MoDOT Missouri Department

of Transportation Patrick K. M cKenna, Director December

8, 2015 Mr. Byron K.Huffinan, Acting Director Fede ra l Aviation Administration Office of Airport Compliance and Management Analysis 800 Independence

A venue, SW Washington, DC 20591 Dear Mr. Huffman:

105 West Capitol Avenue P.O.Box270 Jefferson City, Missouri 65102 1 .888.ASK MODOT (275

.6636) Re: FAA Policy and Procedures Concerning the Use of Airport Revenue

; Proceeds from T axes on A v i ation Fuel (79 Fed. Reg. 6628) The purpose of this letter is to confirm that the State of Missouri
is in compliance with the Federal Aviat

i on Administration's Policy and Procedures Concerning

th e Use of Airport Revenue; Proceeds from Taxes on Aviation Fuel (79 Fed. Reg. 6628). I have enclosed

a copy of an Executive Summary prepared by MoDOT's Chief Counsel's Office which outlines Missouri's compliance

w i th the Policy. MoDOT will advise the Federal Aviation Administration

of any future changes
to state laws th at co uld affect compliance

. If you have any questions
or if I can be of any further assistance

,please do not hesitate to contact me. Sincerely, Wwv\ L Amy Ludwig Administrator

of Aviation Enclosure cc: Jim Johnson, Federal Aviation Administration Bill Miller

,Office of Governor Jay Nixon Our mtsston
Is to provide

a world-class transportation experience that delights our customers and promotes

a prosperous Missouri. www.modot.orgState of Missouri Compliance with the Federal Aviation Administration's Revenue Use Policy Executive Summary

1217/15 (1) Introduction: This Executive Summary

is to confilm that the State of Missouri

is in compliance with the Federal Aviation Administration's (FAA) Policy and Procedures Concerning the Use of Airport Revenue found in the Federal Register (FR) at 64 FR 7696; amended on November

7, 2014 (hereinafter, Revenue Use Policy). Among other things, the Revenue Use Policy saysthat anystate orlocal tax onaviation fuel is subject to revenueuse requirements, except for taxes effective December 30, 1987. (2) Missouri State Sales and Use Tax onAviation Fuel (A) Volume Tax: One of the two taxes authorized by state law to be imposed onaviation fuel is in section 155.080, Revised Statutes of Missouri (RSMo), which levies

anine-cent per gallon tax onfuel used to propel aircraft with reciprocating engines
to be deposited
in the Aviation Trust Fund (ATF). 1. When Passed: This tax was passed by the General Assembly (GA) in 1990. 2. Usc of Proceeds: The ATF is used solely for aviation purposes
as provided
in section 305.230 RSMo, which purposesareconsistent with the Revenue Use Policy. These aviation purposes include, but arenot limited to: (I) Preventive maintenance

of runways, taxiways and aircraft parking; and (II) Acquisition ofland to develop and improve airports; and (III) Earthwork and drainage needed
to construct, reconstruct
or repair runways, taxiways, and aircraft parking areas;and (IV) Construct orrestore runways, taxiways,
oraircraft parking areas; and (V) Acquire land oreasements
to satisfy FAA safety requirements; and (VI) Others. (B) Sales!Use Tax: Chapter 144 RSMo imposes

afour percent (4%) statewide sales and usetax onall sales at retail in Missouri of tangible personal property
orsales that occurred
in other states but in which the tangible personal property

is used orconsumed
in Missouri. Tangible personal prope1ty includes aviation jet fuel. See American Airlines, Inc. v.Director of Revenue, 389 S.W.3d 653 (Mo.banc 2013). 1. Aviation Jet Fuel: Originally passed in 1993, section 144.805.4 RSMo dedicates the revenuederived from the state sales and usetax onaviation jet fuel to the ATF, except for the portion of the revenuethat is designated for nonaviation purposes by the Missouri Constitution

