Assemblyman Leland Yee: Stop Raiding Local Sales Taxes

San Francisco and San Mateo counties are losing an estimated $3 million a year in sales tax revenue from San Francisco International Airport due to a monopoly over jet fuel sales brokered between the city of Oakland and United Airlines. To return that money to the city and county of San Francisco and to guarantee local governments throughout California receive their fair share of jet fuel sales tax dollars, I have amended Assembly Bill 2466 to break this monopoly.

In 1998, the legislature passed a bill designed to ensure that communities hosting airports receive the benefit of sales taxes levied on jet fuel dispensed by airlines at those airports, provided that a given airline has more than one place of business in the state. This policy was developed to ensure that counties that bear the burden of jet fuel pollution and noise would also reap the benefits of sales tax revenue. However, the law contains an unintended loophole that allows the formation of subsidiaries to sell jet fuel from a single point of sale, thereby allowing for the city where the subsidiary is located to receive the sales tax revenue, rather than the local jurisdiction hosting the airport. In this case, jet fuel was being sold through the city of Oakland but dispensed at airports throughout the state.

United Airlines exploited the single-point-of-sale loophole by forming an Oakland-based subsidiary, which is denying millions of dollars to communities across the state, including San Mateo, San Francisco, Los Angeles, Orange, Sacramento and Santa Clara counties. In exchange for doing business exclusively in Oakland, the city gave United Airlines a 65 percent kickback of the generated sales tax revenue.

It is simply unfair for communities across the state to be denied their fair share of jet fuel sales tax revenue. As jet travel increases and fuel prices rise, AB 2466 will protect cities and counties that host airports from losing millions of dollars.

The legislation has the support of SF Mayor Gavin Newsom, among many others. Hopefully, by the time you read this the bill will have moved through the legislative process in both houses of the legislature and be on the governor's desk, waiting for his approval.

Fortunately, this issue was brought to our attention in time to do something about it this year. Hopefully, the additional revenue generated for counties will allow them to continue providing critical services now and into the future. Our communities need and deserve these dollars now and I plan to fight to make sure they stay where they belong.

Assemblyman Leland Yee is the speaker pro tempore at the California Assembly.