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TO:      All CA Aviation Organizations
 
FR:      Skip Daum, Legislative Advocate
           California Aviation Business Association
 
Please be advised that Senate Bill 1100 was also signed into law as part of the State budget package as it portends to recapture up to $54 million in "escaping" sales tax revenue;  as such, it helped balance the budget on paper.  It alters the out-of-state sales tax rules for aircraft, vessels and vehicles.  (See also prior attempts:  AB 694 and AB 2107) 
 
Its language is very awkwardly written, as the Board of Equalization and other careful readers will agree.  It is vague, creates confusion, lacks clarity and a definition of terms, invites subjective interpretations, and raises questions on implementation, sellers' and buyers' liability, and enforcement.  I have been discussing these issues with senior staff at the BOE and they are responding in writing by Friday.
 
Here, in relevant part, is the text of SB 1100, which should be added to your DOT Legislative Report.  It is Chapter 226, Statutes of 2004.
 
SEC. 2.  Section 6248 of the Revenue and Taxation Code is amended
to read:
   6248.  (a) On and after the effective date of this section there
shall be a rebuttable presumption that any vehicle, vessel, or
aircraft bought outside of this state, and which is brought into
California within 12 months from the date of its purchase, was
acquired for storage, use, or other consumption in this state and is
subject to use tax if any of the following occur:
   (1) The vehicle, vessel, or aircraft was purchased by a California
resident as defined in Section 516 of the Vehicle Code.
   (2) In the case of a vehicle, the vehicle was subject to
registration under Chapter 1 (commencing with Section 4000) of
Division 3 of the VehicleCode during the first 12 months of
ownership.
   (3) In the case of a vessel or aircraft, that vessel or aircraft
was subject to property tax in this state during the first 12 months
of ownership.
   (4) The vehicle, vessel, or aircraft is used or stored in this
state more than one-half of the time during the first 12 months of
ownership.
   (b) This presumption may be controverted by documentary evidence
that the vehicle, vessel, or aircraft was purchased for use outside
of this state during the first 12 months of ownership.  This evidence
may include, but is not limited to, evidence of registration of that
vehicle, vessel, or aircraft, with the proper authority, outside of
this state.
   (c) This section does not apply to any vehicle, vessel, or
aircraft used in interstate or foreign commerce pursuant to
regulations prescribed by the board.
   (d) The amendments made to this section by the act adding this
subdivision do not apply to any vehicle, vessel, or aircraft that is
either purchased, or is the subject of a binding purchase contract
that is entered into, on or before the operative date of this
subdivision.
   (e) (1) Notwithstanding subdivision (a), aircraft or vessels
brought into this state for the purpose of repair, retrofit, or
modification shall not be deemed to be acquired for storage, use, or
other consumption in this state.
   (2) This subdivision does not apply if, during the period
following the time the aircraft or vessel is brought into this state
and ending when the repair, retrofit, or modification of the aircraft
or vessel is complete, more than 25 hours of airtime in the case of
an airplane or 25 hours of sailing time in the case of a vessel are
logged on the aircraft or vessel by the registered owner of that
aircraft or vessel or by an authorized agent operating the aircraft
or vessel on behalf of the registered owner of the aircraft or
vessel.  The calculation of airtime or sailing time logged on the
aircraft or vessel does not include airtime or sailing time following
the completion of the repair, retrofit, or modification of the
aircraft or vessel that is logged for the sole purpose of returning
or delivering the aircraft or vessel to a point outside of this
state.
   (3) This subdivision applies to aircraft or vessels brought into
this state for the purpose of repair, retrofit, or modification on or
after the operative date of this subdivision.
   (f) The amendments made by the act adding this subdivision shall
become operative on October 1, 2004.
   (g) The Legislative Analyst's office shall conduct a study of the
economic impacts of the amendments made to this section by the act
adding this subdivision, and shall report its findings to the
Legislature on or before June 30, 2006.
   (h) This section shall remain in effect only until July 1, 2006,
and as of that date is repealed.

  SEC. 3.  Section 6248 is added to the Revenue and Taxation Code, to
read:
   6248.  (a) On and after July 1, 2006, there shall be a rebuttable
presumption that any vehicle bought outside of this State which is
brought into California within 90 days from the date of its purchase,
and which is subject to registration under Chapter 1 (commencing
with Section 4000) of Division 3 of the Vehicle Code, was acquired
for storage, use, or other consumption in this State.
   (b) This section shall become operative on July 1, 2006.
 
 
In a message dated 11/2/2004 11:30:28 PM Pacific Standard Time, stepheni@xxxxxxxxxxxxxxxxxxxxxx writes:

California Aviation-Related Legislation

  Final Report: October 2004

 

Italics indicate changes from the July 1, 2004 report.

