Local Matters

Community Sponsors

July 2, 2013 - 10:04pm

Aviation school owner says NYS Taxation and Finance driving him out of business

posted by Howard B. Owens in batavia, business, taxes, Genesee County Airport.

The way Bob Miller sees it, before long, if you want to learn to fly, you will need to go to Pennsylvania or Ohio because there will be no flight schools left in New York.

"The state is holding all the cards on this," Miller told members of the Ways and Means Committee on Tuesday.

Within the past year, NYS Taxation and Finance has started auditing the owners of airplanes that are used as rentals for flight school students.

The state is demanding payment, Miller said, of taxes that were once exempt.

According to Miller, he can't legally charge students tax for their flight hours, but when private plane owners rent their planes to flight schools, the state is now demanding the owners pay sales tax on those fees.

As a result private plane owners who have been audited by the state will no longer rent their planes to flight schools.

More than two months ago, plane owners in Lancaster were audited and Miller was forced to close his school there. Now the state has gone after Batavia plane owners and he must shut down his aviation school here.

"It's not a new law," Miller said. "It's a new interpretation. The executive branch is holding all of the private airplane owners hostage to their interpretation of the code."

According to Miller, this hasn't been an issue in New York for 40 years, and certainly not during the 20 years he's been involved in aviation instruction.

"The state is so desperate for sales tax revenue they're going after everything," Miller said.

Currently, according to Miller, investors buy airplanes without sales tax if they are renting the planes to flight schools. If the planes are rented to private pilots who are not students, then the owners must pay sales tax; if the owners take the planes on a flight for their own private use, they must pay a portion of sales tax for the usage, but for 40 years, there's been no sales tax, he said, on student rentals through flight schools.

The state is requiring plane owners to pay for past unpaid sales taxes going up to five years back.

As a result, Miller said, the plane owners are just ceasing rental services to aviation schools in the state.

Miller has a lease for hangars and office space in the Genesee County Airport through 2015 and he's being asked to be let out of the lease because he's now out of business as a result of the state's actions.

Highway Superintendent Tim Hens recommended the Legislature require Miller to pay rent for 90 days, giving the county time to find a new tenant.

Hens said he isn't worried about filling the hangars -- there's a waiting list for hangar space, but he isn't sure the office space in the terminal will be filled, especially since it will be hard to find another filght school under the current circumstances.

The county will lose about $2,400 a month $2,700 per year in revenue with the flight school closed, due to a decrease in aviation fuel sales.

Mark Potwora
Mark Potwora's picture
Offline
Last seen: 4 months 4 weeks ago
Joined: May 14 2008 - 6:42pm

Miller has a lease for hangars and office space in the Genesee County Airport through 2015 and he's being asked to be let out of the lease because he's now out of business as a result of the state's actions......

a lease is a legal contract ..he needs to honor it and be held responsible..Let him sub lease it..The tax payer was told how important it was the we build these new hangers at taxpayer expense..Miller leased it now he should have to pay for it..

Kyle Slocum
Kyle Slocum's picture
Offline
Last seen: 1 year 9 months ago
Joined: Jan 29 2012 - 11:18pm

NYS is Open For Business. Honest Injun. That NYC guy said so. What are you, a reactionary?

Mark Brudz
Mark Brudz's picture
Offline
Last seen: 1 year 5 days ago
Joined: Feb 9 2012 - 9:33pm

Mark, Did you read the entire article? The airport can lease the space in a heart beat, 90 days rent in most situations like this is a reasonable compromise and it is here, the loss in revenue to the county comes from the Fuel sales which even if the hangars are rented, probably won't make up for the amount a flight school operation might use., the other loss is from the office space rentals.

If the county is thinking that space would be hard to lease out because there will likely be no flight schools in the state (Which the space was designed for) how do you expect Mr. Miller to sub lease it?

