Legislature(2007 - 2008)CAPITOL 17
04/12/2007 01:30 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB185 | |
| HJR18 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 185 | TELECONFERENCED | |
| * | HJR 18 | ||
HJR 18-OPPOSE FED AVIATION FUEL TAX INCREASE 2:09:21 PM CHAIR JOHANSEN announced that the final order of business would be HOUSE JOINT RESOLUTION NO. 18, Opposing the enactment of the provisions in the Next Generation Transportation System Financing Reform Act of 2007 that increase aviation fuel and aviation gas taxes. REPRESENTATIVE NEUMAN made a motion to adopt CSHJR 18, Version 25-LS0830\C, Kane, 4/10/07, as the working document. There being no objection, Version C was before the committee. 2:09:41 PM SONIA CHRISTENSON, Staff to Representative Johansen, Alaska State Legislature, provided the following testimony: HJR 18 is a resolution opposing the enactment of the provisions in [Federal Aviation Administration] FAA's Next Generation Air Transportation System Financing Reform Act of 2007 [Next Gen] that imposes air traffic control user fees and increases aviation fuel and aviation gas taxes. ... As you all know, because of Alaska's unique geography and limited road access, Alaska depends heavily on aviation for transportation, medical needs, mail distribution, recreation, and supplies and goods. With the aviation fuel and aviation gas tax increase, FAA's legislation, ... also called "Next Gen," will make flying much more expensive for Alaskans and increase the price of shipping goods and supplies. With the FAA legislation, air traffic control user fees will decrease the Congressional role in determining FAA spending. This gives more power to the FAA to make decisions for all airports, not taking into consideration Alaska's special needs, and favoring the needs of larger airline hubs. 2:11:04 PM REPRESENTATIVE NEUMAN asked whether there has been any contact with Alaska's Congressional delegation on this matter. MS. CHRISTENSON replied no, although she said that she has read that Alaska's Congressional delegation has yet to comment on it. REPRESENTATIVE NEUMAN inquired as to the economic impact of the Next Gen legislation on Alaska. He noted that although this would impact a large number of small airplanes, it would also impact the Ted Stevens International Airport. MS. CHRISTENSON indicated that she could research that. CHAIR JOHANSEN announced that he doesn't intend to move HJR 18 at this time. 2:13:08 PM WILFRED RYAN, President, Alaska Air Carriers Association (AACA); President, Arctic Transportation Services, explained that the Alaska Air Carriers Association represents a diverse group ranging from single pilot operators to [Federal Aviation Regulations] FAR-Part 121 regional and national carriers. The AACA objects to the concept of the Next Gen, especially in regard to expanded user fees. He highlighted that the industry already pays skill taxes, passenger ticket taxes, and freight taxes. Mr. Ryan informed the committee that the Next Gen also eliminates the current passenger ticket and freight tax and implements a fee associated with the use of the Federal Airway System and communications network. Additionally, part of the federal proposal removes Congressional oversight of the FAA. Mr. Ryan then related that the AACA objects to any change that grants the FAA independence from Congress. He suggested that the resolution should be amended to reflect the position of the Alaska Air Carriers Association, consistent with the opinions of its membership. The aforementioned requires more time, and therefore he recommended that the resolution remain in committee until the AACA fully develops amendments to the resolution that appropriately address the issues. 2:15:09 PM REPRESENTATIVE FAIRCLOUGH asked if there is a deadline for responding to the federal legislation. MR. RYAN related his understanding that [AACA] has through the end of this month, and perhaps into May, to draft positions on the federal legislation. REPRESENTATIVE FAIRCLOUGH highlighted that the Alaska State Legislature should have completed its session by mid May. Therefore, if the resolution is held in committee, the state won't be able to comment on the matter. She related her concern with regard to the Next Gen, but expressed her hope that AACA could forward its objections within the next two weeks otherwise the state will forego its opportunity, as a legislature, to comment to Congress. She suggested that perhaps if AACA has further objections, those could be addressed as the resolution moves through the process. She then asked if AACA objects to anything in the current version of HJR 18. MR. RYAN related his understanding that Congress is willing to move forward on the Next Gen on May 10th. He then noted his agreement that HJR 18 needs to move quickly through the House. He said that it would take no more than a week to suggest amendments to HJR 18. Mr. Ryan clarified that the committee needs to understand that while the user fee impacts the single pilot and the small 135 operators, it benefits the large 121 regional national carriers. He related that AACA would be comfortable moving HJR 18 forward with a few amendments. REPRESENTATIVE FAIRCLOUGH said that she didn't oppose waiting one week. She then requested clarification regarding the initial concern with moving HJR 18 forward. MR. RYAN explained that the original HJR 18 only addressed the fuel tax user fees. While AACA is opposed to the increase on fuel tax fees, it must take care that AACA's entire membership benefits. Therefore, AACA is attempting to find a balance between the new taxes imposed on single pilot operators and small on-demand charter organizations along with the benefits created for some of the larger main line operators. The AACA would like to add language to address the fees associated with the air traffic control system to which AACA disagrees. Furthermore, AACA objects to the elimination of Congressional oversight of the FAA. REPRESENTATIVE FAIRCLOUGH requested that further information regarding how the higher level companies will benefit be emailed to her. MR. RYAN explained that passengers pay a 7.5 percent excise tax on every ticket purchased. The regional and national carriers operate long-haul routes with high-cost tickets. For example, 7.5 percent on a $1,000 roundtrip ticket amounts to $75 in excise tax. The proposed fuel tax reduction for those carriers benefits the large carriers tremendously. Currently, small operators and 135 on-demand tour operators don't pay any tax associated with the carriage of passengers, and thus they face a quadruple increase. Therefore, AACA is attempting to find a balance between the two groups. 