Commercial deep-sea fishermen and sportfishing operators appear poised to reel in a one-year tax break valued at $1.46 million.
The California Senate overwhelmingly passed a measure Wednesday night to grant commercial deep-sea and charter fishing operations a one-year exemption from the sales and use tax for diesel fuel to be used outside the state's territorial waters. There was no debate before the 29-4 vote.
The bill, which was previously passed by the Assembly, was sent to Gov. George Deukmejian, who is expected to sign it.
The exemption, which would take effect Jan. 1, would reduce the tax bite on the industry by an estimated $1.1 million in state taxes and $360,000 in local levies.
If Deukmejian signs the bill, the state will not reimburse local governments for sales tax revenue lost because of the exemption.
Assemblyman Gerald N. Felando (R-San Pedro), the bill's sponsor, said the hard-pressed commercial fishing industry needs the tax break because two of California's major canneries closed in 1984, leaving only one in the state. In addition, he said the measure would temporarily correct an inequity inasmuch as merchant vessels are already exempt.
"It means a great deal to each fisherman, each boat owner," said Bill Knott, president of the 235-member Sportfishing Assn. of California, which sought the bill. "In some cases, it would mean the difference between a losing season and one that breaks better than even."
Opponents said the measure fails to target struggling fishing operators and opens the door for a continuing exemption.
"Why is it the state should subsidize one special interest?" Sen. Bill Lockyer (D-Hayward) said shortly after voting against the bill. "Once you begin allowing these tax loopholes, the tax code begins looking like a piece of Swiss cheese."
"Some of the people who are going to get (the exemption) run party boats," said Lenny Goldberg, lobbyist for the labor-backed California Tax Reform Assn., which opposed the measure. "Do you think they're going to lower their prices?"
Deukmejian has not taken a position on the bill, said Donna Lucas, his deputy press secretary. But when the governor vetoed a similar measure last year which would have granted fishing operators a two-year tax exemption, he said he would be willing to sign a one-year tax break.
Among the fishing groups that would benefit from the exemption are the San Diego-based American Tuna Boat Assn. and Western Fish Boat Owners Assn., the Fishermen's Cooperative Assn. of San Pedro and the Pacific Coast Federation of Fishermen's Assns. in Northern California, said Elaine Power, a consultant to Felando.
The fishing industry was granted a temporary exemption for the sales and use tax for diesel fuel in 1984 when unusually warm ocean temperatures, referred to as El Nino, caused considerable economic hardship. That tax break expired Jan. 1, 1987.
Current law provides other tax relief for the fishing industry. Boats purchased for commercial fishing are exempt from the sales tax and from 96% of property taxes.