orsection 144.071 RSMo. 2. Tax Rate: The total state sales and usetax rate onaviation jet fuel is 4.225%. 3. Exemptions: Section 144.805 exempts from the state sales and usetax on aviation jet fuel commoncarriers engaged in interstate air transportation

of passengersand cargo if the commoncarrier has paid state sales and usetax onaviation jet fuel in amaximum and aggregate amount of$1.5 million. 4. Aviation Trust Fund Rate: The state sales and usetax rate that generates revenuefor deposit into the ATF for aviation purposes
asset fo1th in section 305.230 RSMo (see (2){A)2. above)
is 3.0% of the 4.225%. The remaining 1.225%
is deposited into other state funds for other, nonaviation purposes
asoutlined below:A. Schools: On November

2, 1982, voters approved Proposition

Cthat raised the statesales tax by 1% with the proceeds

tobe credited
tothe School District Trust Fund and distributed

toMissouri public schools. See section 144.701, RSMo {ATTACHMENT

1). Because voters adopted this 1% statesales and usetax prior toDecember 30, 1987, the proceeds from this tax imposed onaviation jet fuel is excepted (i.e., grandfathered) from the Revenue Use Policy requirement that its revenuesmustbe used forastateaviation program. B. Conservation:
On November

2, 1976, voters approved Constitutional Amendment No.
1that imposed

a1/Sth of 1 percent (0.125%) statesales and usetaxwith the proceeds dedicated

tothe control, managementand conservation

of bird, fish, gameand wildlife by the Missouri Department
of Conservation. See article IV,section 43(a), Missouri Constitution (ATTACHM:ENT

2). Because voters adopted this 0.125% statesales and usetax prior to December 30, 1987, the proceeds from this tax imposed onaviation jet fuel is excepted (i.e., grandfathered) from the Revenue Use Policy requirement that its revenuesmustbe used for astate aviation program. C. Parks and Soils: On August
7, 1984, voters approved Constitutional Amendment No.2 that imposed

a1/lOth of1 percent (0.100%) statesales and usetaxwith the proceeds dedicated for state parks and soil and waterconservation purposes by the Missouri Department

of Natural Resources. See atticle N, section 47(a), Missouri Constitution {ATTACHMENT

3). Because voters adopted this 0.100% statesales and usetax prior to December 30, 1987, the proceeds from this tax imposed onaviation jet fuel is excepted (i.e., grandfathered) from the Revenue Use Policy requirement that its revenuesmustbe used for astate aviation program. D. Conclusion: Since each of these 1.125% statesales and usetaxestax imposed onaviation jet fuel were initially approved by voters prior toDecember 30, 1987, atld the proceeds directed
tononaviation purposes,the continued deposit of these proceeds

to public schools, conservation and parks and soils is notaviolation of the Revenue Use Policy. 4. Cap: Section 144.805 saysthe atnountof proceeds from the aviation jet fuel statesales and usetaxthat maybe deposited into the ATF shall notexceed tenmillion dollars percalendar year.This $10 million capwould violate the Revenue Use Policy if the total amount of proceeds from the aviation jet fuel statesales and usetaxexceeded $10 million in anyyear with the excessamount deposited into the General Revenue Fund (GRF) tobe used for nonstate aviation purposes.But,the ATF has neverreceived morethan $10 million in aviation jet fuel statesales and usetaxrevenues(for the pastseveral years, deposits have averaged $5.5 to$6.0 million).

