### SantaMaria CITY OF SANTA MARIA 

# ltxOd DEPARTMENT OFADMINISTRATIVE SERVICES 

### AII·AmericaCity 

# 1

# 1111! Admin/Finance, Room 6, Ext. 215 Utility Billing, Room 9, Ext. 217/218 Information Technology, Room 7, Ext. 236 Special Projects, Room 2, Ext. 118 Business License, Room 5, Ext. 422 Purchasing, Room 6, Ext. 215

110 EAST COOK STREET • SANTA MARIA, CALIFORNIA 93454

-5190 • (805) 925

-0951 • FAX (805) 925-2243 

### December 4, 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 ofAirport Revenue (79 Fed
. Reg
. 66282-01, November 7, 2014). Dear Mr. Brown: This letter is in response to the request for an action plan for the City of Santa Maria 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 noncompliant 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 othe r types of aviation fuels are exempt from sales tax in this state
. It is ou r understanding that the State of California will be submitting an action plan pertaining only to the state's portion ofthe tax
. California' s state and local governments already provide extensive services to airports including infrastructure maintenance, fire and police protection, environmental protection and noise abatement. These services and improvements are funded with general sales taxes and other taxes. The City of Santa Maria believes these local expenditures exceed the sales tax revenues derived from the sale of aviation fuel. Applicable l aw that May Require Amendments for Compliance 

### • City of Santa Maria Measure U Quarter Cent General Purpose
. Transaction and Use Tax passed by the voters in 2012. The tax is for nine years and the revenues and expenditures are maintained in a separate fund
. • Santa Maria Public Airport District In addition to the locally imposed transaction and use tax rate, the City of Santa Maria receives revenues derived from the state sales and use tax rate for the purposes of 

### (health and human services, criminal justice and 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 Requirement and Tracking System The City ofSanta Maria, in conjunction with its advisors, has begun to identify the requi red data and steps necessary to comply. The internal process to undertake this effort, including 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 the City ofSanta Maria has a contract for sales tax collections, does not require jet fuel sellers to segregate sales tax revenue derived from the sale ofjet fuel from other types oftaxable sales made by the same veridor. Therefore, it is presently impossible for the City of Santa Maria to determine the exact amount of sales tax derived from sales ofjet fuel. Local agencies would need the state to change its tax reporting standards to require fuel sellers to quantify the amount of tax derived from the sale of aviation fuel to achieve compliance. Segregating and reporting the correct amount of tax revenue will further complicate California's already complex sales tax system and increase administrative costs. Transition Period If, contrary to current expectations, the City of Santa Maria determines that its 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 ofthe City ofSanta Maria to attempt to comply with the requirements set forth by the FAA ruling, to the extent it complies with federal law
. The City of Santa Maria 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. Sincerely,

Rene M. Vise Director ofAdministrative Services
cc: City of Santa Maria City Council R

ick Haydon, City Manager Jay Chamberlain, Department of Finance (Jay
.Chamberlain@dof
.ca.gov)