Call to Order and Roll Call
The first meeting of the Budget Review Subcommittee on Transportation of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, September 24, 2015, at 10:30 AM, in Room 131 of the Capitol Annex. Representative Leslie Combs, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Max Wise, Co-Chair; Representative Leslie Combs, Co-Chair; Senators Ernie Harris, Jimmy Higdon, and Robin L. Webb; Representatives Hubert Collins, Jim Gooch Jr., Russ A. Meyer, Sal Santoro, John Short, and Jim Stewart III.
Guests: Senator Joe Bowen; Representative Jerry Miller; Juva Barber, Executive Director, Kentuckians for Better Transportation; Anne Lawson, Vice President, Elizabethtown Flying Service, Inc.; Andrew Aiello, General Manager, Transit Authority of Northern Kentucky; Brian Wright, President and CEO, Owensboro Riverport Authority; and, Russ Romine, Deputy Secretary, Transportation Cabinet.
LRC Staff: Justin Perry, Jeff Schnobrich, and Spring Emerson.
Kentuckians for Better Transportation; Aviation, Transit, and Waterways
Juva Barber, Anne Lawson, Andrew Aiello, and Brian Wright provided a brief presentation regarding aviation, transit, and waterways in Kentucky.
In response to questions from Representative Collins, Ms. Barber said the excise tax assessed on aviation fuels brings in approximately $9 million to $11 million per year, and a portion of that money goes back to the general aviation airports for improvements. River barge lines pay a federal tax on diesel fuel, and none of that money goes to the state. The only state appropriation for the general aviation airports are the Aviation Economic Development funds through the Transportation Cabinet budget, in the amount of approximately $10 million per year. Ms. Barber stated that the barge companies are assessed a tax at the beginning of the year on the property but not on the commodity on the boat, and those moneys go to the state then back to the counties that sit along the river, not directly to the ports. Aviation gets approximately $9 million to $11 million which is spent on general aviation projects. The river barge industry pays approximately $8 million per year in assessed taxes on the barges, which is not directly appropriated to the river barge industry.
Ms. Lawson said the sales tax on jet fuels in Kentucky produces an income stream in order to protect and grow the infrastructure of aviation in the commonwealth. The tax is specifically reported by the retailer of the fuel. Ms. Lawson stated that DHL and UPS are capped at $1 million. The 59 general aviation airports and four commercial airports also report monthly what portion of sales tax that is paid is from jet fuel sales tax. In recent years, the amount of local funds needed to match federal funds was increased. Some of the airports are sponsored by their cities or counties. Ms. Barber said each general aviation airport has its own budget, and each public transit system has its own budget. Mr. Aiello said large urban transit systems primarily utilize their own funds, but some federal capital funds are received which require a local match. Some available federal funds are not being used because of a lack of match.
In response to a question from Chair Combs, Ms. Barber stated that she was unaware of how many carriers hit the $1 million cap on jet fuel sales tax.
In response to questions from Chair Combs, Mr. Romine said the Transportation Cabinet received approximately $14 million in jet fuel tax revenues last year and is seeking an appropriation increase. He said the average is $9 million to $11 million per year, and Department of Revenue collects the funds on the cabinet’s behalf. Approximately $1.8 million in General Fund money is provided for matching funds for transit authorities across the state. About $500,000 of General Fund money goes to waterways, since Road Fund money cannot be spent on waterways. The state also uses toll credits to match federal dollars for highways and transit.
In response to a question from Chair Combs, Ms. Barber said the commercial airports in Kentucky include Louisville, Lexington, Northern Kentucky, Barkley Regional, Owensboro, and Bowling Green.
In response to a question from Chair Combs, Mr. Aiello said an additional $5 million would allow the transit authorities to provide a ten percent match in cash, as opposed to toll credits, the buying power of federal dollars.
In response to a question from Chair Combs, Ms. Barber said the $1 million per year that was requested for waterways in the last budget cycle was based on the needs of the riverports, such as building access roads. The $500,000 that was appropriated was used very quickly.
In response to questions from Representative Collins, Mr. Romine said there are four or five commercial airlines that reach the $1 million cap each year. Some of the airport boards across the state provide local funds to add to the match, and the state provides some assistance as allowable. The airport boards are comprised of volunteers.
Chair Combs welcomed Senator Wise as co-chair of the subcommittee.
Senator Wise commended Mr. Wright and said that he had been in Owensboro a few months ago and was impressed with the Riverport area and the renovations that have been completed there. Senator Bowen said there had been approximately $150 million invested in downtown Owensboro, with about $44 million of that being an appropriation from the federal transportation fund for riverfront abatement for erosion. The riverfront was shored up, making it possible to expand some properties to develop a park, revitalize the shoreline, and incorporate that into a commercial entertainment development.
In response to questions from Representative Short, Mr. Wright said dredging rivers is unique to different locations, specifically in the western tip of the state where dredging is done more often to provide access for barges. Permitting is required through the Corps of Engineers.
There being no further business, the meeting was adjourned at 11:12 AM.