# MONTEREYCOUNTY

AUDITOR - CONTROLLER (831) 755·5040• FAX (831) 755·5098• P.O

. BOX 390• SAUNAS, CAUFOANIA.93902 

### MICHAEL 

### J. MILLER, CPA, CISA AUDIT OR-CONTROLlER 

### ALFRED R. FRIEDRICH, CGFM ASSISTANTAUOITOR·CONTROLLER December 8, 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 County of Monterey to - convey its intent to comply with the FAA ruling related to sales tax revenues derived from aviation fu,el sales to the extent that ruling complies with federal law

. This includes the process**lik~ly ne~~ssary**  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 ofaviation 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 ofthe 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 the County of Monterey**b~lieves** these local expenditures exceed the sales tax revenues derived from the sale ofaviation fuel. 

### Applicable Law that May Require Amendments for Compliance

• Fuel generated sales tax ' ' ' • Monterey Regional Airport !n addition to the locally imposed tra
. nsaction and use tax rate, County of Monterey receives revenues derived from the state sales

.an· d use tax rate for the purposes of (health and human services , criminal justice and transportation).**T~ese** statewid

. e**voter-approve~** tax rates have been designatedJor specif ic purposes. It is our understanding that the state will provide an action plan response as it relates to necessary steps for assuring compl iance related to these revenues.Reporting Requirement and Tracking System County of Monterey in conjunction with its advisors has begun to identify the required data and steps necessary to comply. The internal proces

_ s to undertake this effort, including developing a tracki ng 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 County of Monterey 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 of taxable

_ sales made by the same vendor. Therefore, it is presently impossible for County of Monterey to determine the exact amount of sales tax derived from sales ofj-et 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, County of Monterey 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 of County of Monterey to attempt to comply with the requirements set forth by the FAA ruling, to the extent it complies with federal law. County of Monterey will notify the FAA ofspecific 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,

# !Eft~ Auditor/Controller · .... • · ·**~·**
cc: Board of Supervisors Jay Chamberlain, Department of Finance (Jay.Chamberlain@dof.ca.gov)

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