Mr. James

T. Brown (Email:

J ames.T.Brown@faa.gov) F ina nce Management Federal Aviation Administration 800 Independence

Avenue

SW Washington,

DC 20591

John

l. Maltbie County Manager

/ Clerk

of the Board County Government
Center 400 Cou

n ty Ce

n ter, 1st

F

l oor Redwood

Ci ty, CA 94063 650

- 363- 412

1 T 65

0

- 363

- 1916

F www

. s m cgov

. o

r g Subject: Action
Plan Submission Pursuant

to FAA Policy
and Procedures Concerning

the Use

of Airport Revenue

(79 Fed. Reg. 66282-01, November

7, 2014). Dear
Mr. Brown: T hi s letter

is in response

to the request

for an action plan for the County

of San Mateo

to convey

its intent to comply
with the

F AA ruling related

to sales
tax revenues derived
from aviation

fuel sales

to the extent that ruling complies

with federal

law. This

in cludes

t he process
likely

n ecessary

to amend

any noncompliant

local ordinances

to achieve compliance

and the development

of reporting requirements

and tracking systems

fo

r specific

i nformat

ion on aviation

fuel tax revenues which

in California means

"jet fuel" as other types

of aviation
fuels
are exempt
from sales

tax

in this state.

I t is our understanding

that the State

of Cal

i fornia
will
be submitting

an action

p

l an pertaining

only

to the state's portion

of the tax. The County

of San Mateo

is in

a unique situation.

San Francisco Internationa

l Airport (SFO)

is located

on County

land but

is owned

and operated

by the City and County

of San Francisco

, therefore,

the County

of San Mateo derives
little benefit from the FAA funds provided

to SFO for capita

l
a nd operations

. On the other hand,

the County expends

sign

ifi ca nt resources

on addressing

issues related

to aviation activity

at SFO.

In addition,

the County operates

two general aviation airports

in the cities

of San Carlos
and Half Moon Bay, and

a

l so devotes resources

to the operations

of those airports. California

' s state
and local governments

already provide extensive services

to airports

incl uding i n fra structure maintenance

, fire protection

, pub

l ic safety, environmental protection

and noise abatement.

These services

and impro vements

are funded
with general
sales taxes
and other taxes and County

of San Mateo believes these local expenditures

may exceed

the sales
tax revenues derived
from the sale

of aviation

fue

l and covered

by the FAA ruling

. The County

also receives some sales tax revenue derived
from

jet fuel

sa les that are exempt from the FAA ruling because

that revenue comes from taxes adopted

prior December

30, 1987.TheCountyreceivesalocalsalestax(theMeasure ASalesTax)ofOne-HalfCentwhichwasadoptedbythevotersin2012.Inadditiontothelocallyimposedtransactionandusetaxrate,theCountyofSanMateoalsoreceivesrevenuesderivedfromthestatesalesandusetaxrateforthepurposesof(healthandhumanservices,criminaljusticeandtransportation).Thesestatewidevoter-approvedtaxrateshavebeendesignatedforspecificpurposes.Itisourunderstandingthatthestatewillprovideanactionplanresponseasitrelatestonecessarystepsforassuringcompliancerelatedtotheserevenues.ReportingRequirementandTrackingSystemTheCountyofSanMateoinconjunctionwithitsadvisorshasbeguntoidentifytherequireddataandstepsnecessarytocomply.Theinternalprocesstoundertakethiseffort,includingdevelopingatrackingsystemfordiscreteinformationonaviationfueltaxrevenues,iscomplexandextensive.Forexample,theStateBoardofEqualization,thetaxcollectionagencywithwhichtheCountyofSanMateohasacontractforsalestaxcollections,doesnotrequirejetfuelsellerstosegregatesalestaxrevenuederivedfromthesaleofjetfuelfromothertypesoftaxablesalesmadebythesamevendor.Therefore,itispresentlyimpossiblefortheCountytodeterminetheexactamountofsalestaxderivedfromsalesofjetfuel.Localagencieswouldneedthestatetochangeitstaxreportingstandardstorequirefuelsellerstoquantifytheamountoftaxderivedfromthesaleofaviationfueltoachievecompliance.SegregatingandreportingthecorrectamountoftaxrevenuewillfurthercomplicateCalifornia'salreadycomplexsalestaxsystemandincreaseadministrativecosts.TransitionPeriodIftheCountydeterminesthatitsexpendituresonairportcapital,operatingcostsandotheraviationrelatedissuesatSFO,SanCarlosandHalfMoonBaydonotexceedsalestaxrevenuesderivedfromaviationfuel(andcoveredbytheFAAregulationatissue),itwillattempttocomplywiththerequirementssetforthbytheFAAruling,butmayalsopursuelegislativeand/orlegalremedies.TheCountywillnotifytheFAAofspecificactions,ifany,tobecompletedduringthetransitionperiodandworkwiththestatetoensurecompliancebeforetheDecember8,2017deadline.erely,L.MaltbientyManagerIClerkoftheBoardJohnBeiers,CountyCounselBrianWong,DeputyCountyCounselJimSaco,BudgetDirectorConnieJuarez-Diroll,LegislativeDirectorJay.Chamberlain,DepartmentofFinance(Jay.Chamberlain@dof.ca.gov)