In early May, Los Angeles Times columnist Michael Hiltzik unfairly criticized a State Board of Equalization-supported proposal to simplify property tax assessment of airline property in California. As elected Board members and former legislators, we write to set the record straight.
Senate Bill 661, authored by Senator Jerry Hill (D-San Mateo), would centralize property tax assessment of commercial airline property, ending a confusing and complicated county-by-county system that has spawned years of legal disputes. It would reduce costs and improve efficiency for state and local government, making California more friendly to a sector that helps support a million jobs and generates $154 billion in economic activity in our state.
Although modest, these changes are common sense tax reforms that would bring California’s system in line with most other states that impose property tax on commercial aircraft.
It may be disappointing news for travelers who pay high airline ticket prices, but SB 661 won’t change what’s taxable and what isn’t. That’s already settled law. This measure simply changes who assesses the value of airline property.
Hiltzik charges the airline industry is “disingenuous” and really just after a big tax break. If that’s the case, they’re out of luck. The Board of Equalization doesn’t hand out tax breaks. We implement and uphold the laws passed by the Legislature, which includes the methodology for the assessment of commercial aircraft. If for some reason we didn’t, the courts would step in to ensure we do.
Good ideas are rarely adopted immediately, yet Hiltzik points to past legislative efforts as if to prove that further reforms are unnecessary. The truth is, centralized assessments were never rejected outright. Instead, a compromise resulted in the current “lead county” system that solved a few problems, but left others unresolved. In fact, two prior authors of legislation on this issue serve on the Board of Equalization and support SB 661.
If the airplane had been invented sooner, we suspect the Board would already have direct responsibility for assessing aircraft, given the industry’s similarities to railroads and utilities. It just makes sense.
Hiltzik’s most glaring omission may be his failure to acknowledge the Board of Equalization’s experience and expertise in property tax assessments and administration. Established in the 19th century to address property tax inequities among counties, the Board is charged with regulating county assessment practices, equalizing ratios, and assessing railroad and utility properties.
In fact, the Board wrote the regulations for the current system of aircraft property tax assessment and provides ongoing guidance and oversight of assessors regarding these matters. By law, the Board even specifies the time period when aircraft assessments will be measured. We’re no strangers to this issue.
Giving up aircraft assessments would lessen the burden on county assessors, many of whom are underfunded by years of budget cuts; and while the assessors and their hardworking staff do a wonderful job with limited resources, this is clearly an issue where state government is the more efficient and effective party to carry out these responsibilities.
We’re ready and willing to work with the Legislature to address the concerns raised by a handful of assessors and amplified by Hiltzik. But so far, legislators who have already considered their concerns have rejected them as unfounded, voting unanimously to move the bill forward.
California’s tax system is needlessly complicated and confusing for taxpayers large and small; and as Hiltzik’s column perhaps unintentionally reveals, the forces behind the status quo will vehemently oppose even the smallest, most common sense, bipartisan tax reforms.
Making life simpler for taxpayers and business owners should be a goal we continually work on, and SB 661 is a perfect example of a modest reform that will have a positive impact.
George Runner and Fiona Ma serve as elected members of the State Board of Equalization.