A Georgia proposal to eliminate sales taxes on jet fuel could delay or force the cancellation of building renovations, air conditioning system overhauls and new construction work by Clayton County Public Schools.
“I have several projects that I would have to delay, re-prioritize or maybe not do,” school Superintendent Morcease Beasley said Tuesday afternoon. To drive that point home, he had more than 500 students bused to the headquarters of Delta Air Lines that morning to protest a legislative push to eliminate the tax.
Clayton and its cities are in the middle of a lawsuit against the Federal Aviation Administration, which ruled a few years ago that jet fuel tax revenues must be used for airports rather than for other purposes, like schools. New legislation in the Georgia General Assembly would deny Clayton a day in court by ending both the local jet fuel tax and a statewide one.
House Bill 821 would deny the state about $35 million a year from a 4 percent jet fuel tax while costing Clayton nearly $20 million a year on its local 2 percent sales tax, with half of that coming from the schools, said Wesley Tharpe, research director at the Georgia Budget and Policy Institute.
The left-leaning organization hasn’t taken a position on the bill, but Tharpe said Clayton spends its share on county needs because that’s what the law behind the local tax requires. “Their argument is that they are unable to invest those dollars for airport purposes, so they have been using the money for more general needs,” he said.
Delta reported nearly $3.6 billion in net income in 2017, down from nearly $4.4 billion the year before. The airline says Georgia's policy puts it at a disadvantage with other major airlines that have hubs in other states with either a lower jet fuel tax rate or no jet fuel tax at all.
The advocacy group Airlines for America says Georgia imposes the eighth-highest jet fuel tax burden on airlines. Nine states, including two near Georgia — North and South Carolina — have no such tax at all, the group notes.
This is inconsistent with Georgia’s broader stance on taxes, said Alison McAfee, the group’s chief spokesperson. “The commercial jet fuel tax is uncharacteristically high given the state’s otherwise pro-business climate.” Lower taxes could draw more carriers and jobs to the state, she said, with new routes for flyers.
Delta says that even without the tax the company will remain a financial mainstay for Clayton. Its property accounts for 8 percent of the county’s assessed value, making it the top property taxpayer at $23 million in 2017. The company also employs more than 33,000 Georgians, 5,000 of whom live in Clayton.
Airline spokesman Trebor Banstetter said the company has been in discussions with Clayton schools for more than a year to find a solution to the jet fuel tax issue, adding, “we have a mutual interest to ensure that Clayton County schools will not see a funding shortfall as the tax is phased out.”
The revenue loss would hit a district that already spends more than $645 less per pupil than the state average, according to Georgia Department of Education financial reports. Schools are funded with a mix of federal, state and local dollars, with the average local component equaling 40 percent. In Clayton, just 27 percent of the $8,076 in revenue per full-time student was local.
“We’re considered one of the poorer counties,” said Beasley, the superintendent.
THE STORY SO FAR
Previously: Delta Air Lines is supporting a sales tax exemption for jet fuel, but Clayton County leaders say the move would cost the county millions.
The latest: The school system bused more than 500 students to the headquarters of Delta Air Lines Tuesday to protest the plan.
What's next: Lawmakers are considering legislation that restores the exemption, which was eliminated in 2015.
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