MONTEREY COUNTY 

AUDITOR - CONTROLLER 

(831) 755·5040 • FAX (831) 755·5098 • P.O. BOX 390 • SAUNAS, CAUFOANIA.93902 

MICHAEL J. MILLER, CPA, CISA 

AUDITOR-CONTROLlER 

ALFRED R. FRIEDRICH, CGFM 

ASSISTANT AUOITOR·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 of Airport 

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 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 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 of aviation 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 compliance 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 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 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 of jet 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 of j-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 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, 

!Eft~ Auditor/Controller · .... • · · ~· 

cc: Board of Supervisors 

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

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