APA Members Make a Difference!
Aviation Tax Increase Intercepted (SB1174)
By Mark Spencer
When someone asks me why they should be a member of the APA, I’ll have the perfect example to share with them. No other organization in Arizona was able to react as quickly as the APA and its members to alter the course of a very extensive and serious bill that appeared suddenly at this year’s legislature. No matter which organizations you are currently a member of; APA membership is a must if you are concerned about aviation Arizona!
On February 17th, the night before Aviation Day at the Capital, we learned of a strike-all amendment to SB1174 that was critically important to all of Arizona GA. A strike-all is when the language of a bill, after being submitted, is stripped of its original language and new language put in its place. This places the new language on sort of a short track through the legislative process. Things move fast in a legislature that only meets for around 100 days each year, and your APA had to move just as fast to understand this new bill and its potential effects, both positive and negative, on you, and get the word out.
As the bill was originally written, the entire aircraft registration and license tax fee system would change from a percent of aircraft value to a flat fee based on the type of aircraft you own. Currently Arizona assesses a license fee of 0.5% of the book value on all aircraft but experimental, homebuilt, antique, classic and warbird. This would mean that if your aircraft is valued at say $40,000, your annual license tax would be $200, at $100,000, it would be $500, and if you are in the big leagues, owning let’s say a small Gulfstream valued at $5.3M, you’d pay $26,500 each year. With the new flat rate proposed in this bill (see below) the aircraft owner with the $40,000 aircraft would have paid $50 more than before, the $100,000 aircraft owner paid $250 less, and the Gulfstream owner a whopping $23,500 less! The current flat rate on experimental, homebuilt, antique, classic and warbird aircraft would have gone from $20/year to $50/year. At the same time, all sales tax on aviation parts and avionics would be eliminated, but to make this bill revenue neutral, an increase of the tax on fuel was also proposed. For Jet fuel this would have gone from $0.0305/ gallon to $0.08 an on avgas from $0.05 to $0.10. The bottom line is that the many weekend flyers would have seen an increase in there cost to fly, while those usually able to distribute the costs of their flying through the price of their products or services would have received huge breaks.
Of course, we got the word out immediately to leadership at all EAA chapters in the state, as well as the AOPA and Classic Airplane Association of Arizona. The next day, while at the Aviation Day at the Capitol, we took the opportunity to meet with one of the bill’s sponsors to express our concerns. It was obvious that they were willing to compromise on certain aspects of the bill, but as I said, things move fast at the legislature and we felt it prudent to issue a call to action to all APA members, encouraging them to contact their respective senators and voice their potential concerns. The call was heeded and many of you made those calls or sent emails. Almost immediately we began hearing from legislators who offered assistance in either amending or killing the bill. In the meantime, negotiations continued and just a few days later a compromise was offered by the coalition supporting the bill, a compromise that would significantly alter it by removing any tax increases in the form of the new flat tax or tax on avgas, while leaving in the sales tax exemption, a $0.02 tax increase on business jet fuel, and extending the number of days that an aircraft can reside in AZ before becoming liable for the state’s registration tax. This amended offer was via e-mail, and we had not yet seen anything in a bill form when we learned that supporters had already put out their own call to action. To play it safe, we put out a targeted call to action and began contacting those senators on the appropriations committee ourselves. We received several affirmations that the bill would be killed as it had been written.
Just a few hours before that committee meeting, supporters sent us the new language, including all the changes we requested, and with this, we felt the bill was potentially good for all GA in Arizona. We issued an email statement, attaching the new language to the senators, and the bill passed out of the appropriations committee with the requirement that those changes be made in the Committee of the Whole, and that all stake holders meet in advance of the bill moving another step. Of course, there are still other groups, for example the airport association members, who may have issues that will be heard in the coming days.
Make no mistake, had the APA and its members not have moved as fast as it did, this bill might have sailed through the process unchecked. Thanks to all of you that headed our calls to action and did your part in being “The voice of general aviation in Arizona.”