The tragedy here is NOT Mr. Miller being unable to fulfill the lease, the tragedy is the reason why he is unable to fulfill the state, and that is the State itself. If indeed there was no change in the applicable tax law and this is truly a change in in interpretation retroactively, then there is a problem beyond this that is far more sinister.

Kyle Slocum
Kyle Slocum's picture
Offline
Last seen: 1 year 9 months ago
Joined: Jan 29 2012 - 11:18pm

"If indeed there was no change in the applicable tax law and this is truly a change in in interpretation retroactively, then there is a problem beyond this that is far more sinister."

You are directed to report to a reeducation facility. The NYC guy has spoken. Any factual response to a statement by the NYC guy is deemed reactionary and should be ignored by all members of the loyal population behind the Blue Curtain.

You have been advised.

Brett DeKruger
Brett DeKruger's picture
Offline
Last seen: 5 years 3 months ago
Joined: Nov 27 2012 - 8:34am

I wonder how much money they'll lose in tax revenue due to selling less fuel as a result of this?

Ed Hartgrove
Ed Hartgrove's picture
Offline
Last seen: 1 year 2 weeks ago
Joined: Dec 20 2012 - 11:54am

And, Kyle, you crack me up, too! But I understand everything you write. You're sort of the "Steven Wright of Perry".
Hey, Mr. Slocum. There's a couple of things I wanted to converse about.

First, would Joe Slocum be any relation (Silver Lake Slocum's) ? Joe & I were very good friends in the '60's - early '70's. That's when I was the 'skateboy' at Silverland Roller Rink. Joe and I even traded cars one day. He wanted to drive my El Camino (The Wild Thing), and I got to drive his Catalina.

Second - Although I live in FL now, my 'landlord' lives in your old house on N. Center. He came down here a couple months ago, and when I asked him if he knew you, at first he wasn't sure. But when I told him you had just opened the sport's shop, he said, "Yeah. I just met him.". That's how I found out his place was yours years ago.

As Mark Potwora said recently, it's a small world.
Really wondering about Joe, though. Do you know him?

Dave Olsen
Dave Olsen's picture
Offline
Last seen: 4 months 2 weeks ago
Joined: Oct 12 2008 - 11:48am

"The state is so desperate for sales tax revenue they're going after everything," Miller said.

Maybe they should stop giving it away to retail projects, crony-capitalist projects and creating tax-free zones at colleges in the colossally mistaken view that those programs increase revenue. God, my head hurts.

Dave Olsen
Dave Olsen's picture
Offline
Last seen: 4 months 2 weeks ago
Joined: Oct 12 2008 - 11:48am

Since we're on the airport subject anyway, why don't we just sell the damn thing or at least get a long term lease for operating it. Now, while it is supposedly a hot item and should bring a good price. Last September Mr. Hens told us that the county will need about 600k per year to match federal funds to rebuild the bridges in the county. http://thebatavian.com/howard-owens/highway-superintendent-provides-revi...

Noone that I've seen has a plan for doing that.

Sell the airport for 3 million bucks, keep the money in the highway dept, spend 600k per year for 5 years, fix the damn bridges before something really bad happens, forward whatever interest is earned during those 5 years to the county treasury. The airport will grow much faster and better than the county will ever be able to manage and the funds will benefit each and every county resident and make our travels much safer. How many people really benefit from the airport? and don't feed me any EDC economic development multiplier BS please.

Raymond Richardson
Raymond Richardson's picture
Offline
Last seen: 4 years 7 months ago
Joined: Aug 18 2012 - 9:23am

Give them time and NYS will start charging a tax on residential rentals. They're already collecting a 9% tax on all hospital, nursing home, and transitional care/rehab centers.

Mark Brudz
Mark Brudz's picture
Offline
Last seen: 1 year 5 days ago
Joined: Feb 9 2012 - 9:33pm

Privatization of the Airport would be a good thing, in fact would probably increase the economic multipliers for the county for various reasons. The biggest of course is that instead of putting potential renters on a waiting list, a private company would likely build more hangers as an investment rather than trying to justify the tax expenditure to build more.

