The state Assembly approved a bill that would effectively hike the gas tax on United Airlines, the largest airline company doing business in New Jersey, in order to finance the extension of the PATH Train to Newark Liberty International Airport.
Senate Bill 2892, sponsored by Senate President Stephen Sweeney, D-3rd District, and approved in a 42-31 vote by the Assembly on Thursday, would close a loophole on the four cent jet fuel tax, but it does not specifically mention United Airlines.
Rather, the bill would see the jet fuel tax hike imposed only on flights in and out of New Jersey airports, which is at least 20,000 annual commercial flights, a distinction currently held only by Newark Liberty International Airport, where the majority of flights are by United Airlines.
The bill would boost state revenue by up to $40 million a year, according to a fiscal note from the nonpartisan Office of Legislative Services.
The move has drawn heavy criticism from business advocates and executives, as well as United Airlines, who point to the considerable cost of doing business in New Jersey and argue that the proposed use of the jet fuel tax revenue is illegal under federal law.
“United Airlines, along with other carriers serving Newark Liberty International Airport, have made it very clear this misguided bill would make it more expensive for airlines to operate, adding to the cost of doing business in New Jersey resulting in higher costs for everyone—including the people of the Garden State,” Jill Kaplan, president of the New York/New Jersey region for United Airlines, said in a Thursday statement.
United Airlines has pointed to significant direct and ancillary economic investment into the state—$16 billion in 2017, according to a November 2018 report provided to NJBIZ.
“This change to the aviation fuel tax formula would make New Jersey less competitive and hurt efforts to encourage economic growth,” Andrew Musick, vice president of government affairs for the New Jersey Business and Industry Association, said in a Thursday statement.
“The expanded tax will cost commercial airlines millions of dollars, and that will drive up the cost of doing businesses in New Jersey, as well as the cost of airfare,” he added.
United made $2 billion of direct investment into Newark airport infrastructure and employed 14,000 airport workers, Kaplan said.
And, Kaplan said, Newark has been the most expensive of United’s six hubs nationwide.
“I want to be very clear, we have choices and we are looking at our choices,” Kaplan said at an October 2018 committee hearing. “We grow in areas where we are able to facilitate the focus of our growth plan.”
Kaplan also said the plan is unlawful under the Federal Aviation Administration’s guidelines, which she said mandates that jet fuel taxes can’t be used for non-aviation purposes.
But supporters of the measure, such as the labor union 32BJ SEIU, say United holds significant amounts of wealth, which it needs to more equitably share.
“Approving this measure is justice for working people in New Jersey and especially for Newark and the communities around the airport,” Kevin Brown, the New Jersey state director for 32BJ SEIU, said in a statement to NJBIZ. “In the face of sizable profits on one hand and a compelling community need for improved infrastructure on the other, the tax loophole that commercial airlines current enjoy in New Jersey stands out as unjustifiable.”