BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 311|
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THIRD READING
Bill No: AB 311
Author: Ma (D)
Amended: 9/2/09 in Senate
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 8-0, 7/8/09
AYES: Wolk, Walters, Alquist, Ashburn, Florez, Padilla,
Runner, Wiggins
SENATE APPROPRIATIONS COMMITTEE : 10-3, 7/23/09
AYES: Kehoe, Corbett, Denham, Hancock, Leno, Oropeza,
Price, Walters, Wolk, Yee
NOES: Cox, Runner, Wyland
ASSEMBLY FLOOR : 60-4, 5/28/09 - See last page for vote
SUBJECT : Property taxation: certificated aircraft
assessment
SOURCE : California Assessors Association
DIGEST : This bill extends the Centralized Fleet
Calculation Program for statewide assessment of
certificated aircraft for property tax purposes until
fiscal year 2014-15.
Senate Floor Amendments of 9/2/09 resolve conflicts between
this bill and AB 852 (Fong), which also amends Section 441
of the Revenue and Taxation Code by inserting provisions of
CONTINUED
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AB 852 into AB 311 with contingent enactment language that
prevents AB 311 from subsequently chaptering-out AB 852.
ANALYSIS : Existing property tax law requires the
personal property of an air carrier be taxed at its fair
market value, and the California Constitution requires
property subject to ad valorem property taxation to be
assessed in the county in which it is situated. Existing
law, for the 2005-06 fiscal year to the 2010-11 fiscal
year, inclusive, specifies a formula to determine the fair
market value of certificated aircraft of a commercial air
carrier. Existing law further requires, until December 31,
2010, the Aircraft Advisory Subcommittee of the California
Assessors' Association to designate, after soliciting input
from commercial air carriers operating in the state, a lead
county assessor's office for each commercial air carrier
operating certificated aircraft in this state in an
assessment year, and requires the lead county assessor to
calculate the value of the air carrier's personal property
and to transmit these calculations to other county
assessors, but specifies that each county assessor is
responsible for assessing and enrolling the taxable value
of the property in his or her county, as provided.
Existing law also requires, until December 31, 2010, the
lead county assessor's office to lead a team to audit the
books and records of a commercial air carrier and
authorizes these air carriers to file a property statement
solely with the lead county assessor's office, as provided.
This bill:
1. Extends, until FY 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.
2. Extends, until December 31, 2014, the application of the
following provisions of law that otherwise are scheduled
to sunset on December 31, 2010:
A. Revenue and Taxation Code (R&TC) Section 441
that requires a commercial air carrier to file one
annual property statement with a designated "lead"
county.
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B. R&TC Section 1153.5 that establishes the
procedure for selecting a lead county to calculate
an airline's fleet value and a coordinated
multi-county audit team to perform mandatory audits
of commercial air carriers
3. Imposes a state-mandated local program and provides
that, if the Commission on State Mandates determines
that this bill contains costs mandated by the state,
reimbursement for those costs will be made as required
by the statute.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
The Senate Appropriations Committee analysis indicates,
absent this bill, staff presumes that the assessment of
certificated aircraft would be performed by individual
county assessors as of January 1, 2011. They note that the
statewide assessed value of aircraft under the existing
valuation methodology may be different from values assigned
by county assessors if the current methodology sunsets.
The Board of Equalization (BOE) estimates that there is no
revenue impact from this bill, as the existing valuation
methodology, which this bill would extend, is a reasonable
method to determine fair market value of certificated
aircraft. Extending the current methodology would also
prevent an increase in costs related to property tax
administration; absent a statewide valuation methodology,
there would likely be a significant increase in appeals and
litigation as a result of disagreements between county
assessors and airlines.
SUPPORT : (Verified 9/2/09)
California Assessors' Association (source)
Alaska Airlines
Board of Equalization
California Association of Realtors
California State Association of Counties
Cal-Tax (if amended)
Los Angeles County Board of Supervisors
United Airlines County of San Mateo
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OPPOSITION : (Verified 9/2/09)
Southwest Airlines
ARGUMENTS IN SUPPORT : According to the author's office,
this bill is needed to ensure that administrative
efficiencies created by AB 964 (Horton), Chapter 699,
Statutes of 2005, continue for both the airlines and
assessors. AB 964 created a fair and equitable statewide
valuation of certificated aircrafts. The Centralized Fleet
Calculation Program has allowed assessors to carry out
their mandated responsibility to fairly assess taxable
property in an efficient manner.
The sponsor of this bill, California Assessors'
Association, argues that the existing Centralized Fleet
Calculation Program, which was established by AB 964, has
been a success. The program "has allowed assessors to
carry out their mandated responsibility to fairly assess
all taxable property within their jurisdiction in an
efficient manner" while streamlining the property tax
process for commercial airlines. The sponsor also states
that the "total annual cost savings statewide for assessors
with centralized valuation and audit and the avoidance of
assessment appeals is estimated as over $3.4 million." The
proponents state that the existing Centralized Fleet
Calculation Program provides an equitable and consistent
formula in valuing aircraft and allows airlines to plan
accordingly for the next five years. Additionally, the
proponents emphasize the importance of the current practice
of designating one lead county and allowing airlines to
file only one property tax return with that county.
ARGUMENTS IN OPPOSITION : The opponents argue that the
"unanticipated revision of the Airline Pricing Guide (APG)
in combination with the formula attached to the application
of the APG contained in current statute has resulted in
precipitous and unexpected rises in tax liability for
Southwest Airlines." The opponents suggest either an
increase to 20 percent in the percent discount from the APG
of 10 percent or an extension of the sunset to no more than
three years to precipitate evaluation and discussion of the
methodology. The opponents state that the existing
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assessment methodology was not intended to be a permanent
solution to airline valuation issues and the sunset
provisions are necessary to motivate a periodic review of
that methodology.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom
Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Coto, Davis, De La Torre, De Leon, Eng, Evans,
Feuer, Fong, Fuentes, Fuller, Furutani, Galgiani, Hagman,
Hall, Hayashi, Hernandez, Hill, Huber, Huffman, Jones,
Knight, Krekorian, Lieu, Bonnie Lowenthal, Ma, Mendoza,
Monning, Nava, Nielsen, John A. Perez, V. Manuel Perez,
Portantino, Price, Ruskin, Salas, Saldana, Skinner,
Solorio, Audra Strickland, Swanson, Torlakson, Torrico,
Yamada, Bass
NOES: Anderson, DeVore, Garrick, Miller
NO VOTE RECORDED: Cook, Duvall, Emmerson, Fletcher,
Gaines, Gilmore, Harkey, Jeffries, Logue, Nestande,
Niello, Silva, Smyth, Torres, Tran, Villines
DLW:do 9/3/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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