Valley Voices

Airlines and property taxes: A lack of corporate conscience?

California lawmakers cut the airline industry a 10% break on property taxes after 9/11. Now the industry wants the break continued, and it wants to be able to tie county assessors up in court for years, writes Paul Dictos, assessor-recorder for Fresno County.
California lawmakers cut the airline industry a 10% break on property taxes after 9/11. Now the industry wants the break continued, and it wants to be able to tie county assessors up in court for years, writes Paul Dictos, assessor-recorder for Fresno County. The Associated Press File

Property taxes are local government’s glue to maintain and preserve our American way of life. What distinguishes us Americans from the rest of the world is that our tax system operates on honesty and voluntary compliance and most of us have, what I call, a tax conscience.

Based upon recent events, airlines operating in and benefitting from California and its people do not appear to share this conscience.

Following the 9/11 terrorist attacks, the California Assessors’ Association worked collaboratively with the airline industry and the Legislature to temporarily modify its assessment methodology in the face of mammoth losses by businesses that reliably serve the state and its citizenry.

Subsequently codified into law in 2005 (Assembly Bill 964), the state-mandated methodology requires assessors to value all commercial aircraft at 10% less than the wholesale value established by the Airline Price Guide, the official “blue book” for commercial aircraft, or trended cost, whichever is lower.

CAA’s action properly assisted the industry in a time of need, but with $23 billion in 2015 profits, according to The Wall Street Journal, and massive deferred public works requirements in Fresno and other counties, shouldn’t the communities that are the source of such massive returns receive the same level of assistance?

In 2015-16, the assessed value of commercial aircraft was $7.9 billion, a figure that is virtually unchanged since 2005 despite the fact that airlines have acquired over $65 billion in new aircraft over the past five years.

The AB 964 emergency assessment methodology was set to expire last year – predictably, the airlines and their highly paid lobbyists have pulled every trick in the book to keep the tax subsidy in perpetuity.

Their most recent gambits are Assembly Bill 2622 and Senate Bill 1329, each of which would extend the current tax breaks. On top of that, SB 1329 creates an onerous appeals process for revised assessments that would be costly; it proposes to suspend the impact of reassessments by your elected, nonpartisan officials for years until the disagreements are settled in Superior Court (one such action took eight years and cost a California county over $400,000 in legal fees).

Apparently, no good deed goes unpunished when it comes to the airline industry.

We’re not talking about chump change here – even under the current cut rate assessment methodology, California counties, cities, schools, fire and police departments, and other essential services received $90 million of badly needed support.

Surely, an industry with $23 billion in annual profitability can at a minimum afford to pay taxes in accordance with the actual value of its equipment, not to mention demonstrating a conscience in regard to the people and communities they serve and mightily profit from.

I ask you to support me in returning the methodology for assessing airline equipment to one that fairly compensates California and its people for the services they provide. A state without an educated populace, or one that does not feel safe in leaving their homes and property behind while traveling, is one that cannot provide airlines with the kind of profits to which they have become accustomed.

And that’s a loss for all of us.

Paul Dictos CPA, is the Fresno County assessor-recorder. Email: pdictos@co.fresno.ca.us.

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