# December

7, 2015 Mr. James

T

. Brown (Email: James

. T

. Brown@faa

. gov) Finance Management Federal Aviation Administration 800 Independence Avenue
SW Washington,

DC 20591 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: Th

i s letter

is in response

to the request

for an action plan for the City
of Livermore

to convey

its intent

to comply with the FAA ruling related

to sales tax revenues derived from aviation
fuel sales

to the extent that ruling complies

with federal
law

. This includes the process likely necessary

to amend any non-compliant

local ordinances

to achieve compliance

and the development

of reporting requirements

and tracking systems

for specific information

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.

It is our understanding

that the State

of California

will be submitting

an Action Plan pertaining only

to the state's portion

of the tax. California's
state and local governments already provide extens

i ve services

to
a

i rports including infrastructure maintenance,

fire protection, public safety, environmental protection

and noise abatement. These services

and improvements

are funded with general sales taxes and other taxes and the City
of Livermore believes these local expenditures exceed

the sales tax revenues derived from the sale
of av

i ation fuel. Applicable

Law that May Require Amendments

for Compliance Approximately

one percent

of the currently 2.25%

in non-exempt
sales taxes

on jet fuel (Jet-A)
are collected

at the Livermore Municipal Airport from

a local transaction

and use tax imposed

by Alameda County. •

0

. 5% rate enacted

by Alameda County voters

in 2015 and restricted

to the transportation improvements

in every city throughout Alameda County. •

0

. 5% rate enacted

by Alameda County voters

in 2004 and restricted

to emergency medical

, hospital, public health, mental health and substance abuse services

to indigent, low-income

and uninsured adults

, children
and families, seniors
and other residents

of Alameda County. City Hall

1052 South Livermore Avenue

· Live

r more, CA 94550

www

. c i tyoflivermore.netTherearerestrictionsontheuseofthesetaxes.Inaddition,thesetaxesdirectlyflowtotheagenciesresponsiblefortheseprograms,andnottotheCityofLivermore,makingitimpossibleforustodictatehowthesesalestaxrevenuesareused.Itwouldtakeavoteoftheelectoratetoamendrestrictionsontheiruse.Asanexample,inthe12-monthperiodfollowingOctober2014,approximately$30,000ofsuchsalestaxesmaybeconsiderednon-exempt.TheportionoftheaffectedsalestaxrevenuesderivedfromaviationfuelduetospecialtaxesimposedtheAlamedaCountyisabout$13,000.Incontrast,theCityspendsmoreoncapitalandoperatingcostsfortheLivermoreAirportthantherelevantsalestaxrevenuesestimatedtobederivedfromaviationfuel.TheCityofLivermore'sexpendituresonairportcapitalandoperatingcostsinclude,butarenotlimitedto:•PublicSafetyservices•Fireprotectionservices•Emergencyresponseservice•Accesstoandfromairports,includingroads,highways,andpublictransportationInadditiontothelocallyimposedtransactionandusetaxrate,theCityofLivermorereceivesrevenuesderivedfromthestatesalesandusetaxrateforthepurposesof(healthandhumanservices,criminaljusticeandtransportation).Thesestatewidevoterapprovedtaxrateshavebeendesignatedforspecificpurposes.Itisourunderstandingthatthestatewillprovideanactionplanresponseasitrelatestonecessarystepsforassuringcompliancerelatedtotheserevenues.ReportingRequirementandTrackingSystemTheCityofLivermore,inconjunctionwithitsadvisors,hasbeguntoidentifytherequireddataandstepsnecessarytocomply.Theinternalprocesstoundertakethiseffort,includingdevelopingatrackingsystemfordiscreteinformationonaviationfueltaxrevenues,iscomplexandextensive.Forexample,theStateBoardofEqualization,thetaxcollectionagencywithwhichtheCityofLivermorehasacontractforsalestaxcollections,doesnotrequirejetfuelsellerstosegregatesalestaxrevenuederivedfromthesaleofjetfuelfromothertypesoftaxablesalesmadebythesamevendor.Therefore,itispresentlyimpossiblefortheCityofLivermoretodeterminetheexactamountofsalestaxderivedfromsalesofjetfuel.Localagencieswouldneedthestatetochangeitstaxreportingstandardstorequirefuelsellerstoquantifytheamountoftaxderivedfromthesaleofaviationfueltotoachievecompliance.SegregatingandreportingthecorrectamountoftaxrevenuewillfurthercomplicateCalifornia'salreadycomplexsalestaxsystemandincreaseadministrativecosts.Page2of2Transition Period If, contrary

to current expectations,

the City
of Livermore

dete

r mines that
its expenditures

on airport capital and operating costs
do not exceed sales

ta x revenues derived from aviation

fuel

, it will consider legislative solutions

. It is the intent

of the City of Livermore

to attempt

to comply with the requirements

set forth
by the FAA ruling

, to the extent

it complies
with federal

law

. The City
of Livermore

will notify the FAA

of specific actions,

if any

, to be completed during
the transition period and work with the state

to ensure compliance before
the December

8, 2017 deadline

. **~** Douglas Alessio Administrative Services Director cc: City Attorney City Manager Public Works Director Airport Manager Jay Chamberlain

, Department

of Finance (Jay.Chamberlain@dof.ca.gov)

P age

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