The state has told jet fuel vendors that as of July 1, they shouldn’t collect most local sales taxes on their product.
The move could save air carriers such as Delta Air Lines, cargo companies and others about $20 million a year in fuel taxes.
Gov. Nathan Deal and the General Assembly allocated about $29 million in this year’s budget to fund grants to make up the difference for local governments, such as Clayton County, on SPLOST sales taxes that go for parks, roads and other projects when approved by voters.
The move comes three months after lawmakers killed a broader fuel tax break after Delta ended a discount program for National Rifle Association members. Delta made the announcement a few weeks after a mass shooting Feb. 14 at a Florida high school.
The state’s announcement also comes on the heels of an 11th U.S. Circuit Court of Appeals decision to dismiss a lawsuit by Clayton to uphold airport fuel tax collections that the Federal Aviation Administration questioned.
Clayton and its school district split $18 million annually from fuel taxes levied on the Atlanta-owned Hartsfield-Jackson International Airport, which is located in the county. But the FAA last year indicated it could begin enforcing a policy it upheld in a 2014 decision prohibiting the use of taxes collected at an airport for any purpose other than for the airport.
The Georgia Department of Revenue put out its announcement that it was ordering vendors not to collect most local sales taxes on jet fuel around 4 p.m. Friday. Politicians and government agencies often release controversial decisions late on Friday to limit publicity.
“Today’s action ensures that Georgia will be in compliance with federal regulations and avoids the possibility of significant sanctions both on the state and local jurisdictions,” Revenue Commissioner Lynne Riley said.
“The department is taking this action to preserve the tens of millions of dollars of annual federal airport assistance,” she said.
The Deal administration predicted earlier this year that Clayton would have a hard time winning its legal case with the FAA, and it was keen to include money in the budget to offset at least part of the county’s potential losses.
Deal had proposed early in the 2018 session that the state reinstitute a state and local sales tax exemption on jet fuel, which would have saved airlines, cargo companies and others more than $50 million a year. Delta would have been by far the biggest beneficiary.
However, once Delta broke with the NRA, Lt. Gov. Casey Cagle, a leading Republican candidate for governor, promised to kill the exemption. He found heavy support among GOP lawmakers, who hold an overwhelming majority in the General Assembly and generally support the NRA’s positions.
In the latest move, the state will pay local governments the fuel tax money that would be going to local-option sales tax projects.
Any sales taxes approved before Dec. 30, 1987, would still be collected on jet fuel, as would the state sales tax. For many counties, that would cut the local rate on jet fuel to 1 percent. Clayton would have no local sales tax on jet fuel.
Attempts to reach Clayton County Commission Chairman Jeff Turner after the Revenue Department’s announcement were unsuccessful.
Delta spokesman Trebor Banstetter said the company will mitigate the loss of sales tax funds to schools.
“Delta is making a pledge of voluntary contributions to offset the impact of the revenue loss and help ensure the funding of existing education projects,” he said.