 

 

2003-04 Regular Session

 

AB 118 (Frommer),“Rental Vehicle Transaction Fee” and SB 300 (Torlakson and Alpert) “Rental Vehicle License Transaction Fee”: AB 118 would require rental car agencies to collect an “Impact Fee” of 2.29 percent on each rental car transaction, to mitigate the congestion caused by rental cars on the State’s highways. The fees would be deposited in the State Highway Account to fund road improvement and traffic congestion relief projects near airports and tourist destinations. SB 300 would allow rental car companies to recoup 80% of new increased Vehicle License Fees from consumers by allowing them to charge a separate line item fee on their rental agreements. The bill also provides for various fines for noncompliance with the bill’s reporting requirement. SB 300 is pending in the Assembly Committee on Appropriations. AB 118 did not pass the Legislature by the August 31 deadline.

 

AB 694 (Levine) Inactive: see AB 2107.

 

AB 920 (Nakano): “Real Estate Disclosures: Nuisance: Local Government”: AB 2776 established a city or county disclosure requirement for real property in the vicinity of an airport influence area, effective January 1, 2004. AB 920 provides that on or after January 1, 2005, if a city or county adopts a different or additional disclosure form regarding the proximity or effects of an airport, the form would be required to contain specified information regarding annoyances or inconveniences regarding annoyances associated with airport operations.  This bill also provides that on or after January 1, 2006, that if a city or county doesn’t adopt a different or additional disclosure form, or if there is not a current airport influence area map, a written disclosure of an airport within two statute miles will satisfy city or county disclosure requirements. This bill was chaptered 6/24/04: Chapter 66, Statutes of 2004. 

 

 AB 1869 (Maldonado): “Sales and use tax exemption: Space Flight.” Existing law provides a sales tax exemption for personal property that has space flight capability (launch vehicles and satellites).  This bill expands the sales tax exemption to include equipment and materials used to construct, launch, and transport commercial space flight property and facilities used in spaceport operations. This bill was amended on May 5, 2004.  New language requires an impact report from the California Research Bureau to the Legislature by January 1, 2010.The expanded exemption would be effective until January 1, 2012. This bill did not pass the Legislature by the August 31 deadline.

 

AB 2039 (La Suer) and AB 2284 (Plescia): “Airports: San Diego County Regional Airport Authority” Existing law (PUC Section 170028) provides for the appointment of three members of the public to the San Diego Regional Airport Authority’s Executive Committee to four year terms, and to receive a base salary commensurate to that of superior court judges in the county. AB 2039 would require the three public members of the executive committee be elected at large from the county, beginning with the 2006 statewide general election, and that they receive a salary commensurate with that of members of the state legislature. AB 2284 would delete the requirement that the San Diego Association of Governments and the port transfer all contracts related to the location of an airport over to the authority by March 1, 2002. These bills did not pass the Legislature by the August 31 deadline.

 

AB 2107 (Levine): “Use Tax: Vehicles, Vessels, and Aircraft”: This bill will make a “rebuttable presumption” that an aircraft purchased outside of California (CA) will be subject to CA’s use tax, under any of the following circumstances: a) It was purchased by a CA resident; b) It was subject to the CA property tax during the first 12 months of ownership; or c) It was used or stored in CA more than ½ the time during the first 12 months of ownership. This presumption may be “controverted” by documentary proof that the aircraft was purchased for use outside of CA during the first 12 months of ownership.  If the aircraft is used in interstate or foreign commerce, it will not be subject to the bill.  The bill will provide for an exemption for aircraft brought into California for the purpose of repair, retrofit, or modification, if the work is completed, and less than 25 hours of air time has been logged by the aircraft owner, or an agent designated by the owner who is operating the aircraft.  If more than 25 hours is logged, then the aircraft will be subject to the use tax.  This act will become operative on the first day of the first calendar quarter commencing more than 90 days after the effective date of this act. (This bill is based on AB 694 from the last report.)This bill did not pass the Legislature by the August 31 deadline. 

                                                                     

AB 2430 (Wiggins): “Commercial Air Carriers: Hot Air Balloons.” This bill excludes hot air balloon operators from the definition of “commercial air operator” and excludes hot air balloons from the definition of aircraft. This bill also requires hot air balloon operators to maintain a minimum of $1,000,000 of liability insurance. This bill makes it a misdemeanor to fail to obtain and maintain a current valid local business license as required by the bill or fail to maintain insurance in force as required by the bill. This bill has been re-referred to the Committee on Judiciary. This bill was chaptered 9/30/04. Chapter 881, Statutes of 2004.

 

AB 2676 (Nakano): “Airports: Heliport Construction Plans:  Before submitting an application for the construction of a new heliport to any local, state, regional or federal agency, the plan must first be approved by the department responsible for approving heliport development of the city or county in which the heliport is to be located.  Although this bill would authorize a county board of supervisors or a city council to delegate its approval authority to the city or county planning agency, this authority already exists. This bill was chaptered on 9/14/04. Chapter 521, Statutes of 2004.

