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December 8, 2015

Mr

. Randall S. Fiertz Director, Ai rport Compliance and Management Analysis Federal Aviation Administration 800 Independence Avenue SW Washington, DC 20591 CHIE F EXECUTfVE OFFICE Stan Risen ChiefExecutive Officer Patricia· Hill Thomas Chief Operations Officer! Assistant Executive Officer Keith D. Boggs Assistant Executive Officer JodyHayes Assistant Executive Officer 1010**1d ~**  Street , Suite 6800 , Modesto , CA 95354 Post Office Box 3404, Modesto, CA 95353
-3404 Phone: 209

. 525.6333 Fax 209

. 544

. 6226

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. Fiertz: This letter serves as the action plan for Stanislaus County 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 information is pr-ovided based on our understanding of the required components

. 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 f'l1eqn s 

### "jet fuel" as other types of aviation fuels are exempt from sales tax in this

- s- tate
. 'lt

. is our understanding that the State of Californ ia will be subrr.itting an

·a

- ction plan pertaining only to the state's portion of the tax. California's state and local governments already provide extensive services to airports 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 Stanislaus County believes these local expenditures and specific dedicated support we provide to the local airport, exceed the sales tax revenues derived from the sa le of aviation fuel. Applicable Law that May Require Amendments for Compliance Stanislaus County electorate passed by two-thirds majority, a 1/8 cent sales tax measure in 1995 and again in 1999, 2004 and 2012 to support local libraries. The operat ive date of the latest tax measure passed in 2012 commenced on July 1, 2013

. This measure is codified in Chapter 4.18 of the Stanislaus County Code and is known as the Stanislaus County Library Transactions and Use Tax

### Action Pla n Subm ission Pursuant to FAA Policy and Procedures Concerning the Use of Airport Revenue (79 Fed

. Reg

. 66282-01 , November 7 , 2014). December 8 , 2015 Ordinance. The library tax is applicable in the incorporated and unincorporated territory of the County of Stanislaus. It is important to note that the authorizing statute requi r es r evenue from a library use tax to be spent only on library services and needs. The electorate cannot approve· another use for revenue from a special l ibrary tax

. California Revenue and Taxation Code, section 7286.59 mandates that revenue from a special library tax be used only for funding public l ibrary operation. As such , revenue collected from the Stan islaus County lib rary tax is used only to fund county-wide library programs and operations, including, but not limited to, providing purchases of new materials, technology , story-times , programs for children and teens , and other programs and services. The only airport in Stanislaus County where this FAA ruling may have relevance is the Modesto City-County Airport at 617 Airport Way, Modesto , California 95354

. Our best estimate of annual revenue generated from the library tax as applied to jet fue l sales is approximately $3 ,000

. Stanislaus County's approach is to use library tax revenue for only library purposes as required by statute

. The estimated $3,000 in taxes derived from jet fue l is offset by other annual contributions to airport operations from the County General Fund for the operations and management of the airport that far exceeds this amount. I n addition to the locally imposed transaction and use tax rate, Stanislaus County receives revenues derived from the state sales and use tax rate for the purposes of health and human services , criminal justice arnd transportation

. These statewide voter-approved tax rates have been designated for specific purposes. It is our understanding that the state will provide an action plan response as it relates to necessary steps for assuring compliance related to these revenues. Reporting Req u irement and Tracking System 

### Stanislaus County in conjunction with its advisors has begun to identify the required data and steps necessary to comply. The internal process to undertake this effort, i ncluding developing a tracking system for discrete information on aviation fuel tax revenues , is complex and extensive. For example, the State Board of Equalization, the tax collection agency with which Stanislaus County has a cont ract for sales tax collections , does not require jet fue l sellers to segregate sales tax revenue derived from the sale of jet fuel from other types of taxable sales made by the same vendor. Therefore, it is presently impossible for Stanislaus County to determine the exact amount of sales tax derived from sales of j et fue l. Loca l ag e ncies would need t he s tate to change its tax reporting standards to r equire fuel sellers to quantify the amount of tax derived from the sale of aviation fuel to achieve compliance

. Segregating and reporting the correct amo unt of tax revenue will further complicate California's already complex sales tax system and increase admin istrative costs.
2Action Plan Submission Pursuant to FAA Policy and Procedures Concerning the Use of Airport Revenue (79 Fed. Reg. 66282-01 , November 7 , 2014). December 8 , 2015 Transition Period If, contrary to current expectations, Stanislaus County determines our library tax is relevant to the FAA ruling and that County expenditures on airport capital and operating costs do not exceed sales tax revenues derived from aviation fuel , it will consider legislative solutions. It is the intent of Stanislaus County to attempt to comply with the requirements set forth by the FAA ruling , to the extent it complies with federal law. Stanislaus County will notify the FAA of specific actions, if any , to be completed during the transition period and work with the state to ensu r e compliance before the December 8, 2017 deadline.



# Sin

**--**
**'""" .::.**  Stan Risen Chief Executive Officer

cc: Stanislaus County Board of Supervisors Jim Holgersson, Modesto City Manager Keith Boggs , Stanislaus County Assistant Executive Officer Jody Hayes , Stanislaus County Assistant Executive Officer Jay Chamberlain , Department of Finance (Email : Jay

.Chamberlain@dof.ca.gov) James T. Brown, Federal Aviation Administration Finance (Email: James

.T

. Brown@faa.gov) Dorothy Holzem, Legislative Representative, CSAC (Email : dholzem@counties.org)

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