A revamped version of the proposed jet fuel tax hike would see the levy imposed only on flights in and out of New Jersey airports with at least 20,000 annual commercial flights, a distinction currently held only by Newark Liberty International Airport.
Opponents of the measure argue that the bill would target United Airlines, which uses the majority of the airport’s departure and landing slots.
Lawmakers in the Assembly Transportation and Independent Authorities Committee approved the measure, Assembly Bill 4392, in an 8-3 vote with one abstention at a standing-room-only meeting Thursday.
The bill calls for eliminating the exemption on the state’s 4-cents-a-gallon jet fuel tax and using the additional revenue to fund the $1.7 billion PATH extension to the Newark airport train station.
Under current law, airliners are only taxed for fuel they burn during taxiing and takeoff, not during actual flight time.
The original version of the legislation, Senate Bill 2892, would have only closed the exemption for airlines with at least 8 million passengers a year, a title only United currently holds.
Lawmakers later removed the 8 million threshold so the tax could be levied on any airline flying in and out of the state.
The measure drew heavy criticism from Republican lawmakers, airline trade group representatives, business advocates and predictably United executives.
“This funding approach simply does not work,” Jill Kaplan, president of the New York/New Jersey region for United Airlines, said in her testimony, pointing to $16 billion in economic activity United generates for the state a year, $2 billion in airport infrastructure investments and employment of 14,000 airport workers.
“I’m frankly very puzzled as to why we are before you today in a very adversarial position,” she added.
Of the airline’s six hubs nationwide, Kaplan said Newark has been the most expensive.
“I want to be very clear, we have choices and we are looking at our choices,” Kaplan said. “We grow in areas where we are able to facilitate the focus of our growth plan.”
But Assemblyman Daniel Benson, D-14th District, who voted for the bill, suggested United was doing just fine.
“United is doing very well, they’re doing very well,” he said. “They’re expanding, there’s a large airport terminal project being done. It’s because it’s the fastest-growing airport in the region.”
He also cast doubt on the notion of United might vacate the state as a result of the new taxes.
“I’m not sure they want to shoot themselves in the foot by missing out on the opportunity of the growth that we’re already having in Newark,” Benson said.
Kaplan also pointed to regulations from the Federal Aviation Administration that specify jet fuel tax revenue can only go toward aviation-specific projects, adding the PATH extension does not meet that criteria.
But Benson said he was confident the FAA would consider the PATH extension to be an aviation project.
“The rules say the projects have to benefit the airport,” Benson said. “In this case we have a project, the PATH extension, that is clearly an airport project.”