Dave Olsen
Dave Olsen's picture
Offline
Last seen: 4 months 2 weeks ago
Joined: Oct 12 2008 - 11:48am

My point exactly Mark. Thank you. A private concern has a myriad of ways to raise capital that a government entity does not.

Mark Potwora
Mark Potwora's picture
Offline
Last seen: 4 months 4 weeks ago
Joined: May 14 2008 - 6:42pm

I have always believed in the privatization of the airport.....But back to this taxation thing causing Miller to go out of bussiness..If i have to pay sales tax on a car i buy ,why should the plane owner not have to also pay sales tax on the portion of the plane that is used for pleasure..If you rent a car to drive you pay sales tax...So if you rent a plane to teach someone how to fly shouldn't they also have to pay a sales tax on the rental of the plane..This is all about over taxation in New York state....Tax all sales the same or don't tax at all....

John Roach
John Roach's picture
Offline
Last seen: 5 days 19 hours ago
Joined: May 29 2008 - 5:22am

Mark,
The real point is that up to now, they did not have to pay the tax. Right or wrong, that was policy for a long time. If the State wanted to change the rule and start taxing, then they should have given everyone a bit of notice, say 90 days, to adjust their fees and rates.

But worse, the State decided to punish everyone by backdating the taxes. There is no way that was fair. So, people lose their jobs and we all will be out more tax money than the State will now bring in.

Ed Hartgrove
Ed Hartgrove's picture
Offline
Last seen: 1 year 2 weeks ago
Joined: Dec 20 2012 - 11:54am

Mr. Roach: I totally agree with your 1st paragraph. How would people feel if the taxation department came out and said, "We've (RE-INTERPRETED) our tax code, so anyone who has paid less taxes because of 'child-credit' now owes us those past amounts. You've got 30 days to pay."

If it was known in the past, and was allowed in the past, then it shouldn't be retroactively applied.

Timothy Hens
Timothy Hens's picture
Offline
Last seen: 8 months 3 days ago
Joined: Jun 1 2009 - 10:01am

Privatizing or selling the county airport would require the county to pay back a substantial portion of the nearly $13 million in federal aid that the county has received over the past 15 years so there would likely be little profit in doing so. The county did accept proposals in an attempt to privatize the operation of the airport in 2001, but we received no responses.

Since that time, the County has operated the line service at the airport very successfully. Of the more than 60 general aviation airports in New York, Genesee County is one of only a handful that makes money on a consistent basis.

The actual cost to local taxpayers is very minimal. The federal and state money that covers 95% of the capital improvements at the airport is generated by user fees associated with the commercial airline industry, so unless you fly consistently, it is likely that as a Genesee County taxpayer you contribute less than $1.00 per year towards having a county owned and operated airport.

The airport is a key piece of the transportation infrastructure in Genesee County. It does support several local businesses directly and many businesses (large and small) use the airport on a frequent basis. It is no different than railroads or ports, which are often "privatized", but very heavily subsidized by the government.

I know the airport can be a lightning rod topic for some folks, but if you have questions you would like answered or would even like a tour of the facility please email me at [email protected]

Tim Hens

Daniel Jones
Daniel Jones's picture
Offline
Last seen: 2 weeks 14 hours ago
Joined: May 2 2008 - 9:36am

Tim - Very well put.

Ed Hartgrove
Ed Hartgrove's picture
Offline
Last seen: 1 year 2 weeks ago
Joined: Dec 20 2012 - 11:54am

Mr. Hens. You sound like a politician.
"The actual cost to local taxpayers is very minimal."
"...would require the county to pay back a substantial portion of the nearly $13 million in federal aid that the county has received over the past 15 years..."

Tell me, just where do you think federal aid $$ and state aid $$ come from? Let me answer that 'tough' question for you. It comes from the taxpayers. Plain and simple!

