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Transportation funding is hollowed out while legislature talks

FILE - In this Sept. 6, 2016, file photo, a plane flies near the Manhattan skyline at sunset in New York. The latest mass shootings in the United States have triggered multiple countries to warn their citizens to be wary of travel conditions there. (AP Photo/Darron Cummings, File)

Michigan’s roads aren’t the only thing suffering from budget shortfalls, as fuel-efficient planes have drained fuel-tax funds for local airports, too.

Public Act 327 of 1945 created the Michigan Aeronautics Commission, with the Office of Aeronautics within the Michigan Department of Transportation.

One of the primary roles of the Office of Aeronautics is administering grants under the federal Airport Improvement Program (AIP), according to mich.gov.

“Even with federal assistance,” states a June, 2016 government report named Aviation in Michigan: How Aviation Works in Michigan, on the state website,“local communities struggle to maintain and improve airfield pavements, navigation and weather systems; purchase snow removal and firefighting equipment; develop facilities; and maintain their airports.”

The need identified by the airports and reflected by the Michigan Airport Capital Improvement Plan, the report states, exceeds $1.6 million annually, “leaving a significant shortfall.”

State taxes that support airport infrastructure and safety are generated primarily from the aviation fuel (excise) tax on jet fuel, the report states.

“Until 2016,” it reads, “no revenue was received from the state sales or from any road funding sources.”

The State Aeronautics Fund is funded separately from all other modes and stands alone, the report states. So, where does that funding come from?

Beginning on October 1, 2016, 2% of the sales tax on aviation fuel was dedicated to aviation funding in Michigan, which was determined to generate approximately $10-12 million per year. But that was more than three years ago.

The report states that the excise tax on aviation fuel is 3 cents per gallon, which has not seen an increase since it was enacted in 1929. It was, however modified once in 1945, when it was rebated to 1.5 cents to commercial airlines, where it has remained since.

“In 1999, the excise tax generated more than $8 million on 400 million gallons,” the report states, “while in 2014, the amount was just over $5 million on 275 million gallons. More efficient aircraft and elimination of smaller (50 seat) aircraft with less frequency, have had the greatest impact on gallons consumed and taxes collected. With declining numbers of aviation gallons sold, this revenue source is at its lowest point ever and continues to decrease. Not surprisingly, the overall condition of airfield pavements is also in decline.”

While airport infrastructure is reportedly heading in the same direction as Michigan’s roads, Lansing seems at an impasse.

While Governor Gretchen Whitmer (D) continues pushing for a 45-cent gasoline tax increase for road repair, some House GOP members are considering alternatives, such as selling insignificant airports owned by MDOT, eliminating four state-owned aircraft, as well as tasking MDOT with soliciting bids to sell Michigan’s share of the Blue Water Bridge. The Blue Water Bridge spans the St. Clair River, and carries international traffic between Port Huron, Michigan, and Point Edward and Sarnia, Ontario. It is jointly owned by the state of Michigan and Canada.

In June, State House Republicans asked MDOT for an estimated value on the bridge, but according to the Detroit News, on June 5, 2019, MDOT did not have an immediate estimate of the bridge’s worth, but said outstanding debt on the bridge is roughly $89.7 million with a final payment set for 2037.

The House Transportation Appropriations Subcommittee is aware of some parties interested in the bridge, including a group of investment funds, said Rep. Matt Maddock, R-Milford, in the Detroit News. Maddock is chairman of the transportation subcommittee.

“MDOT used to focus on transportation, not bridges or airports or welcome centers,” Detroit News quoted Mattock as saying. “There’s a lot of things that we’re in the business of that we shouldn’t be in the business of.”

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