2:21:46 PM REPRESENTATIVE NEUMAN inquired as to the meaning of 121 and 135 carriers. MR. RYAN explained that 135 carriers operate with airplanes of less than 10 passenger seats while 121 carriers operate with more than 10 passengers seats. 2:22:33 PM ANDY CEBULA, Executive Vice President, Government Affairs, Aircraft Owners and Pilots Association (AOPA), began by informing the committee that the Aircraft Owners and Pilots Association represent more than 411,000 pilots across the country and over 4,200 pilots in the State of Alaska are members. Mr. Cebula highlighted concerns with Next Gen, including the tax increase, the imposition of user fees, and the loss of Congressional control and oversight of the FAA. There are also cuts in federal investment in airports. In regard to the tax increase, he explained that the initial increase would be $.50 per gallon and could increase further. He then informed the committee that on average over the last two years the price of aviation gasoline has increased by $.68 per gallon. Therefore, this proposed tax would add an additional $.50. Mr. Cebula noted that there is already a drop in aviation fuel sales as a result of the price increase. In fact, the sale of aviation gasoline reached a five-year low last year. More importantly, 80 percent of the members of AOPA have stated they will reduce their flying if this tax is implemented. MR. CEBULA then turned to the user fees. Although currently the user fees aren't a well-defined proposal, the FAA wants to target large and small commercial operators with fees on their use of the air traffic control system, he explained. In some areas, primarily around large cities, general aviation would be affected. At this point, there is no city in Alaska that would be impacted for general aviation flights, although many commercial operators would be impacted. Mr. Cebula related, as has been observed in other countries, once a federal bureaucracy has the authority to impose user fees, it will only expand that authority. Therefore, he fully expected that the fees charged will be increased as well as the scope of what they will be charging for the fees. The federal legislation gives the FAA the ability to unilaterally raise fees. The only appeal is to the U.S. Department of Transportation, which results in very little oversight, he stated. Mr. Cebula opined that it's not in the state's best interest for aviation and the community to have bureaucrats in Washington, D.C., making decisions without the oversight to ensure the state's needs are met. In regard to the airport spending side, the desire is to cut the overall investment in airports by $1 billion, which would eliminate some of the entitlements for the smallest airports in Alaska. The aforementioned would also reduce the rate of the entitlements for other general aviation airports in the state. He opined that the FAA doesn't need to do the aforementioned. Although [the U.S.] needs to modernize its air traffic control system, Congress's own General Accountability Office and the Department of Transportation Inspector General have all said that the existing taxing mechanism can be used to finance modernization, airports, and the operation of the FAA. 2:27:16 PM MR. CEBULA related that AOPA believes the passage of HJR 18 is important. It's important because in Alaska the federal legislation would cause an increase in the cost for transportation and would lessen the attention on the air transportation needs for Alaska. Therefore, Mr. Cebula requested that the legislature join general aviation organizations like AOPA, Alaska Airmen's, local communities who have formed national aviation alliances, etcetera to oppose the FAA legislation. Mr. Cebula then related to the committee that in a letter to one of Alaska's AOPA members, U.S. Representative Don Young said that he doesn't endorse the proposed plan submitted to Congress. In conclusion, Mr. Cebula requested the committee's action on HJR 18. 2:28:35 PM MR. CEBULA, in response to Representative Neuman, confirmed that the federal legislation would cut up to $1 billion for airport improvements. In further response to Representative Neuman, Mr. Cebula opined that the federal legislation will place the small rural airports in competition for a much smaller pot of money. Therefore, it will be more difficult for small rural airports to obtain the necessary financing. However, he noted that airports in Alaska are treated differently than in the Lower 48 and thus the effect in Alaska won't be as significant due to the work of Alaska's Congressional delegation to ensure the unique needs of the state are known. 