Now, on the books, the politicians can make it look like (county taxpayers) are only contributing @ $1 per year. That's because numbers can be jiggled to look like anything you may want them to.

If the county got $13 million in federal aid in 15 years, that's more than $1/per year - "Oh", the politician says, "that was state or federal money". Yeah, that was $866,666/per year from people all across America. And, likewise, people from Genesee County put some of THEIR tax money in for bridges in Wisconsin, and levees in New Orleans, blah-blah-blah. But the politicians do their little juggling act, and make it APPEAR that everyones $$ are being spent close to home. So, you can tell county residents that they only chip in $1/per year, but also tell them that they chip in $1/per year for uncountable projects all across the country also.

There is no state or federal money. There is only TAXPAYERS MONEY!

Mark Potwora
Mark Potwora's picture
Offline
Last seen: 4 months 4 weeks ago
Joined: May 14 2008 - 6:42pm

Mr.Hens are you telling us all that after paying the county employees who work there every day with the county taxpayer paying their yearly salary the airport make a profit...Any tax dollars be it federal,state or local are still taxpayer dollars..Most taxpayers in genesse county get no benefit from the airport being in county hands..How many planes actually land and take off from there on a daily basis...

John Roach
John Roach's picture
Offline
Last seen: 5 days 19 hours ago
Joined: May 29 2008 - 5:22am

Again, the main issue is the Democrats making a retroactive tax policy that will now result in people being laid off (and probably on unemployment for a while), people forced to sell their aircraft, maybe at a loss, and we will not get the tax from fuel sales. Nice touch Governor.

Dave Olsen
Dave Olsen's picture
Offline
Last seen: 4 months 2 weeks ago
Joined: Oct 12 2008 - 11:48am

Thanks Mr. Hens for responding, that's something hardly anyone with the county ever does, other than yourself. I know the county highway dept. has done a good job running the airport and does run it in the black so to speak. That is not my point. My point is is that a proper role of government? I contend that it is not. The mere fact that a large amount of federal aid has been given to the airport however clouds the "profit" claim, as Mr. Hartgrove points out. Also, my point is not how much is it costing taxpayers, it's that it may in fact be an asset which could be turned into maintaining our bridges which as you have pointed out are a problem with no solution so far. Obviously the federal aid issue would have to be dealt with, we'd need to know how much and how long to pay it back, before entertaining a sale. If we are supposedly such a micropolitan hot spot, there should be more takers than 2001. This county has too many fingers in too many pies and is ignoring the basics. You are probably the only one, in my opinion, who can actually claim to be doing the best you can with what you are dealt.

Timothy Hens
Timothy Hens's picture
Offline
Last seen: 8 months 3 days ago
Joined: Jun 1 2009 - 10:01am

Thanks for the comments Dave.

Ed--Regarding the federal aid; it comes from the FAA's Airport Improvement Program (AIP) which is not funded with income tax or a transfer from the General Fund, but rather from user fees on large airports and the commercial airline industry. I understand whether federal or state, a tax is a tax and user fees are a tax as well, but as I stated previously, unless you are a frequent flyer (which most of us are not)--then you do not contribute substantially to this pot of money. If the County didn't take the federal aid offered under this program, it would just be diverted to other airports around the state and across the country. So unless you can convince the federal govt to eliminate the AIP program entirely, it is much better to have a little bit of the money wind up in Batavia so our local contractors and suppliers (and their employees) can benefit.

To Mark's question about profit; the county receives more revenue from fuel sales and hangar leases during the year then it expends in purchasing materials, making repairs and paying county employees and their benefits--so yes the airport does turn a profit on operations. Over time we have used this "profit", or deferred revenue, as local matching funds to state or federal grants or to fund projects not supported by the federal govt. Over the long haul we break even.

The breaking even part is what deters most private entities from wanting to invest in and own General Aviation airports.

The tax issue is what is making it difficult for private operators (like Bob Miller Flight Training) from operating at all.

