Aviation industry leaders are waging a campaign against a measure in New Jersey that would more than double the state tax on aviation fuels and eliminate an exemption for airlines from taxes on fuel purchased in the state but burned beyond state borders. The measure would raise the tax of 2.75 percent of gross receipts (converted into about 4 cents per gallon) to 7 percent. That conversion could be adjusted annually.

Companion bills containing the tax changes were introduced in the New Jersey House and Senate. The Senate Budget and Appropriations Committee yesterday added the bill, S.2411, to its agenda today—meaning it could come up for debate and possible vote.

The pending action has generated substantial opposition from industry groups, with more than a dozen letters independently sent to state lawmakers from the National Air Transportation Association (NATA), NBAA, Airlines for America (A4A), International Association of Machinists (IAM), Teamsters and individual airlines such as United, American, Spirit and UPS.

NATA urged lawmakers to reject the proposal, saying that rather than raising revenue it would convince operators to take their business outside the state. “The legislation fails to recognize the unique nature of aviation, which allows stakeholders to simply fly to the state that affords the best value,” said NATA president and CEO Tom Hendricks. “In fact, these proposals are outside what NATA sees nationally, where states are adopting tax statutes to make their aviation businesses more, not less, competitive with those in adjoining states.” Hendricks pointed to the sales and use tax exemption on the sale of general aviation aircraft adopted by the New York state legislature last year.

Alluding to initial reports that revenue raised by the New Jersey proposal could be used to pay for a variety of state expenses,Hendricks warned that “revenues derived from state aviation fuel taxes may be used only for aeronautical purposes.” The FAA reaffirmed this policy in 2014, he added.

A4A senior v-p and general counsel David Berg also emphasized that concern. “The proposed legislation would be unlawful if it takes jet fuel tax revenues and uses them to fund non-aviation infrastructure projects,” he said in a letter to New Jersey lawmakers. “Non-compliance…may lead to sanctions.”

The bill would harm New Jersey consumers, Berg said, adding that it would have the “unintended and undesirable effect of making New Jersey less competitive.”

“For a state that derives more than 16,000 jobs and over $3 billion in economic output from GA, a nearly tripling of the fuel tax rate will make New Jersey significantly less competitive,” agreed Scott O’Brien, senior manager, finance and tax policy for NBAA. He pointed to Teterboro Airport as “one prime example of how GA powers the New Jersey economy,” noting it handled 170,000 aircraft movements last year and is home to six businesses that fuel aircraft and employ hundreds. The bill, O’Brien said, “will have a negative impact on these businesses as the significant fuel tax increases are likely to decrease fuel purchases and revenue.”

IAM general v-p Sito Pantojaadded the bill would be a disincentive for airlines to expand their operations and hire more workers in New Jersey.