Alaska’s fiscal crisis is again in the news. As oil revenues decrease, lawmakers struggle to make ends meet for almost 90% of the state’s operating costs. In January, the Alaska Aviation Advisory Board (AAB) passed a resolution supporting the Governor’s bill to increase motor fuel taxes to help cover the costs of maintaining the 240 airports operated by the state. This year’s bills call for a two-stage increase, which would result in rates of 14.1 cents per gallon for avgas, and 9.6 cents for jet fuel.  While larger than last year’s proposal, which was not adopted, these rates are still in the middle of the pack of what pilots in other states pay for fuel taxes.  If adopted, the total income from motor fuel tax and other revenue streams that support airports will cover about half the cost of operating the rural airport system.

Will our tax money go to aviation?
When the state collects motor fuel taxes, they are deposited into the state’s General Fund, which the legislators decide how to spend.  There has been a concern that our fuel taxes would go to programs other than aviation.  Last year, however, a separate account was established within the General Fund which treats aviation fuel tax money as a restricted fund, to be spent on airport maintenance and development.  Provisions in this year’s bill set up a similar situation for the other modes of transportation.

Is this the best way to support the aviation system?
Over the past year and a half the Aviation Advisory Board worked with DOT to evaluate options for supporting the rural airport system (excluding Anchorage and Fairbanks International Airports that are operated as an enterprise fund, which pays its own way). Landing Fees and an aircraft registration program were both explored. After looking at the details of these other options, both would cost more to implement, and make life more complicated for aircraft owners.  Consequently, the AAB again this year adopted a resolution to support the motor fuel tax bill.  Based on the AAB’s recommendation, AOPA, the Alaska Airmens Association and some other aviation groups have supported the Governor’s proposed legislation.

What is the impact?
If the proposed increase in motor fuel tax is implemented, what will it cost?  Adam White, Government Affairs Manager for the Alaska Airmens Association computed the potential costs for several different GA aircraft types, using 50 and 100 hours of operation per year. If you own aircraft in these categories, the increase in cost would range between $40 and $140 per year.

Type A/C Hours flown GPH Current Tax Proposed 2018 Tax Difference
$0.047 $0.141
C180/185 50 15 $35.25 $105.75 $70.50
C180/185 100 15 $70.50 $211.50 $141.00
C172 50 12 $28.20 $84.60 $56.40
C172 100 12 $56.40 $169.20 $112.80
PA18 50 9 $21.15 $63.45 $42.30
PA18 100 9 $42.30 $126.90 $84.60

 

Since 2015, DOT has reduced its operating budget by 62 million dollars which is a 22% reduction.  So far the impacts have been limited. Several highway stations have been shut down, and at least one airport will not get winter maintenance this year.  Several airports have been handed off from DOT to other entities.  DOT is also making changes that should allow them to better account for the levels of service they provide—measured in how long it takes to restore service after a storm, or how many hours a Part 139 airport is staffed to support operations.  It will take some time to find the right balance between services and revenues to keep this component of Alaska’s transportation operating. We must all watch closely as the Governor and Legislature work through these challenging times.