Brief(1)
H.B. 2737, as amended, would impose a $.06 per gallon tax on aviation fuel beginning July 1, 1998. Receipts from the tax would be credited to the Public Use General Aviation Airport Development Fund within the Kansas Department of Transportation (KDOT) and used to provide grants to public use general aviation airports. The bill would clarify that the sale or delivery of gasoline, special fuels, and aviation fuels to retail dealers located on an Indian reservation in Kansas is tax-free only if the fuel is sold or delivered to a member of that reservation. Finally, the bill exempts from taxation the sale or delivery of aviation fuel to a public utility for consumption or movement directly and immediately in the course of interstate commerce.
Background
Conferees who testified in support of the bill included Representative Dennis McKinney, the City Manager of Kingman, the President of the Kansas Association of Airports, and the Executive Director of the Kansas Agricultural Aviation Association.
The Secretary of KDOT urged the Committee to defer action on the bill and consider the issue in a future Comprehensive Transportation Program. He pointed out, among other things, that the bill would not generate enough revenue to meet the needs of public use general aviation airports.
The Committee amendment removes "aviation gasoline" from the definition of "motor fuels" and defines aviation fuel separately.
KDOT estimates that H.B. 2737 would reduce funding to the State General Fund by $500,000 because the fuel would no longer be subject to the general sales tax. The Department also estimates that the bill's taxation of aviation fuel as motor fuel would provide $658,000 in FY 1999 and $718,000 in following fiscal years for the Public Use General Aviation Airport Development Fund. The estimate assumes that none of the sales are to common carriers which are exempted from the tax.
The agency indicates that expenditures equaling revenue from the fund would be made in FY 1999 and subsequent fiscal years to provide airport improvement grants.
K.S.A. 79-3606(a) exempts motor fuels and other items subject to a state excise tax from the sales tax. If aviation fuel is taxed under the Motor Fuel Tax Law (K.S.A. 79-3401), it would no longer be subject to the state's sales tax.
KDOT reports that in Kansas the only nonlocal assistance for airport improvements is provided by the Federal Aviation Administration's (FAA) Airport Improvement Program (AIP). In fiscal years 1994-1996, the program assisted nine (of 137) general aviation airports with capital improvement projects. The small number of general aviation airports receiving grants is attributable to the FAA's priority system and the scope of projects it will fund. The FAA's airport improvement policy focuses on capital improvements and does not fund maintenance. In addition, federal funds available for general aviation airports have steadily declined because of reductions in AIP funding and because of policy decisions favoring larger airports. The Kansas Aviation Systems Plan has identified a need of $108 million in general aviation airport improvements to meet FAA's standards.
K.S.A. 75-5061(d) defines a public use general aviation airport as any airport available for use by the general public for the landing and taking off of aircraft, but shall not include any airport classified as a primary airport by the FAA.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.