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State tax board members disingenuously defend a power grab

California tax authorities say they'll hold the line on airline taxes -- but will they?

George Runner and Fiona Ma, two members of the state Board of Equalization, say I "unfairly" criticized a plan in the state legislature to give the board the power to assess commercial aircraft.

They're right that I criticized the plan, in my column at the beginning of May

But "unfairly"? We'll see. The assessment authority is currently held by county assessors, especially those in counties with major airports. They don't think any better of the legislative proposal than I did.

Runner's and Ma's complaint is embodied in a May 15 letter to The Times. It's outlined in greater detail in a column they placed in a few other news outlets around the state. Even at full length, however, Runner and Ma can't refute the key issue I raised about the legislative plan, which is that it gives big airlines the chance to look for a tax-assessing entity they can push around, and the Board of Equalization is "It."

Still, let's hear out Runner and Ma.

They say the question of "what's taxable and what isn't" in aircraft assessing is "settled law," and the bill in question, Sen. Jerry Hill's SB 661, won't change that. If the airlines are looking for a tax break, they write, "they're out of luck. The Board of Equalization doesn't hand out tax breaks."

They're irked that I overlooked the board's "experience and expertise in property tax assessments and administration," and note that the board already bears responsibility for assessing railroads and utilities.

They express sympathy for local assessors: "Giving up aircraft assessments would lessen the burden on county assessors, many of whom are underfunded by years of budget cuts."

And they say that SB 661 would make "California more friendly to a sector that helps support a million jobs and generates $154 billion in economic activity in our state." They call the changes in the bill "common sense tax reforms."

A few things about all this. Calling aircraft assessment "settled law" is beside the point. There's an enormous amount of give-and-take in aircraft assessing. That's evidenced by the fact that the airlines serving Los Angeles International Airport, San Francisco International Airport and California's other big airports have been demanding assessment cuts of up to 70% a year.

Would the Board of Equalization stand firm against these demands, as the local assessors have done? Or capitulate -- in effect, give the airlines a tax break? Runner and Ma don't say. But the fact that the airlines have gone to court to obtain the reduction shows that aircraft assessments are anything but "settled law." 

As for our ostensibly overburdened county assessors, the curious thing is that the assessors themselves aren't asking to be relieved of this responsibility -- they're demanding to keep it, in part because they don't trust the Board to safeguard local revenues under the law.

Then there's the point about making California "more friendly" to the commercial aircraft sector. What does that mean? Are Runner and Ma really worried that the airlines will stop serving California if they don't get this change? It would be interesting to see Southwest fly from L.A. to Oakland without entering California airspace, or United fly passengers from LAX to New York or Beijing without setting a plane down on a California runway, but I don't think that will happen any time soon.

Runner and Ma write about "making life simpler for taxpayers" being a goal we should all share. Well, there are taxpayers and there are taxpayers. Making life simpler for taxpayers such as the airline industry by, say, casting a more tolerant eye on their claims for tax cuts could make life a lot more complicated for Californians who would have to take up the slack via their own tax bills. 

The fact is that there's no reason whatsoever to transfer the job of assessing commercial aircraft from county assessors to a central authority in Sacramento. The current system, in which each airline is assigned a single "lead county" that assesses its fleet values and passes them on to the other counties, works well -- and if the airlines have issues with it, they have the opportunity to raise them during meetings with the assessors twice a year. 

The airlines have been trying to get the county assessors out of the loop for years. There must be a reason, and it's a safe bet that it has nothing to do with making life easier for the assessors. 

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