5. Expiration Date:The provisions

in section 144.805 that requires the transfer of the proceeds from the statesales and usetaxonaviation jet fuel tothe ATF shall expire on December 31, 2023, which meansthe proceeds would instead be deposited into the GRF. MoDOT will monitor the expiration date toensure

itis always extended (or deleted) while currentfederal law and the FAA's Revenue Use Policy
is effective. (3) Commitment

toAdvise: MoDOT
is committed

toadvise the FAA of any subsequent amendments that could affect its excepted (i.e., grandfathered) status.144,701. One centsales and usetax designated local..., MOST 144.701 Vernon's Annotated Missouri Statutes Title X. Taxation and Revenue Chapter 144. Sales and UseTax UseTax (Refs &Annas) V.A.M.S. 144.701 144.701. One centsales and usetax designated local tax--collection fee allowed state--schooldistrict trustfund created, invesbnent Currentness The revenuederived from the rateof onecentonthe dollar ofthe tax imposed by sections 144.010
to144.430 and sections 144.600
to144.745 which shall be deemed
tobe local tax revenue,shall be deposited by the statetreasurer
inaspecialtrust fund, whichis hereby created, tobe known asthe "School District Trust Fund". The moneyin fue fund shall be distributed

tothe public school districts of the statein themanner provided
in sections 163.031 and 163.087 and shaii be appropriated and used for noother purpose; except that, of all refunds made of taxescollected under the provisions
of sections 144.010 to144.430 and sections 144.600
to 144.745, the appropriate percentage
of anyrefund shall be paid from the school district trust fund, and exceptthat the slate mayretain

afee asacharge for collecting and disbursing moneysso deposited, and transfers maybe made from the fund as provided

in section 164.013. The statecollection fee shall notexceed twoand one-half million dollars orone percentof the amount deposited
in the fund, whichever

is less. The fee shall be negotiated annually through the appropriation process. Any balance remaining
in the fund attheend of an appropriation period shall notbe transferred

to general revenue, and the provisions of section 33.080, shall not applytothe fund. Moneys
in the trustfund shall be invested by the statetreasurer inthe same deposits and obligations

in which statefundsareauthorized by law tobe invested, exceptthat the deposits and obligations shall matureand become payable
in time for distribution
of the funds as provided
in sections 163.031 and 163.087. Credits (Adopted by Proposition

C, approved
atNovember

2, 1982 election, eff. Jan. 1, 1983. Amended by L.l983,
p.441, H.B.No. 310,
§ 1,eff. March3, 1983; 1.1993, S.B. No. 380, §A.) V.A.M. S. 144.701, MOST 144.701 Statutes arecurrent through the end of the 2015 Veto Session of the 98th General Assembly, pending corrections received from the Missouri Revisor of Statutes. Constitution

is current through the November

4, 2014 General Election. V, **~~·:l:\\VNexr**

3J 2015 Thomeonneuters. **~Jo**cklim to onginal U.S_ Govar;-,ment **VVor~s.**

1 ATTACHMENT

1§ 43(a}. Sales tax, usefor conservation purposes,MO CONST Art. 4, § 43(a) KeyCite Yellow Flag -Negative Treatment **Propos~d**Lcgidation Vernon's Annotated Missouri Statutes Constitution

of 1945 of the State of Missouri Article IV. Executive Deparbnent Conservation

V .A. M.S. Canst. Art. 4, § 43(a) § 43(a). Sales tax, usefor conservation purposes Currentness For the purposeof providing additional moneys
to be expended and used by the conservation conunission, department
of conservation,
for the control, management, restoration, conservation and regulation of the bird, fish, game, forestry and wildlife resources
of the state, including the purchase
orother acquisition
of property for said purposes,and for the administration

of the laws pertaining thereto, anadditional sales tax of one-eighth
of one percent
is hereby levied and imposed upon al\ sellers for the privilege of selling tangible personal property
or rendering taxable services
at retail in this state uponthe sales and services which nowareorhereafter arelisted and set forth in, and, except asto the amount of tax, subject to the provisions
of and to be collected
as provided
in the ''Sales Tax Law" and subject
to the rules and regulations promulgated

in connection therewith; and anadditional usetax of one-eighth
of one percent

is levied and imposed for the privilege of storing, using or consuming within this state anyarticle of tangible personal property
asset forth and provided
in the "Compensating Use Tax Law" and, except asto the amount of the tax, subject to the provisions
of and to be collected
as provided
in the "Compensating Use Tax Law" and subject to the rules and regulations promulgated

