February 9, 2010-Joel Russell, President and Carl Beardsley, Vice President of the New York Aviation Management Association (NYAMA) presented testimony before the NYS Joint Legislative Budget Committee on Transportation and the Budget Committee on Taxes. NYAMA used the opportunity to express alarm with the Governor's budget proposal as it threatens to disable the economic engine-the state's aviation industry-that drives a significant portion of the state's economy and sustainable jobs market.

New York's aviation industry is responsible for over $35 billion in annual economic activity, employs more than 350,000 state residents and generates $2.8 billion in State and local taxes annually.

NYAMA called for increased support for the FAA Airport Improvement Program (AIP) state match and the restoration of language that allows for the transfer of unallocated AIP funds to the state AIR 99 airport grant program.

"The AIP state match program is important to the viability of our industry as it provides a portion of the local match required by the federal government to accompany airport improvement grants," the NYAMA representatives explained.

Also troubling to the state's aviation industry is the lack of any appropriation for airport projects to replace the Bond Act monies that expire this fiscal year. "The absence of any appropriation to replace the Bond Act money is just not sustainable without compromising the increasing need for infrastructure renewal and maintaining an adequate air transportation system," the airport managers argued.

NYAMA urged the Legislature to increase the appropriation for the AIP state match from $4 million to $8 million and restore the AIP/AIR 99 conversion language. This conversion permitted the state to move any unused match dollars to AIR99 program to help meet the need for funding of development projects which may go unfunded under the Federal AIP provisions. NYAMA further requested that there be an appropriate level of capital funding available for critical security and business development projects at commercial service and general aviation airports to replace expiring transportation Bond Act funding.

"With a total transportation spending plan in the billions of dollars over the next fiscal year, and with all other modes of transportation receiving substantial funding to meet their needs as determined by DOT in the Five-Year Capital Plan, the Legislature should ask why such an important part of the state's integrated transportation system is allocated next to zero," NYAMA testified.

In testimony before the Budget Committee on Taxation, NYAMA protested a provision of the Governor's revenue bill entitled, "Sales Tax Avoidance Provisions - Aircraft and Vessels." This new provision will make the retail sale exclusions for transfers of property between affiliated parties inapplicable to transfers of aircraft and vessels, in essence a new tax on NY based aircraft.

NYAMA believes that the true net benefit to New York State from this tax will be negative for the same reasons a new "charter aircraft" tax enacted last year appears to be a fiscal disaster for the state.

This provision eliminated the exemption from sales and use taxes applicable to certain charter aircraft that were used to transport affiliated officers and employees, making it more expensive to do business in New York.

"As you would expect, tax actions like this send strong signals to the aviation industry in the region that New York is unfriendly to business. These taxes-unique to New York-discourage aviation businesses from investing in significant transportation efficiencies here that improve their national and global competitiveness," NYAMA President Russell said. NYAMA reports that, immediately upon enactment of the new aircraft asset ownership penalty last year, charter aircraft operators began moving their aircraft and associated jobs to other states.

NYAMA has estimated that each lost business jet accounts for a reduction of approximately $183,000 to New York State's recurring tax stream on an annual basis.

NYAMA now advocates, via the "Aviation Jobs Bill" championed by Assemblyman Robin Schimminger and Senator William Stachowski, the extension of this proven job-stimulus effort for maintenance and repair to include the purchase of aircraft.

"NYAMA, therefore, urges the Legislature to reject this new Subpart B provision of the Revenue bill, repeal the ill-conceived charter tax and enact aviation tax relief comparable to that of our neighboring states so that we nurture and support the growth of our state's vital aviation sector," the NYAMA representatives concluded.