Proposed Tax Break for Private Aircraft in Kentucky Stalls in Committee Amid 'Heartburn'

Feb. 15—A proposed tax break for privately owned aircraft stalled Tuesday in the House Transportation Committee amid concerns about its goals and costs.

House Bill 447 would exempt personal jets, airplanes and helicopters that are not used for commercial passenger purposes from state and local property taxes.

"There has been a lot of heartburn over this bill out there," Rep. Cherlynn Stevenson, D-Lexington, said at the committee hearing.

"I know it's been out there on social media," Stevenson said. "Last week we cut unemployment (insurance). This week it seems we're going to cut taxes for people who are really wealthy and own a plane."

House Transportation Chairman Ken Upchurch, R-Monticello, limited the committee to discussion on the bill. There was no reference to when a vote might be held in the future.

Financial impacts

The Kentucky Department of Revenue reports $331 million worth of personal aircraft known to be inside the state as of last year, raising about $2.5 million for schools, cities, counties and other local governments and $52,000 for the state's General Fund through property taxes.

The bill's sponsor, Rep. Jonathan Dixon, said he wants to encourage more people to park their aircraft in Kentucky, promoting the state's general aviation airports and creating aviation-related jobs.

"Those aircraft and those dollars that follow those aircraft are not landing in Kentucky," said Dixon, R-Corydon.

Kyle Lewis, Great Lakes regional manager for the Aircraft Owners and Pilots Association, told the committee that different kinds of people own aircraft, not just the wealthy. Farmers and school teachers own planes, Lewis said, and sometimes two or more people will share ownership of a plane.

Kentucky is at a disadvantage compared to neighboring states like Ohio and Indiana that do not levy a property tax on personal aircraft, Lewis said.

"I personally know over a dozen individuals who reside in Kentucky but base their aircraft in Cincinnati at Lunken Municipal Airport," Lewis said.

Rep. Buddy Wheatley, D-Covington, said he wondered how much of a burden the property tax was. Based on his rough math, he said, he came up with an average annual tax bill of about $1,000 per aircraft.

The state of Kentucky charges 1.5 cents each year for every $100 of assessed value of personal aircraft. Local taxing entities, such as school districts, levy their own tax rates on top of that.

"That doesn't seem to me like too much of a disincentive to be in Kentucky," Wheatley said. "There are so many other factors, related to hanger space, all the other factors why anybody would be at a particular airport."

Dixon told his colleagues that the tax exemption had the support of the Kentucky Department of Aviation, which included it as one recommendation in its operational plan last October.

However, the Department of Aviation issued a written statement on Monday to say that Dixon was referring to a "draft planning document" that does not reflect the agency's stance. "The department does not make tax policy, and HB 447 is not administration legislation," it added.

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