in connection therewith. Credits (Adopted

at general election Nov. 2, 1976.) Notes of Decisions (2) V. A.M. S. Canst. Art. 4, § 43(a), MO CONST Art. 4, § 43(a) Statutes arecurrent through the end of the 2015 Veto Session of the 98th General Assembly, pending corrections received from the Missouri Revisor of Statutes. Constitution

is current through the November

4, 2014 General Election. End l>f **Oo~'Uitl~rt!**

t;· 20!5 **Thomsu~ R~u!crs.** No daim I(> arigin"l U.S. **(ja~~nuncnt**\Yorks. ',',,;;:stl:;·r•Nexr

:'} 2015 Thomson Reuter.:>. No c:i21im to ongina: U.2·. **Go1Jar:1t:-ten~**Wo;ks.

1 ATTACHMENT

2§ 47(a). Sales and usetax levied for soil and water ...,MO CONST Art 4, § ... Vernon's Annotated Missouri Statutes Constitution

of 1945 of the State of Missouri Article IV. Executive Department Natural Resources V.A.M.S. Canst. Art. 4, § 47(a) § 47(a). Sales and usetax levied for soil and water conservation and for state parks--distribution

of parks sales tax fund to counties, purpose,limitation Currentness For the purposeof providing additional monies
to be expended and used by the department
of natural resources through the state soil and water districts commission

asdefmed in Section 278.070, RSMo, for the saving ofthe soil and water of this state for the conservation
of the productive powerof Missouri agricultural land, and by the department
of natural resources through the division responsible
for the State park system for the acquisition, development, maintenance and operation of state parks and state historic sites in accordance with Chapter 253, RSMo, and for the administration

of the laws pertaining thereto, an additional sales tax of one-tenth of one percent
is hereby levied and imposed uponall sellers for the privilege of selling tangible personal property or rendering taxable services
at retail in this state uponthe sales and services which nowarcorhereafter arc listed and set forth in, and, except asto the amount of tax, subject to the provisions
of and to be collected
as provided
in the "Sales Tax Law" and subject
to the rules and regulations promulgated

in connection therewith; and anadditional usetax of one-tenth of one percent

is levied and imposed for the privilege of storing, using or consuming within this state anyarticle of tangible personal property
asset forth and provided
in the "Compensating Use Tax Law'' and, except asto the amount of the tax, subject to the provisions
of and to be collected
as provided
in the "Compensating Use Tax Law" and subject to the rules and regulations promulgated

in connection therewith.
In addition, monies deposited
in the state parks sales tax fund pursuant
to the provisions
of section 47(b) of this article shall also be appropriated

to make payments

to counties for a period offive years for the unimproved value of land for distribution

to the appropriate political subdivisions

as payment
in lieu of real property taxes for privately owned land acquired by the department
of natural resourcesfor park purposesafter July 1, 1985, in such amounts asdetennined by appropriation, but in noevent shall such amounts be morethan the amount of property tax imposed by political subdivisions

at the time the department acquired or acquires such land. Credits (Adopted

at special election Aug. 7, 1984. Amendments adopted
at general election Nov. 8, 1988; general election Nov. 8, 1994; general election Nov. 5, 1996.) Editors' Notes TERMINATION <For termination
of this section, seeSection 47(c) of this article.> V. A.M. S. Cons!. Art. 4, § 47(a), MO CONST Arl4,

§ 47(a) Stamtes arecurrent through the end of the 2015 Veto Session ofthe 98th General Assembly, pending corrections received from the Missouri Revisor of Statutes. Constitution

is current through the November

4, 2014 General Election. i:- 1015 Tlwnm>n

It euler>. Nodaim
W orig:inol U.S **Gov~rnm~nt**Works. **\'1-~~-tl,::\vNexr@**20;5 Thomsl)n Reuters. No clairn to origtna! U.S. Government Works. ATTACHMENT

3