Airports are economic engines fueling growth in the communities they serve. The economic benefits of New York State Airports are impressive. Over $35 billion in annual economic activity of New York State businesses and institutions is attributable to aviation and almost 350,000 state residents work directly or indirectly in aviation. As a result of this, more than $2.8 billion in State and local taxes are generated from aviation activities. On a typical day, about 230,000 people board and deplane commercial aircraft in this state and it is estimated that 40,000 visitors arrive at New York airports. However, the efficacy of this powerful economic engine and its benefits to New York’s citizens is threatened by a critical lack of infrastructure investment, competition from other states and a sagging state and national economy.

Governor’s 2008-09 Budget Proposes Killer Tax on Business Aircraft

The Executive Budget proposal incredibly compounds the competitive disadvantage New York has with neighboring states by imposing new tax penalties on certain business and corporate aircraft owners that seek to base these aircraft in this State. If enacted, this tax will have a chilling effect on airports, businesses and jobs as aircraft owners will relocate their aircraft in neighboring states, taking with them their pilots, crew, mechanics and other aviation-related employment, and possibly move some or all of their corporate operations as well. (Part EE Revenue Bill S6810/ A9810)

Sales Tax Exemption for the Purchase of GA Aircraft

Competition and more lenient tax laws in surrounding states have increased pressure on already cash-strapped New York airports.

This tax law change is important for two critical reasons. First, New York State is at a significant competitive disadvantage with regard to attracting sales and basing aircraft in New York. A number of neighboring and nearby states, including Massachusetts, Connecticut, New Hampshire, Rhode Island, New Jersey and Delaware currently provide sales tax relief or favorable tax treatment for the purchase of these aircraft.

Second, the aviation industry is on the cusp of an important new market. The first round orders of very light jets (VLJs)—manufactured by such companies as Eclipse Aviation and Honda—is scheduled to be delivered this year. This emerging market is projected to have a tremendous impact on business aviation. It is critical for New York State to capitalize on this opportunity and remove any barriers to entry that would result in business going to other states that have a more business-friendly environment. Proposed Language is as follows:

Subdivision 17 of Section 1101(b) of the tax law is amended to read as follows:

(17) Commercial aircraft. Aircraft used primarily (i) to transport persons or property, for hire, (ii) by the purchaser of the aircraft primarily to transport such person's tangible personal property or, for the purposes of section 1115(a)(21) of the tax law, customers, employees, agents or officers, in the conduct of such person's business, or (iii) for both such purposes.

Repeal the Sunset for the Aviation Maintenance and Repair Sales Tax Exemption

In 2004, NYAMA was successful in seeking passage of a bill providing sales tax relief for the maintenance and repair of general aviation aircraft. Since then, the aviation maintenance and repair industry has experienced a substantial boon in business. This enhanced activity has resulted in significant growth in related taxable business for New York’s aviation sector.  The tax exemption is scheduled to sunset December 1, 2009. The industry needs to know that these services will remain tax exempt in the future. It is therefore vital that the sunset be repealed now. (Tax Law 1115 (dd))

Aviation Financial Assistance Program

NYAMA is aware of the difficulties and challenges state transportation policymakers face in trying to develop a new, reoccurring aviation financial assistance program which will be needed to enhance, and ultimately replace the Bond Act money at a time when all transportation systems are under stress from age, heavy use and deferred maintenance. Much of the airport infrastructure remains or is becoming ill-suited to spur economic activity. The State will be developing a new 5-Year Capital Plan and it is imperative that a funding program for airports be included in the Plan.

Raise the Cap on Air ‘99 Grants

While we applaud the AIR ‘99 Program, we recognize as active members of the New York aviation community that the grant level of the AIR ‘99 Program needs to be updated. The program was developed in 1999 and grants under the program were capped at $300,000 based upon available funding and average construction costs at that time.

Nearly a decade later, this $300,000 is not sufficient to accomplish the same task in today’s dollar. An increase in the cap to a minimum of $600,000 is highly recommended to continue to allow New York airports to complete critical projects such as the construction of aircraft hangars, repair of existing facilities, safety enhancements and other important projects, and remain competitive with surrounding states. (Transportation Law 14-l)

Voice of Aviation

NYAMA will continue to be the voice of aviation in New York and will play a key role in the state budget process through meetings with state officials, attendance and testimony at budget hearings and contacts with our state representative and leaders.