AOPA seeks broader benefits from Michigan reforms

Association asks lawmakers to expand tax cuts to avgas

March 20, 2014

AOPA is asking lawmakers in Michigan to modify two transportation funding bills that fail to address the aviation community’s ongoing attempt to secure a long-term funding source for aviation infrastructure and provide tax relief to only a fraction of the statewide aviation industry. The association wants the lawmakers to ensure that the state’s aviation system has a steady source of revenue and expand proposed tax cuts on Jet A to include avgas as well.

On March 18, AOPA Regional Manager Bryan Budds testified before the Michigan House Transportation and Infrastructure Committee about the senate bills, SB415 and SB416, now making their way through the state legislature.

Michigan has been wrestling with ways to provide a steady revenue stream for its aviation system, including significant infrastructure needs. In 2013, AOPA supported legislation that would have reduced the tax burden on all aviation fuel and dedicated money from a new, lower tax to the state’s aviation fund. But with those measures off the table, the association is opposing the bills now up for debate because they do nothing to improve aviation funding and reduce fuel taxes only on Jet A.

In his testimony, Budds asked legislators to modify the bills in ways that will save pilots money while providing a reliable revenue source for the state’s aviation fund.

Without adequate state funding, Michigan could lose hundreds of millions of dollars in badly needed federal Airport Improvement Program grants if local matching funds are not available. And, unlike earlier bills, the new measures would allow taxes collected on aviation fuel to go into the state’s general fund, rather than the aviation fund.

In addition, while the current proposals would reduce the overall tax burden on Jet A, they would do nothing to reduce taxes on avgas. Michigan has the nation’s fourth-highest tax rate on aviation fuels, charging consumers both a 6-percent sales tax and a $.03 per gallon excise tax. Those high tax rates have driven business from the state as both Michigan-based and transient pilots purchase fuel across state lines whenever possible. While the bills now under consideration would reduce the sales tax on jet fuel from 6 percent to 4 percent, avgas users would continue to pay the higher combined sales and excise taxes.

“As written, we just can’t support these bills because they leave the state’s aviation system vulnerable and place an unfair burden on operators of piston aircraft,” said Budds. “But we believe that, with some adjustments, the legislation can be modified to better serve both the aviation community and all of the state’s residents, and that’s what we’re asking lawmakers to do.”

AOPA will continue to work with state legislators and aviation officials to find a solution that lowers the cost of flying, supports businesses, and ensures adequate funding to meet aviation infrastructure needs well into the future.

Elizabeth Tennyson

Elizabeth A Tennyson | Director of Government Affairs and Executive Communications, AOPA

Director of Government Affairs and Executive Communications Elizabeth Tennyson joined AOPA in 1998, the same year she earned her private pilot certificate. She also holds an instrument rating and enjoys jumping out of planes almost as much as flying them.