Amended in Senate April 14, 2015

Amended in Senate April 6, 2015

Senate Bill No. 747

Introduced by Senator McGuire

(Coauthor: Assembly Member Wood)

February 27, 2015

An act to begin delete amend Sections 21682, 21683.1, and 21683.2 of, and to add Sections 21682.1 and 21682.2 to, end delete begin insert add Section 21689 to end insert the Public Utilities Code, begin insert and to add Section 7102.1 to the Revenue and Taxation Code, end insert relating to airports, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 747, as amended, McGuire. Airports: financial assistance.

The State Aeronautics Act establishes the Aeronautics Account in the State Transportation Fund, and continuously appropriates the moneys in the account for expenditure for airport purposes by the Division of Aeronautics within the Department of Transportation and the California Transportation Commission.

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The act requires the department to establish individual revolving fund subaccounts for eligible airports in the Aeronautics Account, permits the department to advance funds to the subaccount of an individual airport, and requires the department to credit from the Aeronautics Account to each public entity owning and operating an airport or airports under a valid permit issued by the department which has not been designated by the Federal Aviation Administration as a reliever airport or a commercial service airport, the sum of $10,000 annually for each qualifying airport.

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This bill would revise and recast these provisions to instead increase this amount to $30,000 annually for each airport that has been designated by the Federal Aviation Administration as a reliever airport, a commercial service airport, a general aviation airport, or an airport certified under specified federal regulations. The bill would also credit annually from the Aeronautics Account additional sums for large, medium, and small nonhub airports, as defined, and for nonhub commercial airports, small hub commercial airports, medium hub commercial airports, and large hub commercial airports. The bill would provide that if a commercial airport is ineligible to receive an annual credit, the annual credit shall be divided among remaining commercial airports.

end delete begin insert

This bill would require that the revenues from the imposition of state sale and use taxes, at the rate of 4.1875%, on the sale, storage, use, or other consumption of aviation fuel, as defined, be transferred to the Aeronautics Account for allocation in specified percentages to airports and for aviation-related purposes.

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The bill would require the begin delete department end delete begin insert division end insert to begin delete set aside $10,000,000 each fiscal year end delete begin insert allocate 27% end insert begin insert of these revenues end insert for grants to be made available for nonhub begin delete airports end delete begin insert commercial end insert begin insert airports, as defined, end insert with less than 300,000 enplanements annually to attract, establish, and expand air service through incentives, marketing, passenger studies, route analysis, and the acquisition of consultants, as specified. The bill would also require the begin delete department end delete begin insert division end insert to provide at least begin delete $150,000 end delete begin insert 1% of these revenues end insert annually in specified grants for aviation education. By begin insert increasing the sources of funding for and end insert expanding the purposes for which money may be used from a continuously appropriated fund, the Aeronautics Account, the bill would make an appropriation.

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Existing law establishes the California Aid to Airports Program under which the department provides grants to political subdivisions for the planning, acquisition, construction, improvement, maintenance, or operation of a publicly owned airport, and to cities or counties on behalf of any privately owned, public use airport, as specified.

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This bill would appropriate $36,250,000 from the General Fund to the Division of Aeronautics for purposes of funding the update, adoption, and administration of programs within the California Aid to Airports Program.

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Vote: ²⁄₃. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert begin insert

(a) The Legislature finds and declares all of the
following:

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(1) It is the intent of the Legislature to return state sales and
use tax revenue on aviation fuels to the Division of Aeronautics
of the Department of Transportation, as directed by the Federal
Aviation Administration (FAA) in “Policy and Procedures
Concerning the Use of Airport Revenue” (Docket No.
FAA-2013-0988) to operate the California Aid to Airports
Program (Chapter 4 (commencing with Section 4050) of Title 21
of the California Code of Regulations).

end insert begin insert

(2) The directive of the FAA requires that, by January 1, 2018,
all airport revenues, including state sales taxes, shall be used for
aviation-related purposes or for a state aviation program.

end insert begin insert

(3) The intent of this act is to begin the process of transitioning
the state into compliance with the FAA directive by allocating
revenues of state sale and use taxes on aviation fuel to the
Aeronautics Account in order to provide financial assistance to
the state’s airports and state aviation programs.

end insert

begin insert

begin insert SEC. end insert begin insert 2. end insert   

end insert

begin insert Section 21689 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 21689. end insert   

(a) Notwithstanding the provisions of this article, from
the funds deposited into the Aeronautics Account in the State
Transportation Fund pursuant to Section 7102.1 of the Revenue
and Taxation Code, the Division of Aeronautics shall allocate
annually to eligible recepients the following percentages of
available funds for airports and aviation-related purposes:

(1) Twelve percent for qualifying general aviation airports, to
be credited to individual airport subaccounts in a manner
consistent with the process established in Section 21682.

