Napolitano Introduces Bill to Protect California from FAA’s Recent Threat
(WASHINGTON, DC) Today, Rep. Grace F. Napolitano (CA-32) introduced H.R. 2939, the State and Local General Sales Tax Protection Act, to protect the State of California and its cities from the Federal Aviation Administration’s (FAA) recent threat to withhold $250 million annually in FAA grants to California airports and divert over $70 million in state and local general sales taxes away from their intended purpose. This legislation would overturn the 2014 FAA policy change requiring state and local governments in California and across the country to use general sales taxes collected on aviation fuel for airport purposes, which is the pretext for the Trump Administration threat.
“The FAA has been silent on enforcement of this issue for over 5 years as California has worked in good faith to address the policy change, but now all of a sudden FAA wants to penalize California,” Napolitano said. “This policy change will overturn the decisions made by local voters to tax themselves for specific purposes, such as transportation, police and fire, and health services. It is contrary to states’ rights and an assault on state and local control of general application sales tax measures. The decision to threaten California airport grants and sue California is yet another political attack by this administration on the State of California, and we will not stand for it. I am proud to introduce this common-sense legislation to remove this burden from states, local governments, and our taxpayers.”
Although California has been one of the first states to receive an enforcement threat, this legislation will protect every state and local government in the country that have general sales taxes that include aviation fuel.
Napolitano introduced H.R. 2939 with Reps. Alan S. Lowenthal (CA-47), David Scott (GA-13), Jared Huffman (CA-02), Harley Rouda (CA-48), Salud Carbajal (CA-24), and John Garamendi (CA-03).
- In 1987 Congress passed the FAA authorization amendments that required airports to spend aviation fuel excise tax revenue on airport uses. The conference report for the 1987 amendments to the FAA statute (H.R. Conf. Rept. No. 484, 100th Cong., 1st Sess. 1987 accompanying P.L. 100-223) clearly stated that the requirement that local taxes on aviation fuel must be spent on airports “is intended to apply to local fuel taxes only, and not to other taxes imposed by local governments, or to state taxes.”
- On December 8, 2014 (79 FR 66282), FAA made a policy change that contradicts the Congressional intent and 29 years of practice by saying that “the agency interpreted the provisions of Sections 47107(b) and 47133 to apply to any state or local tax on aviation fuel, whether the tax was specifically targeted at aviation fuel or was a general sales tax on products that included aviation fuel without exemption.”
- In California, local government sales taxes are voter-approved by a 2/3rds margin for specific purposes. Diverting this money to other purposes would be a violation of California’s state constitution and the will of its voters.
- On May 17, FAA sent a letter to California threatening to withhold $250 million annually in FAA grants that our state’s airports receive.
- If FAA is able to force California to divert the general sales tax revenues from aviation fuel, the California State Board of Equalization (BOE) estimates this will impact $53 million in state funding annually. This includes diverting $17.6 million allocated to counties and cities for law enforcement purposes under Proposition 172 of 1993 and $17.6 million allocated to counties for realigned health and social services programs through the Local Revenue Fund. BOE estimates that approximately $24 million per year in local general sales taxes will be diverted away from their voter-approved purpose, but this estimate does not include many recently passed sales taxes that will make this number higher.
- H.R. 2939 will re-establish 29 years of FAA interpretation by clarifying Congress’ original intent that general sales taxes are not subject to airport spending requirements as are excise taxes.
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