Task force unclear on funding airports after FedEx tax break

Task force unclear on funding airports after FedEx tax break

This is the second of a three-part series about a special tax break state officials gave FedEx last year. Part One is available here.  

In two to three years, Tennessee’s 79 airports will likely suffer a major loss in funding because of a special tax break on jet fuel, which state officials bestowed on FedEx last year.

The money paid by FedEx operating out of Memphis went into what’s called the state’s Transportation Equity Fund.

But no one can say with certainty whether alternative funding is on its way or, assuming it is, from where that money is coming. They also can’t say why it’s OK to give FedEx a tax break but, at the same time, not lower taxes for everyone else in Tennessee who pays for jet fuel.

As reported, FedEx officials didn’t like a state law that required them to pay taxes to help maintain those 79 airports. They lobbied for a tax break — a $10.5 million cap on the amount of jet fuel they pay — which state officials granted last year.

John Black (photo courtesy of LinkedIn)

John Black (photo courtesy of LinkedIn)

Tennessee officials then formed a task force composed of 15 members, including state legislators, business owners and people from the aviation industry, among others, to find alternative funding.

Their suggestions thus far include making airport users pay new taxes or redirecting other tax revenue to Tennessee’s Department of Transportation. Task force members created an economic development fund to collect money for airports, but TDOT spokeswoman B.J. Doughty said the fund has no money.

Larry Mullins, one of five commissioners on Tennessee’s Aeronautics Commission, said he and his colleagues hear nothing about the task force’s progress.

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“They don’t ask us or tell us anything,” Mullins said.

Commissioners are tasked with advising state officials about all things aviation.

Rep. Mark White, R-Memphis, who helped push for the FedEx tax break, said he didn’t know the latest news about what progress task force members may have made. He said he would call state officials to find out.

Tennessee Watchdog asked Smyrna/Rutherford County Airport Director John Black, who is on the task force, about where money for the economic development fund would come.

Randy Boyd (photo courtesy of the Tennessee Department of Economic and Community Development)

Randy Boyd (photo courtesy of the Tennessee Department of Economic and Community Development)

“That is a question mark,” Black said.

“We don’t know.”

Black did say he and other task force members might charge an environmental tax on airports to help pay for airport maintenance needs.

Jo Ann Speer, who manages the Everett-Stewart Airport in Union City and serves on the task force, said her colleagues are also considering a 1 percent tax on petroleum.

Tennessee Economic and Community Development Commissioner Randy Boyd chairs the task force, which has met three times between October 2015 and January 2016, Doughty said.

The task force suggested three other ideas. They include converting the aviation fuel tax from a percentage tax to a cents-per-gallon tax, creating a revolving loan fund and redirecting aviation-related sales and use tax revenue, Doughty said.

When asked why the state can’t just lower jet fuel taxes for everyone, Mullins said “it depends on who wants to come to our state and will it bring more people in?”

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White, meanwhile, said it’s something he and his colleagues in the legislature may examine in the future.

As reported, the state’s jet fuel tax is 4.5 cents a gallon. The revenue from that tax goes to the state’s 79 airports, many of which are small, in rural areas and cater to business people who fly in on private jets.

Mark White (photo courtesy of the Tennessee General Assembly)

Mark White (photo courtesy of the Tennessee General Assembly)

Some of the people who run those airports rely on the money for maintenance and lighting needs, among other things. The state, airport officials say, quickly pushed the tax break through but failed to consult with airport officials.

In 2014, FedEx paid $32 million of the $48 million in jet fuel taxes the state received.

Last year, Doughty said, the state collected $35.7 million and has collected $24 million so far this fiscal year. She said the decrease in revenue is due to a decrease in fuel prices.

White said FedEx pays 75 percent to 80 percent of what goes into the Transportation Equity Fund, and company officials thought they were treated unfairly.

Tennessee, as reported last year, charges a higher tax on aviation fuel than most surrounding states.

Contact Christopher Butler at chris@tennesseewatchdog.org 

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