(2) Forty percent to be divided among large, medium, and small
hub commercial airports and nonhub commercial airports, each
as defined in Section 47102 of Title 49 of the United States Code,
in the following percentages:

(A) Twenty-one percent for nonhub commercial airports.

(B) Thirty-one percent for small hub commercial airports.

(C) Fourteen percent for medium hub commercial airports.

(D) Thirty-four percent for large hub commercial airports.

(3) Twenty-seven percent for grants to be made available to
nonhub commercial airports with less than 300,000 enplanements
annually to attract, establish, and expand air service through
incentives, marketing, passenger studies, route analysis, and the
acquisition of consultants. Expenditures under this paragraph
shall be consistent with the Federal Register, Volume 64, Number
30, on February 16, 1999.

(4) One percent to provide grants for aviation education that
includes, but is not limited to, programs, projects, or initiatives
that improve or enrich aviation within the California aviation
community. Grants may include, but are not limited to, scholarships
for flight training and aviation-related degrees from accredited
universities. Priority for grants shall be given to underrepresented
students, women, veterans, and persons of low-income, as defined
in Section 3413 of the Health and Safety Code.

(5) Fifteen percent for other state aviation programs and
aviation-related purposes as authorized pursuant to this article.

(6) Not more than 5 percent for the division’s administrative
costs. Any unused funds shall be allocated pursuant to paragraphs
(1) to (5), inclusive, on a pro-rata basis.

(b) Sections 21686 to 21688, inclusive, shall apply to allocations
of funds pursuant to this section.

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begin insert SEC. end insert begin insert 3 end insert begin insert . end insert   

end insert

begin insert Section 7102.1 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

begin insert 7102.1. end insert   

(a) Notwithstanding Section 7102, revenues in the
fund, less refunds, derived under this part from the imposition of
state sales and use taxes pursuant to Sections 6051, 6051.3, 6201,
and 6201.3, at the rate of 4.1875 percent, with respect to the sale,
storage, use, or other consumption of aviation fuel shall be
transferred to the Aeronautics Account in the State Transportation
Fund for allocation to airports and aviation-related purposes in
accordance with Section 21689 of the Public Utilities Code.

(b) As used in this section, “aviation fuel” means jet fuel and
aviation gasoline.

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SECTION 1.  

Section 21682 of the Public Utilities Code is
amended to read:

21682.  

(a) The department shall establish individual revolving
fund subaccounts for eligible airports in the Aeronautics Account
in the State Transportation Fund. Money payable under this section
shall be credited to individual airport subaccounts annually, and
may be accumulated for a maximum period of five years.

(b) (1) The department shall, subject to Section 21684, credit
from the Aeronautics Account to each public entity owning and
operating an airport or airports under a valid permit issued by the
department for every airport which has been designated by the
Federal Aviation Administration as a general aviation airport, as
defined in Section 47102(8) of Title 49 of the United States Code,
a reliever airport, as defined in Section 47102(23) of Title 49 of
the United States Code, a commercial service airport, as defined
in Section 47102(7) of Title 49 of the United States Code, or an
airport with certification from the Federal Aviation Administration
under Part 139 of Title 14 of the Code of Federal Regulations, in
the following annual amounts:

(A) The sum of thirty thousand dollars ($30,000) annually for
each qualifying general aviation airport.

(B) The sum of seventeen million two hundred fifty thousand
dollars ($17,250,000) to be divided among large, medium, and
small nonhub airports, as defined in Section 47102 of Title 49 of
the United States Code.

(C) The sum of two hundred fifty thousand dollars ($250,000)
for each nonhub commercial airport, the sum of five hundred
thousand dollars ($500,000) for each small hub commercial airport,
the sum of seven hundred fifty thousand dollars ($750,000) for
each medium hub commercial airport, and the sum of one million
dollars ($1,000,000) for each large hub commercial airport, as
defined in Section 47102 of Title 49 of the United States Code.

(2) If a commercial airport is ineligible to receive an annual
credit, because it does not meet the requirements of Section 21684,
the annual credit of that airport shall be divided among the
remaining commercial airports, as defined in Section 47102 of
Title 49 of the United States Code.

