MTPR

One Cent Increase In Airline Fuel Tax Awaits Final House Vote

Apr 23, 2019

A new tax on airplane fuel is nearing a final vote in the Montana Legislature. In recent weeks a trade group for major airlines has fought against the bill in a social media campaign.

Montana lawmakers advanced House Bill 661 Tuesday on a 74-26 vote, approving amendments made by the Senate.

The proposal to increase the aviation fuel tax to fund maintenance at rural airports has been significantly scaled back since it was first introduced in March.

It initially called for raising the aviation fuel tax 10 cents per gallon, from the current 4 cents to 14 cents. However, the current form the bill would raise the tax a single cent per gallon.

John McKenna, a member of the Montana Pilots’ Association, says this will allow needed maintenance at small airports in the state to move forward. But, "There are still good projects that are going to go for wanting because just aren’t enough dollars."

According to the Montana Pilots’ Association, the state’s aeronautics grant program has come up $5 million short of funding requests since fiscal year 2015.

The trimmed down version of HB 661 cuts back the money the state could have generated for grants for rural airports from more than $4.5 million a year to around $1.5 million a year. Those dollars are used to leverage federal dollars for airport maintenance.

The Washington D.C. based Airlines for America spent $20,000 lobbying in Montana the month the bill was introduced, with the major aim of opposing the new aviation fuel tax. That’s according to a March financial disclosure report filed to Montana’s Commissioner of Political Practices. Disclosure reports for April have not yet been released.

Sean Williams, a vice president with Airlines for America says the tax increase would harm travel and tourism in Montana. He spoke during the bill’s first hearing in the House in March.

"House Bill 661 is bad for passengers flying in and out of Montana. Something has to give when there is a proposal like this that so drastically proposes to increase fuel taxes. Either fares will go up or service levels will go down."

Sen. Duane Ankney, a Republican from Colstrip, says the original 10 cent tax increase was just an opening offer. He asked lawmaker to support its amended version, including the 1 cent increase, before it passed out of the Senate last week.

"It’s 1 cent. And it hasn’t been raised since 1999. And this money is needed to keep these smaller airports, their runways, in good shape."

House Bill 661 latest version does not include its original request for new grants for aeronautics education with the aim of encouraging more people to go into careers in the industry.

One aspect of the bill that did remain in place is the removal of a 2 cent per gallon tax break for commercial airlines. 

The House is scheduled to take a final vote on the bill Wednesday.