John R. Kasich, 

Governor 

December 7, 2015 

Timothy S. Keen, 

Ditector 

Federal Aviation Administration 

John R. Kasich, 

Governor 

Attention: Director, Airport Compliance and Management Analysis 

800 Independence Ave., SW 

Washington, DC 20591 

JcrryWray, 

Director 

RE: Response to FAA Final Policy Amendment to Revenue Use Policy 

On November 21,2013 the Federal Aviation Administration (FAA) issued a "Notice of Proposed 

Clarification of Policy; Request for Comments" (78 Fed. Reg. 69789) regarding its existing Policy 

and Procedures Concerning the Use of Airport Revenue ("Revenue Use Policy") (64 Fed. Reg. 

7696). The proposed clarification sought to explain how and why revenue generated from nonsponsor state taxes were subj~ct to the existing Revenue Use Policy. Following the comp1ents 

received in response to t)le proposed policy clarification, a Final Policy Amendment was publish~d 

on November 7, 2014 (79 Fed. Reg. 66282). The Final Pobcy Amendment added a subpart to 

Section IV of the original 1999 Policy that specifies what non-sponsor state taxes are subject to 

the Revenue Use Policy, as well as what are the allowed uses for such revenue under the policy. 

Additionally, the Final Policy Amendment provided that states are able to submit an action plan 

demonstrating the proce~s the state. wilt' take to come in to compliance with the amended Revenue 

Use Policy (79 Fed. Reg. 66282, 66286-04). .. 

Oh~o is confident, as will be demonstrated below, that it currently complies with the amended 

Revenue Use Policy. However, in accordance with the FAA suggestion that non-sponsor states 

provide reliable reporting and tracking systems for proceeds from taxes on aviation fuel, Ohio is 

dedicated to implementing a state action plan to provide for such a system. But, regardless of the 

action plan, it is important to emphasize Ohio's record of compliance with the FAA's current 

policy. 

The State of Ohio has levied a general sales tax (GST) since January 1, 1935. On December 30, 

1987, the rate of the GST was 5 percent (Attachment A). As a general tax, this rate applied to the 

sale of aviation fuel. The State currently levies the GST at a rate of 5.75 percent (Attachment B). 

Accordingly, and pursuant to the grandfathering provision of the FAA's Revenue Use Policy, the 

revenue generated by 0.75 percent of the GST levied on aviation fuel is subject to the Revenue 

Use Policy. Additionally, the State of Ohio currently levies an exc~se tax known as the Petroleum 

Activity Tax (PAT). The PAT is levied at a rate of 0.65 percent on each supplier of motor fuel, 

including aviation fuel, and is measured by the supplier's calculated gross receipts derived.froin . ' 

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the fust sale (Attachment C). This tax was not enacted until July 1, 2014, and is therefore not 

subject to the Revenue Use Policy grandfathering provision. Because both the GST and the PAT 

are taxes of general applicability, Ohio does not currently collect tax return data that enables the 

clear identification of revenues specifically derived from the sale of aviation fuel. 

Nevertheless, Ohio is able to provide estimates that indicate compliance with the amended FAA 

Revenue Use Policy. These estimates are based upon secondary source data from the FAA, the 

U.S. Energy Information Administration, and AirNav, LLC. This estimate equals approximately 

$7.6 million for the 2016-2017 biennial budget period, and encompasses all revenue from taxes 

levied on aviation fuel generated by the non-grandfathered 0.75 percent GST and 0.65 percent 

PAT. 

In addition to the state taxes described above, Ohio allows its 88 counties and its eight transit 

authorities to levy a piggyback sales tax. This tax is levied in addition to the GST, at a rate of up 

to 3.0 percent (up to 1.5 percent for a county, and up to an additional 1.5 percent for a transit 

authority). As of December 30, 1987, 77 of Ohio's 88 counties, and six of Ohio's eight transit 

authorities levied such a piggyback sales tax. These taxes, while administered, collected, and 

distributed by the Ohio Department of Taxation, result from the independent political authority of 

the political subdivisions imposing them. In other words, the state is not responsible for the 

decision to levy such taxes nor the use of the revenue generated thereunder. Relying upon the same 

secondary source data referenced above, revenue generated from the non-grandfathered portion of 

these local piggyback taxes is estimated to be approximately $2.6 million for the same biennial 

budget period. 

All told, revenue generated from taxes on aviation fuel subject to the amended FAA Revenue Use 

Policy will total approximately $10.2 million over the 2016-2017 biennial budget period. In terms 

of the type of spending required by the Final Policy Amendment, the State of Ohio appropriated 

$12 million in its 2016-2017 biennial budget to be used by the State's Department of 

Transportation (Attachment D). These appropriated dollars allow for the continuation of the Ohio 

Airport Grant Program, which s.upports capital improvements, maintaining infrastructure, and 

ensuring safety at publicly owned, public use airports in the state, provided that the airports receive 

neither Federal Aviation Administration Air Carrier Enplanement Funds nor Air Cargo 

Entitlements. Given the funds appropriated for spending specifically approved by the FAA's 

Revenue Use Policy, and the estimates of revenue generated by aviation fuel taxes subject to the 

Final Policy Amendment, Ohio's compliance is clear. 

Although the figures presented above document compliance with the FAA's Final Policy 

Amendment, Ohio does intend to take actions regarding the tracking of aviation fuel revenue 

within the next two years, as suggested in the FAA's response in Comment 4 of the Final Policy 

Amendment. These actions will clearly account for the amount of revenue generated by taxes on 

aviation fuel, and subsequently allow for the tracking of the expenditure of such revenue. For 

relevant tax returns filed on or after July 1, 2017, which is the day on which the State's 2018-2019 

biennial budget period is to commence, the Ohio Department of Taxation intends to require 

taxpayers to report data enabling the State to track state and local revenues from sales of aviation 

fuel by state fiscal year. Additionally, the State intends to pursue statutory language in its 2018-

2019 budget bill requiring local counties to report any local spending in the state's fiscal year for 

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the capital or operating costs of local airports, local airport systems, and any other local facility 

that is owned or operated by the person or entity that owns or operates the airport that is directly 

and substantially related to the air transportation of passengers or property. 

Ohio is confident this letter resolves any concerns regarding the State's compliance with the Final 

Policy Amendment. It does not constitute, and should not be considered, a waiver of any right to 

challenge the policy or any underlying federal law upon which federal enforcement action could 

be predicated. The following person has been designated as the contact person to speak for the 

State of Ohio regarding this matter: Matt McAuliffe, Chief of Staff for the Ohio Department of 

Transportation. Any questions or concerns may be directed to the designated contact person. 

Thank you. 

Sincerely, 

Jerry Wray 

Director 

Ohio Department of Transportation 

Central Office- 1980 West Broad St 

Columbus OH 43223 

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Timothy S. Keen 

Director 

Ohio Office of Budget and Management 

30 East Broad St, 341h Fl 

Columbus OH 43215