BILL ANALYSIS
AB 311
Page 1
Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 311 (Ma) - As Amended: May 4, 2009
Policy Committee: Revenue and
Taxation Vote: 7-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill extends, from 2010-11 to 2014-15, the application of
the current assessment methodology for determining the fair
market value of certificated aircraft owned by commercial air
carriers for property tax purposes.
FISCAL EFFECT
1)The State Board of Equalization (BOE) estimates that this bill
will have no revenue impact since the existing valuation
methodology is a reasonable method for determining fair market
value of certificated aircraft and this bill simply extends
the application of this methodology.
2)Major administrative savings to both county assessors and
airlines due to continued use of a standard assessment
methodology.
COMMENTS
1)Rationale . This bill is sponsored by the California Assessors'
Association (CAA), who states that its purpose is to continue
operation of a successful centralized assessment procedure,
resulting in administrative efficiencies for both the air
carriers and the counties.
2)Background . Certificated aircraft used in commercial aviation
are subject to California's property tax. As personal
property, the aircraft are not subject to the valuation
limitations of Proposition 13. Hence, they must be valued each
AB 311
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year.
Aircraft valuation was a contentious issue prior to 1998, as
no specific assessment methodology existed in California. In
1998, a group of counties and airline industry representatives
entered into a written settlement agreement to dispose of
outstanding litigation and appeals over the valuation of
certificated aircraft. The settlement agreement created a new
unified assessment methodology for valuing aircraft that was
subsequently codified into law. The calculations were refined
in 2005 by a working group of industry and county
representatives, to apply more consistent standards for
aircraft valuation.
The current valuation methodology has three key elements.
First is the selection of a lead county for the purpose of
valuing each carrier's fleet of aircraft. Second is the
determination by the lead county assessor of the total value
of the full fleet of each type of aircraft operated by the
carrier based on standard valuation methods. Third is the
transmission of total fleet value to assessors in each county
where the carrier operates, who then allocate a portion of the
total fleet value to their county based percentage of the
fleet's time spent in their county. The latter calculation is
based on a formula that takes into account the percentage of
the fleet's total landings occurring in the county and
information from the airlines flight schedule.
3)Opponents . While most major airlines and the California
Assessors' Association support this bill, Southwest Airlines
is opposed to the measure, on the grounds that the specific
methods used to value aircraft per the 2005 settlement
agreement - specifically the reliance on the Airliner Price
Guide to determine fleet values - has led to unwarranted
increases in assessed values of its newer aircraft.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081