NH House panel weighs changes to state’s aircraft fees
Discussion focuses on how to make state more competitive with Mass.
It looks like New Hampshire lawmakers are more interested in replacing than merely repealing airport fees by either increasing the fees on older planes or upping the jet fuel tax.
Currently, New Hampshire is one of the most expensive places in the region to base general aviation aircraft, particularly when it comes to fancy new jets owned by executives that the state wishes to attract. As a result, the state is losing them to Massachusetts, particularly after the Bay State abolished its sales tax on aircraft and planes. For example, it now costs more than $300,000 to base a Gulfstream G550 in New Hampshire in its first year as opposed to $300 in Massachusetts.
As a result, airport registrations have declined by a fifth over the last decade to just over 1,000. This has been a particular problem at the airports at Pease International Tradeport and in Nashua, which specialize in general aviation.
General aviation — everything but commercial airlines and military aircraft — contributed at least $100 million to the state’s economy in 2013, generating 776 jobs, according to the 2015 State Airport System Plan released by the NH Department of Transportation’s Bureau of Aeronautics.
House Bill 124 would have repealed airport fees altogether, but airports – particular smaller airports – depend on a share of those fees to keep up their airports.
The House voted to retain the bill, and on Tuesday, a subcommittee of the Ways and Means Committee was trying to figure out how to “reduce fees while staying revenue neutral,” said Rep. Patrick Abrami, R-Stratham, who chaired the meeting.
There were two proposals to replace almost $1 million of revenue that the fees bring in. Patrick Herlihy, the state director of aeronautics, rail and transit, suggested that the state stop assessing fees based on the cost of the airplane, but instead by its weight.
‘Winners and losers’
The state already charges a modest fee based on poundage, but that is nothing compared to the millage rate. For instance, the aforementioned Gulfstream would pay a $48 registration fee plus $910 weight fee, and six mills (or six-tenths of one percent) based on its $56 million price tag, at least in its first year, or $337,500. The rate goes down a mill a year for the first five years, but even one mill translates into $56,250 a year for the next five, until it drops to a flat rate of $15.
Under the proposal, there will just be four annual registration fees, based on weight:
• 12,500 pounds or more: $15,000
• 10,000 to 12,499 pounds: $5,000
• 4,000 to 9,999 pounds: $500
• 3,999 or less pounds: $100
That would drop the Gulfstream’s first-year registration fee by a factor of more than 20, but it would also mean an increase for most owners, since their planes are more than 10 years old, and in some cases pay as little as $48 a year.
“There will be winners and losers,” said Herlihy. But the increase will be minor for most, he added, and “there will be more of an incentive to buy new planes here.”
The question is whether that will be enough of an incentive.
“Fifteen thousand dollars may still be too high if Massachusetts is charging $300,” said Abrami.
David Schoneman, a Nashua alderman who is the liaison for the Nashua Airport, said he is worried about that too. New Hampshire would still keep its disadvantage, he said, which results in more than twice the number of jets based at Massachusetts’ Hanscom Field than in all of New Hampshire.
Schoneman proposed replacing the millage fee with a jet fuel tax increase while keeping the current registration and weight fee intact. That means that state only has to replace $600,000 rather than $1 million. The increase wouldn’t affect most smaller aircraft that run on jet fuel. Commercial airline fees would go up from a half-penny a gallon to 2 cents, and general aviation jet fuel would increase from 2 cents to 8 cents a gallon.
That’s competitive with Massachusetts, which charges a percentage of the fee, so that it varies depending on the price of fuel. That works out to 6 to 15 cents a gallon, estimated Schoneman. And since the price of fuel varies from place to place by several dollars, a few pennies won’t make that much of a difference, he said.
Still, lawmakers were hesitant to raise any kind of a tax, and wound up talking about some kind of hybrid of the two proposals.