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Bill to raise aviation fuel tax opposedBill to raise aviation fuel tax opposed

Some unspent trust fund proceeds would go to state general fundSome unspent trust fund proceeds would go to state general fund

AOPA has notified a New Mexico legislative committee and other officials that two bills that would increase aviation fuel taxes and tap some of those proceeds for nonaviation purposes could place the state in conflict with federal grant guarantees.

On Feb. 19, the New Mexico House Transportation and Public Works Committee sent an amended version of House Bill 262 to the Ways and Means Committee .

The bill provides that starting in July 2016, aviation gasoline would be taxed at 19 cents per gallon, up from 17 cents, plus a price-index formulation past 2016. Also at that time, jet fuel, now taxed at 21 cents a gallon, would be taxed 23 cents plus the "chained price index" in the future.

"In addition, a reduced percentage of gasoline tax revenue for the State Aviation Trust Fund would be an adverse effect of the legislation. Currently, 0.26 percent of that is dedicated to aviation and on July of 2015, it would be reduced to 0.23 percent," wrote Yasmina Platt, AOPA Central Southwest regional manager, in a letter to Cathrynn Brown, chair of the House Transportation and Public Works Committee.

"If the tax rate is increased, the proceeds going to aviation accounts should increase as well," Platt said.

Platt expressed AOPA’s concern that the legislation also would place New Mexico at odds with FAA requirements that "airport operators that have accepted federal assistance can only use airport revenues for the state aviation program or airport-related purposes."

"While New Mexico currently meets that requirement, HB 262 would change that because the additional taxes collected from aviation fuel would not be dedicated back to the State Aviation Trust Fund, thereby foregoing millions of aviation generated federal dollars, which create significant economic impact and support good jobs for New Mexicans.

"And, just as important, it would lead to a decline in the safety and usefulness of the state’s airports," she wrote.

Another newly introduced bill, House Bill 209, could also place the state in conflict with federal grant guarantees, Platt said. The measure would require that 20 percent of "leftover" proceeds from special accounts such as the aviation trust fund revert to the state’s general fund at the end of the fiscal year.

Platt also pointed out that a favorable tax environment "is a critical factor in stimulating aviation activity within the state." Imposing additional taxes on "an industry that is already highly regulated and taxed" would have an opposite effect, she added.

Dan Namowitz

Dan Namowitz

Associate Editor Web
Associate Editor Web Dan Namowitz has been writing for AOPA in a variety of capacities since 1991. He has been a flight instructor since 1990 and is 30-year AOPA member.
Topics: Taxes, Advocacy, Financial

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