GillBilly Chronicles: Will the 90 DAY YACHT CLUB Disappear over the Horizon Again?

Governor’s proposed budget for 2008-09 would bring back one-year waiting period

SACRAMENTO, CALIFORNIA -- The rejoicing was almost unanimous in the boating community last summer, when California legislators brought back the sales tax exemption for boats purchased offshore and used out of the state for more than 90 days. However, because of the state’s impending budget shortfall, the governor has proposed a requirement for fiscal year 2008-09 that vessel, vehicle and aircraft purchases remain out of state for a full year to qualify for the exemption. According to a report from Betty Yee, chairwoman of the state Board of Equalization, the move is expected to bring in “$21 million in additional General Fund revenues by making permanent the use tax on vessels, vehicles and aircraft brought into the state less than one year from purchase.” The move brings back a measure enacted in 2004 to restrict the sales tax exemption. During last year’s budget negotiations, California state Senate Minority Leader Dick Ackerman, R-Irvine -- a boat owner -- successfully convinced fellow legislators to remove a renewal of the one-year out-of-state requirement from the 2007-08 budget.

At the time, Senator Ackerman said the 2004 law restricting the sales tax exemption “was going to be an experiment,” and he believes that experiment had failed. Yacht brokers and boat builders statewide had been adversely affected by 2004’s tougher requirements for buyers who sought to avoid sales tax, Ackerman said. A return to the 90-day out-of-state requirement for offshore deliveries provided a valuable incentive for new buyers, and was expected to result in increased sales of larger vessels by California yacht dealers and brokers. The return of the 90-day requirement was approved as one of several budget compromises with Democratic legislators, which resulted in passage of the $145.5 billion budget signed by Governor Arnold Schwarzenegger last Aug. 25.

Senator Ackerman recently told members of the California Yacht Brokers Association that this time around, he will need extensive data on the effect of the 90-day exemption on yacht sales -- and the related impact on vessel repair, accessory sales, marine service and tourism industries -- to convince legislators of the value of keeping the “old rules.” Meanwhile, boaters can make their voices heard on this issue by contacting their California Assembly representatives at www.assembly.ca.gov , California state senators at www.sen.ca.gov and Governor Arnold Schwarzenegger at www.gov.ca.gov .

Nothing makes a fish bigger than almost being caught.