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Alaska considers increasing fuel tax

Alternatives proposed by the department include instituting landing fees at Part 139 airports, a statewide airport use fee, and increasing the state motor fuel tax.  

AOPA Alaska Regional Manager Tom George serves on the 11-member Alaska Aviation Advisory Board to represent general aviation users. The board has had several meetings with the Alaska DOT since February to examine different means of raising revenues, while minimizing the impact on aviation users, and rural residents who rely on the aviation system.

“While understanding that the aviation system needs revenue to operate, the board wanted to make sure that any increases were equitable, and didn’t just increase administrative costs, so that the money could go to operations and maintenance,” George said.

In an Oct. 28 letter to Alaska Gov. Bill Walker, the Alaska Aviation Advisory Board unanimously supported an increase in motor fuel tax, as opposed to the other proposed revenue sources.

“Alaska has one of the lowest motor fuel tax rates found anywhere in the nation,” George said. Alaskans pay 4.7 cents per gallon on avgas and 3.2 cents per gallon on jet fuel. The board recommended raising both rates to 10 cents per gallon, which, if adopted, is expected to raise about $9 million a year in additional revenue. The state currently collects about $4.6 million from aviation motor fuels, and $5.3 million from airport leasing, permits, and other fees. If the motor fuel tax is increased, it would bring total revenues from aviation sources to about $19 million. The costs to operate the state rural airports (excluding the international airports at Anchorage and Fairbanks) in fiscal year 2014 was about $34 million dollars. 

After considering the pros and cons of the different proposals, the Alaska Aviation Advisory Board felt that the motor fuel tax was the most equitable, and because it has an administrative process already in place, there would be no additional cost to the state. It also avoids creating any new user fees or administrative burden to the users.  Legislative action is required to change the tax rate.

“Any increase in the cost of flying is a concern to our members,” George said. “However given the financial situation the state is in, the increase in motor fuel tax appears to be the best choice to address the issue.”

The Alaska Aviation Advisory Board recommended that the fuel tax increase be rolled back if the price of oil reached $140 per barrel, and indicated that the increased revenues needed to be spent on airports as opposed to other parts of state government.

Because of the dramatically low price of crude oil, Alaska is facing a budget short fall in excess of $3 billion. Consequently, the state government is looking for ways to decrease services or find supplemental streams of revenue.

The Alaska Aviation Advisory Board has been working with the Alaska Department of Transportation and Public Facilities since February to consider different approaches to keep the almost 250 state-operated airports open. These facilities, along with a smaller number of municipally operated airports, represent the primary means of access to many communities in the state not served by the road network, in addition to enabling medevac, cargo, and other flights vital to the state’s economy.

Alaska DOT looks to restructure

The Alaska Department of Transportation and Public Facilities is considering internal changes in response to the budget situations.

One change would be to move the management of the Part 139 regional hub airports under the division of statewide aviation. This would steamline operation of the airports, currently managed under a regional structure, and could result in cost savings.

“The aviation community has been asking the Alaska DOT to create a true division of aviation for many years,” said AOPA Alaska Regional Manager Tom George. “The Alaska Aviation Advisory Board supports moving in this direction.”

Topics: Taxes, Advocacy, Alaska

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