Fighting Over Fuel Sales Tax

A turf war has broken out among state lawmakers scrambling for a piece of the $25 million to $30 million in tax revenue generated from the sale of nearly $500 million worth of jet fuel in California every year.

A 1991 state law backed by former Assembly Speaker Willie Brown (D-San Francisco) mandated that a small portion of the taxes collected on jet fuel sales go to the local governments that serve as the “point of negotiation,” as opposed to the “point of sale,” which is how it works with most sales taxes.

About 90% of jet fuel is supplied by San Francisco-based Chevron Corp., so the practical effect of the 1991 law is that the city and county of San Francisco get to keep most of the $5.4 million in annual sales taxes intended for local governments. Cities and counties that actually sell the jet fuel at their airports--including LAX and Burbank airports in Los Angeles County and John Wayne Airport in Orange County--lose out.

Assemblyman Joe Baca (D-Rialto) has introduced AB 66 to redistribute the money on the basis of where the jet fuel is sold. Baca says his bill addresses the issue of fairness.

“If you buy a piece of candy, the tax stays local. If you fill up your car in a gas station, the sales tax from that stays local,” Baca said. “But with jet fuel, you have a situation where you have a politically orchestrated law that is totally undemocratic.”

Baca’s bill stalled last year in the Assembly Appropriations Committee, the panel chaired by Assemblywoman Carole Migden (D-San Francisco). Migden put the kibosh on the bill.

“I will fight any effort to strip San Francisco from its rightful revenue,” Migden said. “I would never pinpoint another county exclusively to raid its coffers, and that’s precisely what this is.”

But Baca is trying to turn up the heat on Migden. He sent a letter to Assembly Speaker Cruz Bustamante (D-Fresno) asking him to urge the committee to hear the bill in the second year of the two-year legislative session.

“I have the votes to pass the bill, if she would stop holding it hostage,” Baca said. “I understand her desire to protect her district’s revenues, but all I’m saying is let’s have a fair hearing.”

Other San Francisco pols have weighed in as well. Baca said he received a call from Brown, now mayor of San Francisco, asking him to abandon the cause.

The effort to address the issue is two-pronged. In addition to the legislative front, the Board of Equalization, the state agency charged with collecting all sales taxes, will take up the matter at a meeting Tuesday in Sacramento.

Board member Dean Andal, whose district includes Sacramento, is pushing for a change in policy that mirrors Baca’s bill. But Andal acknowledged the obstacles he faces.

“I’m unsure whether we will have enough votes on Tuesday,” Andal said. “Willie Brown has always counted [votes] better than me, and he’s working hard on this issue. San Francisco is using its political muscle once again to take tax revenue away from other counties.”

“I think the fact that the bill hasn’t moved is a testament to Willie’s continuing power in Sacramento,” Baca said. “This is San Francisco versus the rest of the state, but he’s still controlling all of the political strings.”

Internet Complaint Forms

Bottom Line: State agencies such as the Department of Corporations and the Public Utilities Commission will be required to post complaint forms on their Web sites by July 1.

Status: AB 206 was signed by Gov. Pete Wilson in September after passing the Assembly 75 to 1 and clearing the Senate 28 to 0.

Next Step: The bill becomes law today.

Details: The bill’s author, Assemblyman Bob Hertzberg (D-Van Nuys), can be reached at (916) 445-7644.