New Mexico hailstorm highlights tax effect
Months after an October storm damaged every aircraft parked outside at Los Alamos Airport in New Mexico, owners are still making repairs, and forced to do so out of state. While the wind and hail quickly moved out, damage is still being done to the state’s economy by tax policy.
Local pilots told AOPA that as many as eight of the 18 aircraft based at the field sustained repairable damage (nearly all of the rest were total losses) when the powerful storm tore into the airfield. Aircraft owners have been forced to turn to out-of-state repair shops because of a tax-induced double-whammy: Maintenance and repairs done in the state are subject to a gross receipts tax of 5.125 percent (with additional local taxes optional); the tax has in turn prompted shops and mechanics to move to one of the many states that have acted in recent years to eliminate similar taxes. This leaves New Mexico owners who might want to complete repairs locally with few options.
J.P. Wilson owns Los Alamos Aircraft Maintenance, but the storm which left aircraft covered in dents was no windfall for him.
“All I’ve been able to do is look at them and shake my head and sign off on ferry permits,” Wilson said. “There’s no maintenance facility in this state that’s capable of doing this work.”
New Mexico has been losing jobs and revenue for some time. AOPA reported in 2012 on one mechanic’s journey from New Mexico to Maine, drawn by opportunity created when Maine repealed its once-notorious aircraft use tax. A&P mechanic Lee Bitsilly had been out of work for more than a year when Oxford Aviation, expanding its operation in Oxford, Maine, offered him a job.
The departure of Bitsilly and others like him has left New Mexico with a shortage of qualified mechanics and repair specialists, according to Wilson and local pilots. Wilson moved to New Mexico a decade ago and loves the climate (particularly because it effectively halts corrosion), but not the tax and business climate.
“I’m honestly even wondering if I’m going to stick around in this state,” Wilson said.
Will Fox, a CFI who teaches at Los Alamos, said the tax burden has increased “substantially” over the past decade, and he now pays a 7.3-percent gross receipts tax (including the optional local assessment).
“It doesn’t sound like much, but that’s a couple percent here and there, and pretty soon people aren’t flying,” Fox said.
AOPA continues to work with officials in New Mexico and other states to craft sensible tax strategies that benefit the aviation community and the economy as a whole.
January 17, 2013