STATE OF INDIANA 

OFFICE OF MANAGEMENT & BUDGET 

212 State House 

December 8, 2015 

Byron K. Huffman 

Indianapolis, Indiana 46204-2796 

317-232-5610 

Director, Office of Airport Compliance and Management Analysis 

Federal Aviation Administration 

800 Independence A venue 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 to the Federal Aviation 

Administration's (FAA's) request that all states document their compliance with Docket No. 

FAA-2013-0988, Policy and Procedures Concerning the Use of Airport Revenue; Proceeds From 

Taxes on Aviation Fuel. Specifically, Indiana affmns that all revenues from state taxes on 

aviation fuel are and will be used for specified aviation-related purposes. 

Under Indiana Code 6-6-13-6, as of July 1, 2013, the State oflndiana began collecting 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 of Revenue 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 of these funds, 

and more on aviation-related purposes. 

Indiana's State Aviation System Plan (ISASP) includes 70 airports that serve the air 

transportation needs of more 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 of activities, such as pavement reconstruction and 

rehabilitation of runways and taxiways, approach protection, land acquisition, runway 

extensions, and planning for future projects. The FAA awarded 90% of the total project cost 

directly to the municipality sponsoring the project with a 10% match requirement. The Indiana 

Department of Transportation (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 

airport development fund appropriation included in the state fiscal years 2016-2017 biennial 

budget bill. The appropriation level was set at $4 million for the biennium. INDOT requested a 

$2 million dollar installment of this appropriation from the state budget committee in September 

2015 and plans another installment request ofthe remaining $2 million in September 2016. 

INDOT works diligently with the FAA to prepare a five year comprehensive Capital 

Improvement Program (CIP) for ISASP Airports. The current plan forecasts a statewide 

matching grant need of approximately $3.2 million per year for the next few years. INDOT's 

Office of Aviation realized that the $2 Million appropriation would not be sustainable to make 

the 5% state matching grant commitment. The Office of Aviation was able to obtain State 

Budget Agency approval to have $1 Million dollars from INDOT's operating budget transferred 

into the Airport Development Fund to support the matching grant program as a one-time repair 

to meet commitments. In federal fiscal year 2016, INDOT plans to lower the matching grant 

requirement to 4% and in federal fiscal year 2017, lower to 2.5% putting an increased matching 

grant requirement on the local airport sponsor. 

ISASP airports are required to submit their five year CIP to the INDOT Office of 

Aviation every February. Each airport's plan includes a wide variety of projects that are 

extremely important to the airport but may not score high enough on the FAA's national priority 

rating system to leverage the required funding for the project. INDOT and the FAA are required 

to trim the program down to the required funding target levels. Many of these projects are never 

seen to fruition. In the late 1990's and early 2000's, INDOT managed a 50%/50% state and 

local airport grant fund provided by Build Indiana Fund (BIF) which helped get these important 

capital projects completed at Indiana's airports. Examples of these types of projects include 

building revenue producing facilities such as aircraft hangars or fuel farm facilities. The most 

important of these projects is updating or constructing new te1m inal building facilities, which are 

the doorstep into the State oflndiana and our communities as the airport has only once chance to 

make a great first impression. 

Please Jet us know if you need any additional documentation. Indiana's airports provide 

many economic benefits to the state, and we appreciate our ongoing relationship with the FAA. 

A 2012 economic study found that, for every $1 invested in an airport, the community will 

realize $10 in benefits. INDOT' s participation in our current airport development programs helps 

reduce the local entity's match requirement and helps local airports leverage all the federal 

funding they can get to maintain and enhance their infrastructure. Airports are a vital piece of 

our transpmiation network enhancing the economic development of each community they serve. 

Thank you for your ongoing assistance. 

Should you have any questions, please direct them to Martin Blake at the Indiana 

Department of Transportation and Asheesh Agarwal at the Indiana Department of Revenue. 

Their contact information is as follows: 

December 8, 2015 
Office of Management & Budget 

Martin Blake 

Manager, Office of Aviation 

Indiana Department of Transportation 

100 N. Senate Avenue, Room #N955 

Indianapolis, IN 46204 

(317) 232-1487 

MaBlake@indot.lN .gov 

Micah G. Vincent 

Director 

Office of Management and Budget 

December 8, 2015 

Asheesh Agarwal 

General Counsel 

Indiana Department of Revenue 

100 N. Senate Ave. 

Indianapolis, IN 46204 

(317) 232-0610 

aagarwal@dor .in.gov 

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