(3) The funds credited pursuant to paragraph (1) shall be paid
to public entities upon request for expenditure on preapproved
eligible projects. Eligible public entities may submit applications
for the withdrawal of credited funds for expenditure on proposed
projects in letter form to the department for review and approval.
Projects identified shall be for airport and aviation purposes and
operation and maintenance purposes. No payment made under this
section is transferable, but shall be expended only upon the airport
for which the payment is made, unless the department authorizes
a payment to be transferred for expenditure on another airport.
The department may establish any accounting systems it deems
necessary to provide for the accumulation and expenditure of funds
under this subdivision.

(c) If, in any year, there is insufficient money in the Aeronautics
Account to make the credits specified in subdivision (b), the
department shall, subject to Section 21684, credit to each public
entity subaccount an amount which is equal to the total amount of
money in the Aeronautics Account multiplied by a percentage
equivalent to the proportion which the airport or airports of the
public entity for which credit is required to be made pursuant to
subdivision (b) bear to the total number of airports for which credit
is required to be made pursuant to subdivision (b).

(d) No payment shall be made under this section to any public
entity for any airport on which general or commercial aviation
activities are substantially restricted if the airport is licensed to
conduct these activities by the department. The department shall
determine whether or not general or commercial aviation activities
are restricted.

(e) The department shall adopt rules and regulations and
establish procedures to effect prompt payment to public entities
for eligible airport projects from money credited pursuant to this
section.

SEC. 2.  

Section 21682.1 is added to the Public Utilities Code,
to read:

21682.1.  

The department shall, subject to Section 21684, set
aside ten million dollars ($10,000,000) each fiscal year from the
Aeronautics Account for grants to be made available for nonhub
airports with less than 300,000 enplanements annually to attract,
establish, and expand air service through incentives, marketing,
passenger studies, route analysis, and the acquisition of consultants.
Expenditures under this section shall be consistent with the Federal
Register, Volume 64, Number 30, on February 16, 1999.

SEC. 3.  

Section 21682.2 is added to the Public Utilities Code,
to read:

21682.2.  

The department shall, subject to Section 21684,
provide grants for aviation education which includes, but is not
limited to, programs, projects, or initiatives that improve or enrich
aviation within the California aviation community. Grants may
include, but are not limited to, scholarships for flight training and
aviation-related degrees from accredited universities. Priority for
grants shall be given to underrepresented students, women,
veterans, and persons of low-income as defined in Section 3413
of the Health and Safety Code. The funding for aviation education
grants under this section shall be no less than one hundred fifty
thousand dollars ($150,000) annually.

SEC. 4.  

Section 21683.1 of the Public Utilities Code is
amended to read:

21683.1.  

(a) At the discretion of the commission, any balance
remaining in the Aeronautics Account, after the payments made
under Section 21682, may be used to provide a portion of the local
match for federal Airport Improvement Program grants. Matching
shall be provided only for grants at general aviation airports, as
defined in Section 47102(8) of Title 49 of the United States Code,
or at airports that have been designated by the Federal Aviation
Administration as reliever airports, as defined in Section 47102(23)
of Title 49 of the United States Code.

(b) Funds shall not be allocated by the commission until the
federal grant offer is accepted by the public entity. Upon allocation
by the commission, the department may pay a public entity an
amount equal to 5 percent of the amount of a federal Airport
Improvement Program grant. These funds are excluded from the
requirements of Section 21684.

(c) Funds shall not be allocated by the commission until the
federal grant offer is accepted by the public entity.

SEC. 5.  

Section 21683.2 of the Public Utilities Code is
amended to read:

21683.2.  

Any balance remaining in the Aeronautics Account,
after the payments made under Sections 21682, 21682.1, 21682.2,
21682.5, 21683, and 21683.1, shall be used at the discretion of the
commission for airport and aviation purposes subject to the
provisions of Section 21684.

SEC. 6.  

The sum of thirty-six million two hundred fifty
thousand dollars ($36,250,000) is hereby transferred from the
General Fund to the Aeronautics Account and, notwithstanding
Section 21680 of the Public Utilities Code, is appropriated to the
Division of Aeronautics within the Department of Transportation
for purposes of funding the update, adoption, and administration
of programs within the California Aid to Airports Program
(CAAP). Not more than 5 percent of these moneys may be used
by the Division of Aeronautics for the cost of administering these
programs.

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