Cut to state’s fuel tax revenue will cost local airport

Published 9:43 am Wednesday, April 29, 2015

NW0429 Airport Commission A

Changes to the state’s aviation fuel tax law could lead to less grant funding for airports through the state, including the Elizabethton Municipal Airport.

The Airport Commission received an update on how the changes in the law will likely lead to less funding through the Transportation Equity Fund, and in turn fewer grants to Tennessee airports.

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“As we go forward, the pie is about half, which means our slice will be about half,” Commission Chairman Bill Greene said. “This has changed the income stream for all airports in Tennessee. I think in four years we will be sitting in a holding pattern with what we have.”

The current legislation would cap a company’s aviation-tax fuel liability in Tennessee to $10.5 million, after FedEx Corp. found it had been paying between up to 75 percent of the total $41 million to $48 million that is collected in Tennessee, according to legislative testimony.

The tax is 4.5 percent per gallon and is in lieu of other fuel taxes. The revenue flows into a fund created in 1988 that helps pay for airport improvements across the state. The revenue fluctuates from year to year with the price of fuel.

The legislation would cap the annual tax liability  for a single payor at $21.375 million for the fiscal year starting July 1, and would continue to reduce it over the next four years until it hits $10.5 million, where it would stay.

The loss in funding from the aviation fuel tax revenue would mean airports would receive fewer grants to pay for improvements to their infrastructure, such as the current runway expansion project at the Elizabethton airport, manager Dan Cogan said. The airport believes the application for funding for the remainder of that project made it in before the deadline and should be received.

“We believe that funding will be available,” Cogan said. ”Projects will be funded differently in the future. We will see money shifted away from structures like terminals and more toward the air side of things. There will be more justification needed for projects, and that is not a bad thing. It means airports will need to be smarter with the projects they do.”

Cogan told the commission of several equipment needs the airport had, such as a new fuel farm, new fuel trucks and new tow machinery to move the aircraft around at the airport. The goal was to save enough revenue to be able to purchase these items for the airport. Cogan expects the fuel farm will be upgraded in the next three years.

Another project for the airport is to add restrooms and a lounge to the old airport office on the north side of the runway for clients who store or land their planes on that side of the property. Currently, there are some aircraft that cannot be taxied to the south runway, where the current office with restroom facilities and customer lounge is. The pilots and passengers are sometimes unable to come over to the current lounge, and a space is needed at the hangars on the north side, Cogan said.

The commission unanimously approved the 2015-2016 budget for the airport. The budget included $984,500 in regular income, with an additional $158,000 in funding in appropriations. This includes $145,000 from the city of Elizabethton with $100,000 for the Moody property and $45,000 for operating expenses. The remainder of the additional appropriations is $13,000 from a state maintenance grant.

Expenses total $548,000 for the purchase of goods to be resold, such as fuel, pilot supplies, flight school and catering. Of this fuel is the highest cost at $475,000. It is estimated the fuel will be resold to pilots with sales totaling $700,000. Operating expenses totaled $593,000. This leaves the airport with a net income for the fiscal year of $650.