Proposal 1 Failure – Not Just Roads!
With the failure of Proposal 1, Michigan roads are again our transportation focus. But while we’ve all worried about this crumbling infrastructure and the solutions to fix it, other transportation modes have been held hostage – bargaining chips for any proposal to fix the state’s deteriorating road system.
Aviation is a critical part of the overall transportation network that serves our business and tourism industry. Aviation provides more than $20 billion to Michigan’s economy. Yet, the transportation funding for airports is outdated and does not provide the resources to keep airports open. Sound like the same issue roads are having? Well, it is! Our leadership in Lansing has not keep up with infrastructure for airports either. Airports in Michigan believe that the state will not be able to support their mission for matching the federal Airport Improvement Program grants this year. That will be a loss of $100 million plus grant dollars per year to Michigan’s airports.
Michigan taxes on aviation are some of the highest in the country, something we hear all of the time from our airlines and general aviation users. Michigan has a tax structure that does not meet Federal Aviation Administration (FAA) revenue diversion standards as Proposal A diverts sales tax revenue on aviation fuel. Proposal 1 would have done the same. The FAA has put states and airports on notice that we could lose our Federal Grants if this is not corrected.
Why is there not enough revenue? In 1929, Michigan passed a $.03 per gallon tax on aviation fuel. This tax was unchanged until 1945, when it began a refund program of $.015 per gallon for interstate airline flights. The use of fees for aircraft registration, licensing and permits for airports and the parking tax at Detroit Metro Airport have been the backbone of supporting our system. Meanwhile, the sales tax revenue from aviation goes to support other state programs, leading to a tax structure not competitive with other states.
The state’s budget for the aviation system is in need of $28 million annually. Aviation generates nearly $54 million in tax revenue. Why can’t aviation support aviation? Revenue diversion! Aviation is too valuable in supporting other state programs.
We must find a long-term solution that provides the funding to match federal grants or risk losing those dollars. Forcing the capital improvements cost of airports back on the local communities is not a reality we can endure. Many communities already use local taxpayer dollars to support the operation and maintenance of the airport. Cherry Capital Airport does not receive local taxpayer dollars, however, if grant funds are lost Cherry Capital Airport’s self-sufficiency would come into question.
Aviation leaders have suggested many different funding alternatives, but a solution Lansing can agree on is far from reach. No one likes to give up revenue from programs, no one wants more taxes – but to lose airports is a loss of economic development for communities. We have to remember what programs provide the maximum return on investment for our taxpayers. The Michigan Aviation System provides that return on investment, we just have to have the dollars generated by the users of the system return to the system.
Aviation investment in Michigan ensures future generations will enjoy the benefit of a strong and viable transportation system. As many have said, “One mile of road takes you one mile; one mile of runway takes you to the world!”
Kevin Klein is the director of Cherry Capital Airport in Traverse City.