The state of Alaska has proposed a new aircraft registration fee, which will go toward offsetting the cost of maintaining the state’s 240 rural airports. The proposed fee, which would be $150 for a private plane and $250 for a plane used for business, has garnered criticism from some of Kodiak’s aircraft businesses.
Kyle Eaton, one of the owners and operators of Kingfisher Air, said a new registration fee would detrimentally affect his business.
“Aircraft are the lifeblood of these areas,” Eaton said. “A tax for, at least us, would have to be passed onto customers in terms of a rate increase.”
Eaton’s brother, Glen, started the company in 1998. Eaton joined the company in 2003. “Every time our costs increase, our prices will have to increase,” he said, “and when our prices increase, our customer base decreases.”
Jo Murphy co-owns Seahawk Air with her husband, Rolan Ruosf. Murphy’s been in the business since 1987 and said that the news didn’t surprise her in the slightest.
“It’s not a huge amount compared to some of the other taxes we pay,” said Murphy. “There’s a lot of difference fees. We have licenses – different types of taxes we pay on all kinds of things.”
The state expects the fee to raise between $1.3 million and $1.4 million for Statewide Aviation, the branch of the Department of Transportation that oversees the state’s airports. Statewide Aviation’s annual operating budget is approximately $40 million, and a quarter of that is covered by the state’s aviation fuel tax, as well as leases for hangars and other airport spaces.
The remaining $30 million comes from the state’s general fund, and the proposed registration fee is intended to close some of the gap, according to Richard Sewell, the aviation policy planner for the Alaska Department of Transportation and Public Facilities. Murphy, however, feels that this fee would unjustly affect her business.
“It seems unfair that we would have to pay that fee, considering we don’t operate a runway,” she said. “I don’t see any maintenance going on down here at Trident Basin. They sure don’t do anything for us down here.”
Not all of Kodiak’s aircraft operators feel this way. Dean Andrew, who started Andrew Air in 1995, said that his firm operates seven planes, so the fee would probably lead him to raise his rates.
“I have a private plane, too, and some of the pilots have their own personal planes,” he said.
His view, however, is that the fees and taxes he has to endure go toward vital maintenance that his business requires to operate safely and efficiently.
“If the state is trying to find money to keep the runways in reasonable state for us, I don’t think I would be opposed to that,” he said. “There are a lot of costs in running an aircraft business, but if that’s the only option, I’d much rather see that than see airports close or not be maintained properly.”
Andrew explained that his firm leases a hanger at Kodiak Airport, which they use to do upkeep on his firm’s floatplanes. With regards to the maintenance of the local airports, Andrew said, “And, by the way, they do a good job here in Kodiak.”
The proposed fee is not set in stone: Alaskans have until Jan 5 to pass comment on the proposal.
Since 2016, Governor Bill Walker has been attempting to raise more money for the DOT by asking the Alaska Legislature to raise the state’s motor fuel taxes (which includes the aviation gasoline and jet fuel taxes).
Raising gas taxes would result in more revenue for aviation needs than the proposed aircraft registration fee would, but the gas tax increase has remained stalled in the Legislature’s finance committees. In order to get around this, the registration fee is being pursued as a regulation, not a law, which means it can bypass the Legislature.
Representative George Rauscher (R-Sutton) said he sees the proposed registration fee as a tax, and he’s alarmed by this apparent political subterfuge.
“Going forward, once one administrative department starts using this method for recovering costs … where do we go?” he asked. “Is every department going to come up with this idea now?”
People can comment on the proposed regulation changes by submitting comments via email at StatewideAviation@alaska.gov. The comments must be received no later than 5 p.m. on January 5.