Mark Brudz
Mark Brudz's picture
Offline
Last seen: 1 year 5 days ago
Joined: Feb 9 2012 - 9:33pm

Mr. Hens,

We need more people like you serving the public, as I am sure that there are, sometimes an explanation of the facts is all that is needed to deflect the proverbial lightening rod, which you just did a mighty fine job of in your last two post, and likewise In many of your post in the past.

I tip my hat to you sir.

Howard B. Owens
Howard B. Owens's picture
Offline
Last seen: 4 hours 32 min ago
Joined: Apr 23 2008 - 3:05pm

I wish there were more officials around like Tim Hens, who are willing to leave comments and explain things in a very factual, non-emotional, non-personal way, a way that educates us all. It's the kind of detailed information that no amount of journalistic reporting is going to dig out but does help us all better understand the issues. Thank you, Tim.

Mark Brudz
Mark Brudz's picture
Offline
Last seen: 1 year 5 days ago
Joined: Feb 9 2012 - 9:33pm

Well said John Roach

Kyle Slocum
Kyle Slocum's picture
Offline
Last seen: 1 year 9 months ago
Joined: Jan 29 2012 - 11:18pm

Ed,

It is, indeed, a small world. My father is Steven Slocum and my mother was Kathleen Pope Slocum. My Father's siblings were June, Joseph, Nancy and Rex.

My earliest remembrances of my Grandparents are of their house on Shearman Road down by the lake. So, Uncle Joe is probably the very same fellow you are looking for. He married Donna and had a couple of youngins. They live in Warsaw and have been growing apples.

I count Dave as a good friend and someone that I trust. That is a very short and exclusive list.

Ed Hartgrove
Ed Hartgrove's picture
Offline
Last seen: 1 year 2 weeks ago
Joined: Dec 20 2012 - 11:54am

Yeah, Kyle. Thanks for answering. Joe was my big buddy. When I went to Vietnam, and was away so long, I kinda lost touch with my Perry friends. Hope he's doing great.

And you're right about David. A good man.

Thanx, Ed

Beth Kinsley
Beth Kinsley's picture
Offline
Last seen: 1 year 1 month ago
Joined: Aug 22 2008 - 9:43pm

Thank you for your service Ed.

Ed Hartgrove
Ed Hartgrove's picture
Offline
Last seen: 1 year 2 weeks ago
Joined: Dec 20 2012 - 11:54am

Thanks, B.A. (See, I didn't forget). How could I? Next to my sister Cher (Oh, and, of course, Ginger from Gilligan's Island), you were my favorite redhead! But, then, you had that infectious smile!!

But I don't wanna take too much credit for the military. Unlike today's service, in '68, Uncle Sam said, "Jail, Canada or You're in the Army Now".

But I got the last laugh, 'cause I was half-way thru Parris Island before they figured out they couldn't put me in the Army (Blues always trumps Browns!!).
Guess I did OK. Came home alive.

Been wanting to say Hi to you for months, now. So, Hi!!

Beth Kinsley
Beth Kinsley's picture
Offline
Last seen: 1 year 1 month ago
Joined: Aug 22 2008 - 9:43pm

Hi Ed! Miss you and the good ole days!

Ed Hartgrove
Ed Hartgrove's picture
Offline
Last seen: 1 year 2 weeks ago
Joined: Dec 20 2012 - 11:54am

Yeah. Uh, I think you mean the good young days. Long gone, now!

Post new comment

Log in or register to post comments

Calendar

S M T W T F S
 
 
 
1
 
2
 
3
 
4
 
5
 
6
 
7
 
8
 
9
 
10
 
11
 
12
 
13
 
14
 
15
 
16
 
17
 
18
 
19
 
20
 
21
 
22
 
23
 
24
 
25
 
26
 
27
 
28
 
29
 
30
 
31
 
 

Copyright © 2008-2019 The Batavian. All Rights Reserved. Privacy Policy | Terms of Service
 

blue button