## STATE OF INDIANA OFFICE OF MANAG EMENT & 

### BUD GET 212 State House

December 8, 2015 Byron K. Huffman Indianap olis, Indiana 46204-2796 3 17

-232

- 56 1 0

Director, Office ofAirport Complian ce and Managemen t Analy sis Federal Aviation Administration 800 Independence Avenue S

### W. Washington, DC 20591 (202) 267

- 3085 (phone) (202) 267-5257 (fax) Dear Director Huffman, Michael R. Pence Governor Micah G
. Vincent Director

This letter will serve as the State oflndiana's response t o th e Fede ral Aviation Administration's (FAA's) request that all states document their compliance with Doc ket No
. FAA-2013-0988, Policy and Procedures Con cerning the Use of Airport Revenue; Procee d s From Taxes on Aviation Fuel. Specifically, Indiana affmns that all revenues f rom sta te taxes on aviation fuel are and will be used for specified aviation-related p u rposes . Under Indiana Code 6-6-13-6, as of July 1 , 2013, the State oflndiana began colle cting an Aviation Fuel Excise Tax of $0
. 10 per gallon
. Aviation fuel is exempt from Indiana's general sales tax , and Indiana does not have any local aviation fuel or sales taxes . Proceeds from the Aviation Fuel Excise Tax are remitted and reported to the Indiana Department ofRevenue and deposited into the state 's general fund. Every dollar collected from tbe Aviation Fuel Excise Tax, and more, are spent on aviation-related purposes. Since its enactment, Indiana has collected between $1.5 and $1.8 million from this tax per fiscal year. As described below, Indiana has spent all ofthese funds, and more on aviation-related purposes. Indiana's State Aviation System Plan (ISASP) includes 70 airports that serve the air transportation needs ofmore than 6.5 million Hoosiers. In Federal fiscal year 2015, 57 airports were selected to receive $71 .3M in federal funding from the FAA for airport development projects, which encompass a wide range ofactivities, such as pavement reconstruction and rehabilitation ofrunways and taxiways , approach protection, land acquisition, runway extensions, and planning for future projects. The FAA awarded 90% ofthe total project cost directly to the municipality sponsoring the project with a 10% match requirement. The India na Department ofTransportation (INDOT) provided a 5% match, totaling over $3.3 million dollars, and the municipality or airport provided an equivalent 5% match to meet the 10% local match requirement set by FAA to complete the project.Office of Management & Budget Page 2 State funding for the $3.2 million utilized for state matching grants was derived from the a irport d e v e lopm e nt f und a pp r opri a tion i n clud e d in th e stat e fi s cal ye ar s 2 016 -20 17 bi e nnial budget bill . The appro p riatio n level was set at $4 million for the biennium . INDOT requested a $ 2 million dollar in s t a llment of thi s a ppropri a tion from the s tat e bud ge t committ e e in S e ptemb e r 2015 and plans another i nstallment request ofthe remaining $2 million in September 2016. INDO T work s dili ge n tl y with the FAA to pr e par e a fiv e year compreh e nsiv e C a pital Improvement Program (CIP) for I SASP Airports. T he current plan forecasts a statewide matchin g gran t n ee d o f app rox imat e ly $3.2 million p er y e ar f o r th e n ext fe w y ears . IND OT's

Office of Avia t ion real i zed that the $2 Million appropriation would n o t be sust aina ble to make th e 5% stat e matching gr ant commitm e nt. The Office of Aviation was ab le to obtain State Budget Agency approval to have $1 Million dollars from INDOT's opera t ing bud get transferred into th e Ai r por t D evelopm e n t F und to support th e matching grant pro gram as a one-tim e repair

to meet commitment s . In federal fiscal year 2016 , INDO T plan s to l ower t he matching grant requirement to 4% and in federal fiscal year 2017, lower to 2.5 % puttin g an in crea sed matching grant requirem e nt on the loca l airport s pon s or. IS A S P a irport s a r e re q uir e d to s ubmit th e ir fiv e y e ar C IP t o the INDOT Office of Aviation every February. E ach airport's plan includes a wide var iety of projects that ar e ex trem e ly important to th e airp o rt but m a y not s core high enoug h on the FAA's nationa l pr i o rit y rating system to leverage the required funding for the project. IND OT and the FAA are required to trim th e p r ogram down to the r e quired funding target level s . Man y of t h ese projects are never seen to fruition . In the late 1990's and early 20 00's, INDOT man aged a 50%/50% state a n d lo c al airp o rt g r ant fund provided by Build I nd i ana Fund (BIF) w hi ch helped get these important capital projects co mpleted at Indiana's airp orts . Ex am p l es of t hese types of projects i nc lu de building rev e nue producing facilities su ch as aircraft han gars or fuel farm facilities. The most important of th ese pr ojec ts is u pdat in g or construct i ng new te 1 m i na l building fac ili ties, which are t h e door s t e p in to t h e Stat e ofl ndia na and our communities as the airport has only once chance to make a grea t first impres sion. Pl ease Jet us know if you need any add i t i onal documentation . Indiana's a i rports provide many e conomic benefits to the state, and we appreciate our ongoing relationship with the FAA . A 2 012 economic study found that , for every $ 1 i n vested i n an airport, t h e community will reali ze $10 in benefits. INDOT' s participat i on i n o ur cur r ent airport development prog r ams h elps redu c e t h e local entity's match requirement and he l ps local air p orts leverage a ll the federa l fundin g they can get to maintain and enhance t heir infrastructure. A i rports are a vita l p i ece of our t r anspmiation network enhancing the economic development of each commun i ty t hey serve . Thank you for your ongoing assistance . Sh ould you have any q uestio n s, please d i rect them to Mart i n Blake at the I nd i a n a D e partment of Transpor tation and Asheesh Agarwal at the Indiana Department of Reven u e . Their contact i nfor ma ti on is as follow s: Decemb e r 8 , 20 1 5Office of Management & Budget

Martin Blake Manager, Office of Av iation Indiana Department of Transportation 100 N
. Senate Avenue, Room #N955 Indianapoli s, IN 46204 (317) 232-1487 MaBlake @ indot.lN
.gov

Micah G. Vincent Director Office ofManagement and Budget

December 8, 2015 Asheesh Agarwal Genera l Counsel Indiana Department ofRevenue 100 N. Senate Ave. Indianapolis, 

### IN46204 (317) 232-0610 aagarwal@dor .in.gov Page 3