Delta Air Lines. KENT D. JOHNSON /kdjohnson@ajc.com

Georgia Senate seeks to hike jet-fuel taxes on Delta, other airlines

Delta Air Lines just can’t seem to catch a (tax) break from the Georgia General Assembly.

Last session, lawmakers nixed a proposed break on jet-fuel taxes — which would have saved Delta $40 million a year — after the airline broke marketing ties with the National Rifle Association following a Florida school shooting.

About two weeks after the Georgia House overwhelmingly approved a 20-year exemption on state jet-fuel taxes — a measure backed by Gov. Brian Kemp — a key Senate committee on Wednesday moved instead to impose a big excise tax on fuel that Delta and other airlines use.

In addition, they tied what was once a tax-break bill to a proposal already approved by the Senate — and opposed by Delta’s CEO — to create an authority to oversee Hartsfield-Jackson International Airport.

The rewritten legislation was sold to the Senate Finance Committee, which approved it 5-4, as a way to greatly increase the amount of money the state spends to improve about 100 small-town airports across Georgia.

“Aviation infrastructure in our state is very important for a multitude of different reasons, rural economic development being paramount,” said state Sen. Tyler Harper, R-Ocilla, who proposed a 10-cents-per-gallon excise tax on aviation fuel, including jet fuel. The measure would also allow local governments to impose a 1 percent sales tax on aviation fuel.

Harper said the excise tax would raise about $120 million a year, which still wouldn’t be enough to meet all the needs of rural airports.

“We have very good aviation infrastructure currently, but there are some issues, and we’ve got to address those,” Harper told colleagues.

Opponents of the move, including Delta officials, said if approved, the new taxes would make Georgia less competitive with other states that have lower or no jet-fuel taxes.

“This legislation could create the highest effective rate in the nation. Going from zero to the highest,” said state Rep. Dominic LaRiccia, R-Douglas, a floor leader for Kemp.

Delta spokesman Trebor Banstetter said the company applauded Kemp’s original proposal to “keep the state of Georgia competitive in global aviation by reducing sales taxes on jet fuel.”

But he added, “The changes to the legislation today by the Senate Finance Committee would have the exact opposite effect as the governor’s proposal.

“By doubling the tax rate that airlines pay in the state of Georgia and making Georgia the highest jet-fuel tax state in the country among states with hub airports, it would make the state less competitive and give commercial aviation reason to grow somewhere other than the state of Georgia.”

The measure could be voted on by the full Senate in coming days.

The bill is seen as an attempt to force movement on the airport authority legislation, which is in the House and hasn’t come up for a vote. Such late-session brinkmanship is common in the General Assembly, which is supposed to leave town April 2.

The House is unlikely to go along with the jump in taxes for Delta and other airlines, even if the bill passes the Senate. Kemp’s floor leader is sponsoring House Bill 447 — which would suspend jet-fuel taxes for 20 years. And Delta’s team of lobbyists includes the son of House Speaker David Ralston, who has strongly endorsed the tax cut on jet fuel.

Earlier this month the Senate passed a stand-alone bill, Senate Bill 131, to create a state airport authority to run the Atlanta airport.

State senators have said amid a federal investigation into corruption at Atlanta City Hall, they want to protect the state’s economic engine from mismanagement.

Atlanta Mayor Keisha Lance Bottoms and other city and airport officials have voiced staunch opposition to a state takeover of the airport.

Kemp has not yet taken a formal stance on the airport takeover issue and has said he’s watching the process.

While the state has pushed for control of the Atlanta airport for decades, this year is the first time such an attempt has gotten this far in the Legislature, fueled by charges against former Atlanta city officials and a shift in city-state relations.

City officials have said there are barriers that could block a state takeover, including Federal Aviation Administration policy and language in airport bond documents and Delta’s lease. The matter will likely end up in court if the General Assembly passes the authority bill.

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 after Delta broke ties with the NRA, 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, and then he signed an executive order suspending collections of the state portion of the tax. The General Assembly backed the executive order and tax break — through June 30 — during a special session last fall.

Kemp’s proposal this year would keep the suspension but include a small excise tax on fuel that would raise $3.5 million to $4 million a year. The money would be used as a local match to obtain federal funding, which would be spent on small-town airports.

LaRiccia said the Senate Finance Committee passed the new version of the bill Wednesday without an official estimate — called a fiscal note — of how much it would cost airlines and other users of aviation fuel. Harper’s projection of how much it would raise was an estimate. LaRiccia said he didn’t see the Senate Finance proposal until an hour before the meeting, and that taxing the fuel airlines use would be bad for the state’s economy.

“Input cost taxes will drive businesses out of this state, rather than into it,” LaRiccia said.

But state Sen. Bill Heath, R-Bremen, a member of the committee, said Delta and other airlines have had tax breaks off and on for several years without their customers seeing an obvious benefit.

“Through this whole period of time when there have been exemptions on jet-fuel taxes, there has been no reduction in ticket prices,” Heath said. “That has been added to the bottom line of a few select (companies).”

Support real journalism. Support local journalism. Subscribe to The Atlanta Journal-Constitution today. See offers.

Your subscription to the Atlanta Journal-Constitution funds in-depth reporting and investigations that keep you informed. Thank you for supporting real journalism.

X