Georgia agency rules temporary tax break for Delta is really permanent

Delta Air Lines. KENT D. JOHNSON

Delta Air Lines. KENT D. JOHNSON

Around this time last year state lawmakers met in a special session to pass storm relief legislation for South Georgia farmers and what they were told was a temporary tax break for air carriers such as Delta Air Lines.

But after reviewing that legislation, the Department of Revenue on Wednesday ruled the jet-fuel tax break — worth about $35 million a year, mostly going to Delta — isn’t so temporary.

Despite the fact that lawmakers were told the tax break only ran through June 30 of this year, the Revenue Department said wording in the legislation made it clear the taxes are suspended “indefinitely.”

That likely surprised many lawmakers, who battled unsuccessfully for hours — until the final minutes of the 2019 session — to pass legislation to make the suspension of state jet-fuel taxes permanent. They apparently had already done so, the department ruled.

The Revenue Department published the ruling Wednesday with little fanfare. Earlier this year the agency posted a friendly reminder that airlines and others using jet fuel would have to begin collecting the tax July 1. The latest ruling came after the Revenue Department was asked "for guidance" in applying the law.

A spokesman for House Speaker David Ralston, R-Blue Ridge, said the speaker wanted to review the Revenue Department ruling before commenting. Other Republican leaders said they didn't want to comment.

Georgia Senate Minority Leader Steve Henson, D-Stone Mountain, said the agency's interpretation of the law is wrong, and he's asked for a legal opinion from the Office of Legislative Counsel.

“It is clear the legislative intent was for there to be a stop date,” Henson said. “I think the Legislature is going to address this during the next session. Clearly the Department of Revenue didn’t read the full bill because the Legislature did not intend on it continuing after July 1.”

Delta spokeswoman Lisa Hanna said, “We agree with the Georgia Department of Revenue’s assessment of the law and believe this will allow Georgia to remain a top state in which to do business, attract more companies and provide more jobs for our growing population.”

Delta, the largest private employer in metro Atlanta, has lobbied hard the past few years to get the tax break, saying other states had little or no taxes on jet fuel and that Georgia was at a competitive disadvantage.

The tax break on jet fuel was initially approved in the mid-2000s when Delta was in financial trouble. It was renewed every few years before the company’s CEO ran afoul of lawmakers in 2015.

Then-Gov. Nathan Deal tried to bring it back last year, only for it to pass the House and stall in the Senate when Delta broke ties with the National Rifle Association, a political no-no, particularly in a year when Republicans were set to battle it out for the party's nomination for governor.

Deal responded after the 2018 session by having the state stop collecting the local portion of the tax on July 1, 2018, and then he signed an executive order suspending collections of the state portion of the tax.

During the November 2018 special session, Delta sent in a team of lobbyists to push for the tax break. The General Assembly backed the executive order and tax break but said it only ran through June 30, 2019. At that time, lawmakers sold it as a "tax cut" for consumers, even though Delta never promised to lower fares.

The special session legislation — which passed the House and Senate overwhelmingly — included a line that read, “The General Assembly of Georgia hereby continues such suspension of collection indefinitely.” That led to the Revenue Department’s ruling Wednesday.

Thinking that the tax break ended June 30, Delta and other airlines put on another big lobbying push during this year's legislative session to get the tax break renewed. Gov. Brian Kemp, who replaced Deal in January, proposed a 20-year exemption and a small excise tax to be used as matching money to attract federal funding for projects at small airports, such as runway resurfacing. However, the legislation didn't pass, in large measure because rural lawmakers wanted much more money to improve small-town airfields.

Wednesday’s ruling could mean another legislative fight when lawmakers return in January. While some Republican leaders would like the Revenue Department’s decision to stand, other lawmakers are likely to seek legislation setting a time limit on the tax break.

The Atlanta Journal-Constitution reported last month that Delta had a record $1.5 billion profit in the third quarter of the year thanks to the busiest summer travel season in the company’s history.