TN airports may lose money after FedEx gets big tax break

TN airports may lose money after FedEx gets big tax break

This is the first of a three-part series about a special tax break state officials gave FedEx last year.

FedEx pays taxes on jet fuel to help maintain 79 airports around the state, according to Tennessee law.

But the company didn’t like the law and lobbied for a tax break, which state officials granted last year.

As Tennessee Watchdog reported last year, a $10.5-million cap will be placed on the amount of aviation fuel tax FedEx will pay. The money goes to the state’s Transportation Equity Fund.

No other airline in the state comes close to paying what FedEx does, The Commercial Appeal of Memphis reported.

Larry Mullins (photo courtesy of Facebook)

Larry Mullins (photo courtesy of Facebook)

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 businessmen and women who fly in on private jets.

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 the airports.

Bob Mullins is one of five commissioners on Tennessee’s Aeronautics Commission tasked with advising state officials about all things aviation.

He was blindsided by the move.

“I’m just one little bitty pee in a big old pod, but I will say no commissioner was consulted in this decision-making that I’m aware of, not one, as far as how it would affect the state of Tennessee,” Mullins said.

“We didn’t even know about it until two weeks before it happened.”

Jo Ann Speer, who manages the Everett-Stewart Airport in Union City, said state officials never spoke with her about how the tax break would affect airport operations.

John Black of the Smyrna Airport said a lot of companies, if not immediately impressed, will avoid an area and its airport.

Mullins said less money means smaller airports can’t spruce up their facilities in regard to repaving, resurfacing and drainage.

Mark Norris (photo courtesy of the Tennessee General Assembly)

Mark Norris (photo courtesy of the Tennessee General Assembly)

“Who wants to land a $10 million airplane at an airport that has that happening to it?” Mullins asked.

“The airport system won’t be able to do anything but mow grass because we won’t have the funds we need.”

Mullins said one airport, which he would not identify, is already in a state of limbo with its maintenance needs because of the cuts, which he expects will hit hardest in about two years.

State Sen. Mark Norris, R-Collierville, helped push through the tax break and did so, he says, at the behest of Republican Gov. Bill Haslam’s office.

Haslam spokeswoman Jennifer Donnals, in an emailed statement, said the governor did not take a position on the matter.

Regardless, Norris said this week, “the communications and the work with airport stakeholders have been after the fact.”

Tennessee Department of Transportation spokeswoman B.J. Doughty would not comment on Mullins’ and Speer’s comments.

As reported 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 thus far collected $24 million this fiscal year. She said the decrease in revenue is due to a decline in fuel prices.

“Fuel usage has continued to be steady,” Doughty said in an emailed statement.

“As a result, project prioritization has largely focused on safety and maintenance projects. In past years with higher fuel prices and larger revenue collections, prioritization has permitted a greater level of modernization/expansion projects.”

State Rep. Mark White, who also pushed for the tax break, said FedEx pays 75 percent to 80 percent of what goes into the Transportation Equity Fund.

Mark White (photo courtesy of the Tennessee General Assembly)

Mark White (photo courtesy of the Tennessee General Assembly)

“They said they felt like they were being treated unfairly,” White said.

“The burden is on one company.”

When asked for comment, FedEx spokesman Jack Pfeiffer referred to a letter the company’s Executive Vice President Christine Richards wrote to The Commercial Appeal last year.

“Less than a third of the tax paid by FedEx is returned to Memphis International Airport,” Richards wrote.

“The remainder is distributed to and subsidizes large airport operations and general aviation airports across the state. The users of these airports should have to bear the real cost of these facilities.”

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

FedEx employs about 36,000 people in Memphis.

Contact Christopher Butler at chris@tennesseewatchdog.org 

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