BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 384|
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THIRD READING
Bill No: AB 384
Author: Ma (D)
Amended: 5/5/10 in Senate
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 3-0, 6/9/10
AYES: Wolk, Alquist, Padilla
NO VOTE RECORDED: Walters, Ashburn
SENATE APPROPRIATIONS COMMITTEE : 10-0, 6/28/10
AYES: Kehoe, Cox, Alquist, Corbett, Denham, Leno, Price,
Walters, Wolk, Yee
NO VOTE RECORDED: Wyland
ASSEMBLY FLOOR : 62-8, 1/27/10 - See last page for vote
SUBJECT : Property taxation: certified aircraft
assessment
SOURCE : California Assessors Association
DIGEST : This bill extends the property tax assessment
practices for commercial aircraft until the 2015-16 fiscal
year.
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
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law, for the 2005-06 fiscal year to the 2010-11 fiscal
year, inclusive, specifies a formula to determine the fair
market value of certified 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 the 2015-16 fiscal year, 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, 2015, the application of the
following provisions of law that otherwise are scheduled
to sunset on
December 31, 2010:
A. Section 441 of the Revenue and Taxation Code (RTC)
that requires a commercial air carrier to file one
annual property statement with a designated "lead"
county.
B. RTC 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.
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3. Specifies that it is "rebuttably" presumed that the
pre-allocated fair market value of certified aircraft is
the amount determined under the provided formula and,
thus, allows either the assessor or the taxpayer to
challenge that amount before an assessment appeals
board.
The value of an individual aircraft assessed to the
original owner of that aircraft shall not exceed its
original cost from the manufacturer. The preallocated fair
market value of an aircraft may be rebutted by evidence
including, but not limited to, appraisals, invoices, and
expert testimony.
Prior legislation . Last year, the Legislature approved AB
311 (Ma), which extended the valuation methodology for
certificated aircraft until the 2014-15 fiscal year. The
Governor vetoed AB 311, stating: "This bill is intended to
represent the continuation of an important tax assessment
methodology that was agreed to by all the major airlines in
2005. The original methodology brought consistency and
greater efficiency to the assessment of certificated
aircraft. However, this bill makes changes that do not
reflect consensus. Since the existing methodology does not
end until December 31, 2010, I would encourage the author
and stakeholders to reach that consensus and send me
legislation to that effect."
This bill is substantively similar to AB 311, with the main
differences that AB 384 extends the assessment methodology
one year longer (2015-16), than AB 311 (2014-15), replaces
language specifying value with a rebuttable presumption,
providing a cap on valuation equal to its original cost,
and specifying that the taxpayer may rebut the presumption
with appraisals, invoices, and expert testimony.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
Senate Appropriations Committee staff notes that the
estimated assessed value of certificated aircraft allocated
to California in 2008 was approximately $8.2 billion, which
resulted in approximately $94 million in property taxes.
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SUPPORT : (Verified 6/29/10)
California Assessors Association (source)
Alaska Airlines
American Airlines
United Airlines
ARGUMENTS IN SUPPORT : According to the author, "AB 384
is needed to ensure that administrative efficiencies
created by AB 964 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 bill's sponsor, the California Assessors Association,
argues that the existing Centralized Fleet Calculation
Program, which was established by AB 964 (Horton), Chapter
699, Statutes of 2005, 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 at 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. The proponents also
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.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom
Berryhill, Blakeslee, Block, Blumenfield, Bradford,
Brownley, Buchanan, Caballero, Charles Calderon, Chesbro,
Conway, Coto, Davis, De La Torre, De Leon, DeVore, Eng,
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Evans, Feuer, Fong, Fuentes, Fuller, Furutani, Galgiani,
Garrick, Gilmore, Hagman, Harkey, Hayashi, Hernandez,
Hill, Huber, Huffman, Jeffries, Jones, Knight, Lieu,
Bonnie Lowenthal, Ma, Mendoza, Miller, Nava, Nestande,
Nielsen, John A. Perez, Portantino, Ruskin, Salas,
Saldana, Skinner, Smyth, Solorio, Audra Strickland,
Swanson, Torrico, Tran, Yamada
NOES: Anderson, Emmerson, Fletcher, Gaines, Logue, Niello,
Silva, Villines
NO VOTE RECORDED: Carter, Cook, Hall, Monning, V. Manuel
Perez, Torlakson, Torres, Bass
DLW:mw 6/30/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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