TENNESSEE AVIATION ASSOCIATION TAKES LEADTO RESOLVE AIRPORTS SYSTEM FUNDING ISSUES - Nashville – April 17, 2017
The Tennessee Aviation Association, representing the state’s system of airports, is taking the lead to explore potential solutions to lingering funding questions. TAA’s Executive Director, Bob Minter said, “This funding problem is extraordinarily complex, much more so that many realize. In order to find a long-term solution a number of technical areas must be researched. Among them are changing fuels technologies which will diminish the consumption of fossil fuels near-term. He went on to say, “We (TAA) are seeking proposals from firms that understand aviation, the technologies and regulatory environment, government, tax structures, other funding practices. Equally important is selecting a firm that has impeccable credentials and integrity. We are not seeking a political solution. The product of this effort will serve as a guide to stakeholders and our governmental leadership so that we can arrive at the best possible options for Tennessee.”
Tennessee’s 30-year old airports funding system was compromised in 2015 when a large user of aviation fuel in the state sought legislative relief that resulted in placing a “cap” the sales tax obligation of high volume users. The legislature established the cap at $10 million per year. It is important to note that since that time, fuel prices have plummeted and the 4.5% sales tax on aviation fuels has resulted in extremely low deposits into the Transportation Equity Fund (TEF), dedicated to development, improvement and maintenance of the state’s system of airports.
Included in the “cap” legislation was the formation of a Task Force to explore solutions to the resultant funding shortage anticipated to be between $20 & $30 million a year based upon fuel prices remaining the same. The Task Force met a number of times and reported to the General Assembly when it convened in 2016. The legislature then passed an Aeronautics Economic Development Fund measure, which has not yet been funded. The group also made other recommendations that are continuing to be studied.
When the 110th General Assembly convened in early 2017, another commercial user of aviation fuel filed a measure requesting a cap of $3 million/year arguing that it would make their financial planning more predictable. That filing has instigated widespread opposition from Tennessee’s airports, the administration and others including the user that received the higher cap in 2015. TAA strongly believes that the General Assembly should have the best a truly comprehensive understanding of this issue before it grants any more tax exemptions.
For additional information contact:
TENNESSEE AVIATION ASSOCIATION