 

SB 924 (Karnette): “Global Gateways Development Council”:  This bill would create, until January 1, 2011, an eight-member Council in the Business Transportation and Housing Agency, to advise the Department, CTC, and regional transportation planning agencies, concerning the needs of commercial transportation in California.  The Council would report annually to the agency, and the Assembly and Senate Transportation Committees and the Governor on the goods movement transportation system.  The council may only convene after the Department of Finance has determined that nonstate funds have been deposited with the state to fully support the activities of the Council. This bill was enrolled on 8/26/04.  The governor, who feels that the provisions found in the bill can be accomplished administratively and without legislation, vetoed I on 9/15/04.

 

SB 926 (Knight): “Technology Development”: This bill would transfer the space enterprise development program, the California Space Authority, and a competitive grant program for space enterprise from the Technology, Trade and Commerce Agency to the Business, Transportation and Housing Agency.  SB 926 was chaptered 9/30/04. Chapter 907, Statutes of 2004.

 

SB 1095 (Chesbro) and AB 1800 (Steinberg): “Budget Act of 2004”: This bill calls for the transfer of $745,000 from Aeronautics funds to the General Fund. The transfer will decrease the State’s potential to fund future FAA Airport Improvement Program (AIP) matching grants, Acquisition and Development (A&D) safety projects and Airport Land Use Compatibility Planning (ALUCP) projects.  AIP grants are matched at 5%, so the transfer would potentially cause the State to lose up to $14.9m in Federal funds, depending on the number of AIP matching grants needing funding. In addition, the 2004/05 budget has potentially 14 A & D safety projects estimated at $2,615,444 and 17 ALUCP projects estimated at $2,303,090.  These bills did not pass the Legislature by the August 31 deadline.

 

SB 1233 (Murray) “Vehicles”: This bill would make changes in the Public Utilities Code.  It would change the term “Comprehensive Land Use Plan” to “ Airport Land Use Compatibility Plan” which would make the term consistent throughout the PUC. Another change includes the substitution of the term “airport influence area” for “planning boundaries”, “planning area” and “study area.” SB 1233 was introduced on February 12, 2004. This bill was chaptered 9/21/04. Chapter 615, Statutes of 2004.

 

SB 1874 (Alpert) “San Diego County Regional Airport Authority”: Existing law establishes the San Diego County Regional Airport Authority in the County of San Diego and provides for a nine member permanent board.  Existing laws establishes the initial term for one of the members who is a mayor or members of the public of an east area city to be 2 years.  This bill would change that member’s initial term to 4 years.  This bill was chaptered 9/18/04.  Chapter 589, Statutes of 2004.

 

SB 1879 (Cedillo) “Property Taxation: Exemption: Aircraft of Historical Significance”: This bill would eliminate the requirement that an owner of an historical aircraft sign an affidavit before a notary public when seeking a tax exemption.  Instead the owner would be required to sign the affidavit under penalty of perjury, which would create a new crime and impose a state-mandated local program. SB 1879 was introduced on February 26, 2004.  This bill did not pass the Legislature by the August 31 deadline.

 

SCA 2 (Torlakson): “Local Government: Sales Taxes: Transportation and Smart Growth Planning”: This proposed Senate Constitutional Amendment (SCA) would authorize a county, city and county, a local transportation authority, or a regional transportation planning agency to submit an increase in the sales tax to voters, upon approval of 2/3 of voters, for the purpose of funding local transportation projects and related smart growth planning.  “Smart Growth planning means land use planning programs that conserve open space, reduce air pollution, and provide housing in close proximity to population and employment centers.” SCA 2 did not pass the legislature by the August 31 deadline.

 

SJR 16 (Morrow) and HR 23 (Parra/Dutton):  "Military Air Fares":  These resolutions would urge all airline companies in the United States to permanently establish, for active duty military personnel, a reduced price fare equal to, or lower than, the lowest fare offered for each ticketed flight.  This bill was chaptered on 6/16/04:  Resolution Chapter 94, Statutes of 2004.

 

SJR 23 (Ashburn and Knight):“Military Base Closures”: This resolution requests the President and Congress of the United States to include “intellectual capital” and “ total mission support” in the list of essential 2005 Base Realignment and Closure Act evaluation criteria. This bill has been chaptered: Resolution Chapter 7, Statutes of 2004.

 

2003-04 First Extraordinary Session: The following bill would amend the: a) Budget Act of 2003, or

b) California statutes, to implement the budgetary changes. 

Budget and Trailer Bills for FY 2003-04 SB 1048 (Senate Budget Committee): SB 1048 was amended in the Assembly to delete the transfer of $4.8 million from the Aeronautics Account to the General Fund for FY 2003-04.   SB 1048 did not pass the Legislature by the August 31 deadline.

 

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