2:29:48 PM DEE HANSON, Executive Director, Alaska Airmen's Association, began by informing the committee that she is a third generation Alaskan who flies a 1955 Super Cub once owned by her grandfather. Ms. Hanson provided the following testimony: This resolution is important to general aviation and to Alaskans. The Alaska Airmen's Association mission is to promote general aviation in Alaska. We have over 2,200 members across the state. The Airmen's Association is opposed to the FAA refinancing act and is practically concerned about the impact of the proposed increase in gas tax in Alaska for general aviation aircraft. As you know, a very large percentage of our state is accessible only by aircraft. In Alaska, the airplane is not a luxury item; it is a tool. Alaskans use airplanes as if it were a vehicle or a pickup truck to haul groceries, building supplies, fuel, and family not to mention weekly visits to our remote coastal distribution centers. Alaskans use airplanes to travel to neighboring communities to watch rival athletic events. We rely on our airplanes for recreation, and hunting, as well as business applications, such as guiding, flight seeing, game surveys, and very importantly, search and rescue. The price of fuel today is already a concern. At Lake Hood Seaplane Base, the largest seaplane base in the world, fuel costs are currently $4.67 per gallon, which is up from $2.95 two years ago. For those of our members that rely on their airplane to commute to and from work, this would be a financial hardship. We have members that live remotely, flying their private general aviation aircraft to Anchorage to Big Lake and Talkeetna. Those of us living in remote villages who depend solely on aircraft will have no choice at all. Our urban members are certainly looking at whether to fly or not. With this increased fuel cost you can be assured that people will be flying their aircrafts less, canceling the perceived advantage of increased revenue from this bill tax. The other side of this is that people who are flying less are less proficient in their piloting skills. Therefore, this now becomes a very important safety issue. There will also be an impact on businesses that support aviation, such as maintenance facilities, avionics shops, part suppliers, and small aviation parts manufacturers. Many of these businesses are Alaskan owned and operated. They are not large state- side corporations. In conclusion, the Alaska Airmen's Association does not support the FAA Transportation Financing Reform Act that increases aviation fuel and gas taxes. Adding $.70 a gallon to the backs of general aviation pilots with already historically high fuel prices is moving in the wrong direction. It is our understanding that the current tax structure will adequately support the FAA and we want to stay with this system, which has been proven to work. 2:33:07 PM REPRESENTATIVE NEUMAN questioned what impact this would have on the Civil Air Patrol and air rescue programs. MS. HANSON replied that any increase in fuel prices will have an impact, as it will drive up costs. 2:34:00 PM TOM GEORGE, Alaska Representative for the Aircraft Owners & Pilots Association, provided the following testimony: Of course, we already know how important aviation is to the state. We've got something over 200 communities that have no road access, that rely on aviation as their main year-round link to the rest of the world. The user fees is a fascinating ... and ... complex challenge and it affects different segments of the aviation communities in different ways. One thing that the FAA is looking at in this bill is essentially access to airspace. The plan charges air taxi operators to land and take off at airports with control towers that exceed certain capacities. And in Alaska that would be Fairbanks, Anchorage, Juneau, and Bethel. So, there'd actually be a charge ... for the services provided going in and out of those airports. But we think this is, again, merely the camel's nose under the tent because we've seen in other countries where these fees have expanded as more services have been included, such as weather briefings, touch-and- gos, flight plans, etcetera. Of course, they're calculated on the historical traffic, but if the fuel prices and taxes go higher, the flying is reduced. Then those user fee rates will increase to cover the FAA's cost. In aviation we call that a descending spiral or a graveyard spiral. The other aspect ... is aviation safety. We already have an accident rate that's higher than the rest of the country. And there's been a lot of work, both with the Alaska aviation community and the FAA capstone program that's made significant gains over the past five years with some pioneering work they've done in Southwest Alaska. However, if pilots start avoiding services, such as access to weather, instrument approaches, towered airports because of costs associated ... with those changes, we could actually see a decline in aviation safety which, of course, is the very thing we're trying to turn around and go the other way with. We've talked about the control of the FAA. Part of this plan is to establish an Air Transportation System Advisory Board, which would have the approval over the user fee system, and, as has been mentioned already, removing Congress more and more from the oversight of this. And, of course, in Alaska, ... the impacts of various FAA mandates have really hit Alaska hard over the years and without our Congressional delegation's ability to get the attention of the FAA for us to get fair and equitable treatment, it'd be very difficult to continue to do business. So, any move away from that, we think, is very bad for Alaska, for all segments of the industry. Finally, on the fuel costs I can add my own ... personal data point. I have a small business that acquires vertical aerial photography around the state and last week while working on my taxes, I learned that I'd spent over $8,000 on [aviation] gas in the last year and an average price of $4.88 a gallon. And that ranged from a low price in Fairbanks, which is where I'm based, at $3.40 a gallon to a high of $7.00 a gallon in Galena. Well, already that inexpensive $3.40 gas in Fairbanks is up to $4.26 a gallon today. So, we've already seen that increase and it's certainly going to be going up proportionally in those other areas. So, adding a $.50 fuel tax to that cost is really, again, taking us in the wrong direction. So, we definitely appreciate your efforts on this and would be happy to help it move forward any way we can. 2:37:55 PM CHAIR JOHANSEN reminded the committee that HJR 18 would be held over.
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