Legislative & Governmental Affairs Update – May 2020
Governor Ron DeSantis has continued to ask the Legislature to hold the FY 2020-2021 General Appropriations Act (the Budget) and nearly 200 bills that passed during the 2020 Regular Legislative Session as he and his staff continue to guide Florida through the COVID-19 pandemic. Although the Legislature was able to finish the Budget and address major policy issues during Session, everything was immediately overshadowed by the global pandemic as Governor DeSantis triggered stay-at-home orders and restrictions. The FY 2020-2021 Budget is effective July 1, 2020, so it is expected that the Legislature will begin sending bills to the Governor no later than the end of June.
As Florida begins the process of reopening the economy, FABA is revisiting legislation that was filed, debated, voted upon, or passed during the 2020 Session. The Legislature entered the 2020 Regular Session with a unique blend of optimism and expectation as Session began without hurricane recovery (no Irma or Michael), and without mass tragedy (no Pulse or Parkland). The economy was healthy, and legislators were eager to begin Session so it could end and head directly into campaign season. As we all know, the optimism evaporated once the Capitol banned visitors and the Legislature met in a new era of social distancing. However, FABA did work on a number of issues of concern to the membership before everything became COVID-19 related:
Aircraft Sales Tax - For FABA, Session began with Senator Dennis Baxley filing Senate Bill 1546, and Representative Heather Fitzenhagen filing House Bill 6067, to repeal Florida’s aircraft sales tax. Florida’s aircraft sales tax is higher than all of the surrounding states in the Southeast, and continues discourage aviation sales and service in Florida. With states like New York repealing its aircraft sales tax, and others capping sales tax at $300 (South Carolina), Florida continues to receive negative publicity for its high-tax position. Almost all of the funds that the Department of Revenue collects in aircraft sales tax is “discovery collections” not actual sales of aircraft in Florida. The bills failed to pass this Session but FABA thanks Sen. Baxley and Rep. Fitzenhagen for carrying the torch on this important tax issue.
Aviation Fuel Tax – Just as the general aviation community has come together to support the repeal of the aircraft sales tax, the commercial airlines annually make a run at repealing the aviation fuel tax. This year was no exception as Senator Joe Gruters (SB 1192) and Representative Spencer Roach (HB 6061) filed legislation to repeal the aviation fuel tax. Airlines for America (A4A), American Airlines, Allegiant, Jet Blue, and Southwest Airlines proposed eliminating or reducing the aviation fuel tax that commercial airlines pay. FABA has opposed the aviation fuel tax proposal in favor of the advancing the aircraft sales tax repeal. A scaled-down version of the aviation fuel tax proposal that would increase the refund given to commercial airlines was included in the House tax package. However, concern over cutting taxes for the airlines instead of cutting taxes for the Florida residents, together with opposition from FABA and the Florida Airports Council, doomed the fuel tax repeal or reduction this year.
Aircraft Documentation – One of the few legislative proposals that did pass and has already been signed into law was contained in the tax package legislation: HB 7097. A purchaser of an aircraft will now have 90 days from the date of departure to provide DOR with documentation that the aircraft has been titled or registered in another jurisdiction. A purchaser now has 30 days instead of 10 days from the date the aircraft left Florida to provide DOR with proof of the removal. And, the selling dealer has 30 days from the date of the sale to provide to DOR a copy of the invoice (or other proof of sale) and a copy of the original affidavit from the purchaser attesting that he or she has read the statute on nonresident purchases.
Diesel Exhaust Fluid – New proposed legislation this Session was filed by Representative Toby Overdorf and Senator Ben Albritton in House Bill 569 and Senate Bill 1036 related to diesel exhaust fluid. As background information, the United States Environmental Protection Agency requires diesel exhaust fluid (DEF) to be used in newer diesel engines, including diesel-powered vehicles used for aircraft and airport support. DEF is an exhaust additive that reduces diesel emissions by neutralizing nitrogen oxide into harmless nitrogen gas and water.
In recent years, a number of aircraft have experienced engine shutdowns and other engine operability issues resulting from the contamination of jet fuel due to the inadvertent filling of fuel truck anti-icing injection system reservoirs with DEF instead of fuel system icing inhibitor. The Federal Aviation Administration has made a number of preliminary safety recommendations regarding the use of DEF at airports including additional training and the adoption of best management practices.
As initially filed, the bill required that DEF be phased out of use at public airports by October 1, 2030. The bill, as passed by the House also required certain public airports that utilize DEF to create a DEF safety mitigation and exclusion plan and provides minimum requirements for such plan. The plan must be approved by the governing body of the airport and submitted to the Florida Department of Transportation. The airport must regularly review its plan and annually certify compliance. Physical measures must be made to secure fuel system icing inhibitor fill points on the operator's aircraft fuel delivery vehicles. Such measures shall prevent the addition of any fluid to the fuel system icing inhibitor fill point by unauthorized personnel. The Senate version of the bill failed to advance through all of its committee. The DEF bill is expected to return for the 2021 Session.
What’s Next? – One of the reasons the Governor has asked for a delay in having the Legislature send him the budget is to give the State more time to receive additional federal dollars. Those additional funds will help the Governor as he makes decisions on what projects and programs to veto. Once the budget is signed, we can expect rampant speculation on when the Legislature will hold a special session to address the budget shortfalls. Legislative leadership has insisted that Florida’s reserves and federal funds received are sufficent to address needs at this time and that a November special session would be the earlies date for a special session. FABA is continuing to work with the Governor’s Office, the House and Senate to monitor the latest updates on the reopening of Florida’s economy and new of legislative proposals for the 2021 Session and will let you know as issues develop.
Sales Tax Exemption on Aircraft Sales
FABA is encouraging the Florida legislature to follow the lead of other States such as New York and offer an exemption to sales tax on aircraft. In essence, Florida is losing a great deal of aviation business and opportunity to other states. For example, other states such as New York have little or no sales tax on aircraft. Numerous transactions are closed in other states where the aircraft are simply flown out of Florida for the closing. Moreover, any work done on these aircraft is performed in other states to the detriment of aviation businesses in Florida.
Amendments to Mechanic’s Lien Law
In 2019 FABA successfully championed amendments to Florida Statutes s. 329.41 and s. 329.51 to clarify that that liens claimed under Florida law for labor, services, fuel, or material furnished to an aircraft are not possessory liens and thus, a person claiming such a lien does not need to keep the aircraft in his or her possession to enforce the lien. The law now allows a lienor to enforce a lien for fuel, labor, services, or material furnished to an aircraft even if the lienor releases the aircraft to the owner or operator. This will make it easier for a lienor to recover money owed for maintenance on an aircraft without keeping a commercial aircraft out of service and potentially disrupting commercial air travel. This will also allow the owner or operator of an aircraft on which a lien is claimed to keep using the aircraft while he or she works to satisfy the lien.
We are still working the aircraft sales tax repeal to be a part of the House and Senate tax packages and for the lien law amendment to be attached to a bill. Rep. Miller and Sen. Bean are encouraging their respective committee chairs to include the repeal. We are waiting on the Senate tax package to be released at this point to know whether the issue is still alive. The House did not include the aircraft sales tax exemption in its tax package and ultimately collapsed its tax package from $331 million to less than $80 million due to Parkland. Rumor has it that the Senate tax package will be smaller than the House and that the Senate is more interested in a reduction in the aviation fuel tax for the airlines, but will not know for sure until documents are released.