FAA’s Response to Questions from the State of Georgia Concerning the Use of Proceeds from

State Aviation Fuel Taxes – July 9, 2015

Inquiry dated January 16, 2015, from Georgia Department of Transportation and Georgia

Department of Revenue, regarding Policy and Procedures Concerning the Use of Airport

Revenues: Proceeds from Taxes on Aviation Fuel (Amendment) (Docket No. FAA-2013-0988,

79 Fed. Reg. 66,282, November 7, 2014).

In developing an action plan, GDOT and GDOR submit the following questions to the FAA

for clarification regarding the New Policy:

1. If the AAIA [Airport and Airway Improvement Act of 1982 (49 U.S.C. § 47101, et seq.)]

requires that the proceeds from a particular tax on aviation fuel imposed by a local taxing

jurisdiction (e.g., a county or a municipality) be used by that jurisdiction for airport

improvement or aviation-related purposes (hereinafter “airport purposes”), may that

requirement be satisfied by the State’s appropriation of monies for airport purposes from

its general fund?

Yes. The AAIA requires the proceeds from local aviation fuel taxes imposed by a particular

jurisdiction be used by that jurisdiction for the capital or operating costs of (a) the airport; (b) the

local airport system; or (c) other local facilities owned or operated by the airport owner or

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

Additionally, in accordance with 49 U.S.C. § 47133, a State tax on aviation fuel may be used to

support a State aviation program, and airport revenue may be used on or off the airport for a

noise mitigation purpose.

We have concluded that these aviation fuel tax statutory requirements may be satisfied by the

State’s appropriation of monies for airport purposes from its general funds. We are labeling this

type of action as an offset, and are permitting offsets when the State appropriates money for

airport purposes from its general fund in an amount equal to or exceeding the aviation fuel tax

proceeds collected, and then remits such funds into the applicable airport revenue account. The

same is true for a State aviation fuel tax; the State could appropriate monies from its general fund

and deposit an amount equal to or exceeding the State aviation fuel tax proceeds into the State

aviation program fund.

State and local governments interested in making an offset would need to confirm that such

actions are lawful and consistent with applicable State and local laws, and advise FAA

accordingly. Additionally, appropriate enforceable administrative or legislative initiatives would

need to be in place, as well as accounting, tracking, and reporting systems, to ensure airport

revenue accounts and State aviation program accounts receive on a continuing basis during each

fiscal year an amount equal to the full amounts collected for aviation fuel taxes.

2. If the answer to Question No. 1 is “yes,” would the State’s appropriation for that purpose

have to be reflected in a specific line item in the State’s annual budget?
Yes, the State’s appropriation from its general fund for airport purposes would have to be

reflected in a specific line item in the State’s annual budget. A specific line item for airport

purposes in a State’s annual budget appropriation is a component of the required accounting,

tracking, and reporting mechanisms that is required to be explained in the action plan to ensure

airport revenue accounts receive on a timely basis an amount equal to or exceeding the amounts

collected as aviation fuel taxes. The action plan should confirm that requirements are in place to

ensure the appropriations are implemented and enforceable by state or local agencies as

applicable. See Question No. 4 for information regarding appropriated funds, payment, and

reconciliation requirements.

3. If the answer to Question No. 1 is "yes," and the local taxing jurisdictions do not use

any of those tax proceeds for airport purposes, must the State's appropriation at least

be equal to the total amount of tax on aviation fuel derived by all local jurisdictions in

the State in order to comply with the AAIA's requirements? For example, if local

sales taxes on aviation fuel state-wide total $100 million (none of which is used by

the local taxing jurisdictions for airport purposes), would the State's appropriation for

airport purposes have to be at least $100 million?

We understand the question to ask whether the State is required to appropriate and pay an

amount equal to the aviation fuel tax proceeds levied and collected within a local jurisdiction

when such proceeds are not used for airport purposes. Yes, the amount of the State’s annual

appropriation for airport purposes must be at least equal to or exceed the total amount of aviation

fuel taxes derived by all local jurisdictions in the State.

4. If the answers to Questions No. 1 and 3 are both “yes,” may the State’s appropriation for

airport purposes for its upcoming fiscal year (July 1 – July 30) be based on the local tax

collected on aviation fuel for the most recently completed fiscal year?

As noted above, the answers to Questions No. 1 and 3 are “yes.” The answer to Question No. 4 is

yes. The State’s payment of collected aviation fuel taxes to airport sponsors may come from

appropriated funds in one fiscal year based on the local aviation fuel taxes collected during the

immediate prior fiscal year, provided the payments made are reconciled with amounts collected

in accordance with Generally Accepted Accounting Standards (GAAP) and such payments are

made on a timely and prompt basis within defined reporting periods. The State’s action plan

should detail the process for collection, timely reconciliation and prompt payment of

appropriated funds within defined reporting periods.

5. If the answers to Questions No. 1 and 3 are both "yes," would the funds appropriated

by the State for airport purposes have to be used or distributed in a way that matched

up with each local jurisdiction's tax collections on aviation fuel, or could the

appropriated funds be used or distributed more generally? For example, if all local

taxes on aviation fuel equaled $100 million statewide, but only $1 million was

attributable to a particular jurisdiction, would $1 million of the State's appropriated

funds have to be distributed or used in that particular jurisdiction for airport

purposes? Or would it suffice that $100 million in appropriated funds are used state-
wide for airport purposes, regardless of how much a local jurisdiction has received in

taxes on aviation fuel and where the appropriated funds are used?

As noted above, the answers to Questions No. 1 and 3 are “yes.” State appropriated funds for

airport purposes have to be used or distributed to match each local jurisdiction’s tax collections

on aviation fuel. Thus, the $1 million of appropriated funds attributable to a particular

jurisdiction for airport purposes must be used in that local jurisdiction for permissible airport

projects or programs. It does not suffice that $100 million in appropriated funds is used statewide for airport purposes.