A pair of bills currently in the state House of Representatives proposes that a small percentage of discretionary state general fund spending be diverted into the state’s aeronautics fund.
State Rep. Dave Agema (R-Grandville) introduced the bills last month in an effort to boost the federal match on funding for the aeronautic industry that has been dropping steadily for years.
“We were looking at where the best federal matches could come from for roads and airports,” Agema said. “We need $120 million to keep our airports going and these proposals are just one niche to find money.”
David VanderVeen, Oakland County’s director of central services, said he sees the initiative giving the aeronautics industry a hand.
“Airport funds have been reduced greatly over the years and these bills are intended to bring the funding back to the standard of about five years ago, and would go toward improvements of infrastructure,” VanderVeen said.
House Bill (HB) 4022 amends the distribution of certain revenues into the state aeronautics fund and amends a portion of Public Act (PA) 16 of 1933. The bill would make it so that after the allocations and distributions are made, an amount equal to the collections of the tax imposed at a rate of 4 percent from the sale of retail computer software shall be allocated to the aeronautics fund.
The percentage allocated would not affect the 2 percent sales tax allocation already mandated by Proposal A. Rather, it only takes a portion of discretionary general fund dollars after revenue sharing and education programs are mandatorily funded.
Currently, 70 percent of the 6 percent sales tax goes toward school revenues and just shy of 30 percent goes toward revenue sharing, Agema said.
Agema is proposing to divert dollars from The Michigan Health Initiative into the aeronautics fund. Currently the Michigan Health Initiative is set up to dole out $4.5 million toward work place wellness; $700,000 for HIV/AIDS; $2.2 million in HIV/AIDS testing and education; and $2.5 million to local health care networks, according to Agema.
“Between the feds and the state, that’s $55 million for AIDS,” he said.
Of the $7.8 million spent last year on the Michigan Health Initiative, $4.2 million was spent on HIV/AIDS prevention, testing and education, but 52 percent or $2.4 million of the money allotted to AIDS initiatives was absorbed by administrative costs.
“The funding isn’t doing what it should,” he said. “Right now it’s flipping into AIDS and too much toward administrative costs. We’re not raising fuel taxes so I’m trying to cut the AIDs funding by 7.4 percent and at the same time use the money the best we can to get our own money back.”
Agema said the money could be more wisely spent since those dollars would be eligible for federal matching dollars to assist the state’s airports and create jobs.
Similarly, HB 4025 proposes the same taxing structure as HB 4022, at a rate of 4 percent from the sale of aviation fuel and aviation products to benefit the state aeronautics fund.
“When you buy a gallon of gas at the 6 percent sales tax, nothing goes to roads and the same with airports,” Agema said. “I’m proposing a small percentage — just a fraction — that doesn’t already go to schools and revenue sharing.”
That amounts to about $7 million a year, according to Agema.
“There’s no better use for these dollars than on aviation to fix the airports and at the same time, get a 9.5-to-one federal match,” Agema said. “It also will significantly put more people back to work.”
VanderVeen said federal matching dollars provide the impetus for improving infrastructure.
“Oakland County International Airport would benefit,” he said. “While the state would be administering funds, these funds are to meet matching federal funds and to provide the ability for airports and aeronautical services to administer grants.”
HB 4022 was referred to the House Tax Policy Committee; HB 4025 is being reviewed by the House Transportation Committee.