ALBANY – After a decade of lobbying the state Legislature, the general aviation industry has finally secured the tax relief that it believes will restore New York’s competitiveness – and bring lost jobs back to its airports.
“What this legislation does is level the playing field with Connecticut, Massachusetts, New Jersey – the states that have cannibalized our business,’’ said Mike Giardino, president of the New York Aviation Management Association and director of aviation at Greater Rochester International Airport.
The bill that Gov. Andrew Cuomo signed April 13 eliminates state sales and use taxes on the purchase of general aviation aircraft – planes used for non-commercial purposes – and any machinery or equipment installed on them as of Sept. 1. State sales taxes on their maintenance and repair was eliminated in 2004.
Previously, only commercial aircraft – planes used for passengers, cargo and charters – were exempt from these taxes.
“This is going to make a measurable difference in New York, where we are so highly taxed, so highly regulated,’’ said Maureen Halahan, president and CEO of the Orange County Partnership. “People are doing happy dances about it.”
Halahan said she expects the tax relief will bring new tenants to Stewart International Airport and encourage current ones to expand. The airport is already home to Cessna’s Citation Service Center, GE’s corporate fleet and two fixed-base operators, Atlantic Aviation and Airborne Aviation, that supply the gamut of support services to plane owners, from hangars to repairs to fuel.
“Over the next year or two, Stewart will grab some of the low-hanging fruit – planes that aren’t location-sensitive,” from Teterboro Airport in New Jersey and Waterbury-Oxford Airport in Connecticut, said Fritz Kass, the Stewart representative to the Aircraft Owners and Pilots Association. “But they’ll have to build more hangars first, so this will mean construction jobs, too.”
Tenants at Teterboro, in particular, will be attracted to Stewart’s wide-open spaces and lower operating costs and to the county’s lower cost of living, predicted Kass, explaining that corporate planes bring their crews with them.
Teterboro, a purely general aviation airport, has been at capacity for years. Like Stewart, it is operated by the Port Authority.
Giardino said the state has lost more than 700 general aviation aircraft over the past decade, most of them to low-tax or no-tax neighbors who promoted themselves as cheaper places to buy and base planes, yet still close enough to serve the New York market. Prices of single-engine planes can range from $16,000 to $300,000, and of twin-engine jets, from $645,000 to $65 million.
But the loss of a business jet, according to a state Department of Transportation study, also translates into the loss of an average of five on-airport jobs and $1 million a year in economic activity.
“Everybody uses the word ‘jobs,’ but we like to use the word ‘careers,’ because jobs such as pilots and mechanics really are career paths,’’ said Giardino.
Mechanics, for example, have to be Federal Aviation Administration-certified before they can touch a plane, and then they earn between $58,000 and $95,000 a year.
“Stewart has 5,000 full- and part-time jobs, maybe 2,000 of them at the Air National Guard, all good jobs, and it can support more,” said Kass. “People don’t see what a huge economic thing it is, because it doesn’t have a lot of air service, but that’s also going to change in a few years.”
The legislation, despite its parallels to the state’s other tax-relief programs for businesses, languished for years, in part because some lawmakers perceived it as pandering to rich people rather than promoting economic development.
In what Giardino called “a beta test,” NYAMA finally convinced them to waive state sales taxes on maintenance and repair of general aviation aircraft for five years in 2004.
The tax relief stopped enough planes from leaving the state for pricey tune-ups to produce a 64 percent increase in local and state sales tax revenues from aviation maintenance and repair-related businesses by its third year. The increase, documented by the state Department of Taxation and Finance, resulted in the exemption becoming permanent.
The FAA subsequently reported an increase of 23 maintenance and repair businesses and 686 new aviation-related jobs in New York.
“We are highly confident this tax relief will quickly become revenue neutral, and then revenue positive, too,’’ said Giardino. “The results will be tangible. The end game will show the payoff is there.”
http://www.recordonline.com/article/20150425/NEWS/150429532/101019/BIZ05