Randall S. Fiertz 

Director, Airport Compliance and Management Analysis 

Federal Aviation Administration 

800 Independence Ave., SW 

Washington, DC 20591 

Re: The State of California's Action Plan in Response to FAA Policy Change 

79 FR 66282-01; Docket FAA-2013-0988 

Dear Mr. Fiertz: 

The State of California responds to the FAA's amendment of its Policy and Procedures 

Concerning the Use of Airport Revenue with the following action plan. The FAA interprets 

restrictions on the use of "local taxes on aviation fuel (except taxes in effect on December 30, 

1987)" in 49 U.S.C. § 47107(b) and 49 U.S.C. § 47133(a) to include state general sales tax 

revenue derived from aviation fuel in addition to local aviation fuel excise taxes. The policy 

change says that states should submit an action plan by December 8, 2015 providing for the 

expenditure of such general sales tax revenues derived from aviation fuel on airport capital and 

operating costs, and implement the action plan by December 8, 2017. 

Because California's tax system is extensive, wide-ranging, and extremely complicated, 

determining compliance with the policy change is inherently difficult. Sales taxes are levied by 

the state, 58 counties, 482 cities, and 205 special districts. The state has enacted three general 

sales tax rates-two of which are restricted to specific expenditures-since December 30, 1987 

that will be in effect on December 8, 2017: 

• 0.5% rate enacted by state voters in 1993 and constitutionally restricted to local public 

safety services (Cal. Canst., art. XIII, § 35 [Proposition 172]) 

• 0.5% rate enacted in 1991 and restricted to health, mental health, and social services 

programs that the state realigned to counties (Cal. Rev. & Tax Code §§ 6051 .2, 

6201.2) 

• 0.25% rate enacted in 1991 (Cal. Rev. & Tax. Code §§ 6051.3, 6201 .3) 

The state does not segregate general sales tax revenue derived from aviation and jet fuel from 

other taxable sales. A reliable estimate of the portion of general sales tax revenues derived from 

aviation fuel is not easily determined, as it is, among other challenges, difficult to track 

necessary information due to confidentiality protections for taxpayer data and determine the 

amount of military and international flight tax exemptions. In addition, any estimate is subject to 

volatility based on the fluctuating price of aviation fuel and other calculations. That said, the 

most recent rough estimate of state general sales tax revenues potentially affected by the FAA's 

policy change is approximately $25 million annually based on current fuel prices. 
• Access to and from the airports, including roads, highways, and public transportation 

• Infrastructure, including water, electricity, and sewer 

• Community college and university aviation and aviation-related skilled trade programs 

• State health and safety oversight, including food handling and disposal 

• Environmental and noise mitigation 

• Weather services • Tax credits and subsidies related to the activities above 

The state believes these state expenditures exceed the above estimate of state general sales 

tax revenues derived from aviation fuel and the state is in compliance with federal law. 

Over the next two years, the state will continue to work with taxing authorities, local jurisdictions 

and other entities to coordinate the collection of data to refine (1) estimates of state general 

sales tax revenues derived from aviation fuel and (2) estimates of state expenditures on and 

investment in local public use airports, to confirm California complies with federal law. 

If, contrary to current estimates, the state determines that its expenditures on airport capital and 

operating costs do not exceed general sales tax revenues derived from aviation fuel, it will act 

accordingly, including considering legislative solutions, to comply with applicable federal law. 

Sincerely, 

...._ r? 

MICHAEL COHEN 

Director