Dispute between city and Springfield Airport Authority continues

No lawsuit filed yet, but disagreement over aviation fuel sales taxes isn't resolved

The Springfield Airport Authority hasn't followed through on its threatened lawsuit against the city of Springfield to obtain disputed sales tax revenue on the sales of aviation fuel at Abraham Lincoln Capital Airport.

But lawyers for both sides have started to talk, and the SAA has filed a Freedom of Information Act request to determine how much the city has received in aviation fuel sales tax revenue since 2012 and how that money has been spent.

Mayor Jim Langfelder sent a letter Jan. 4 asking for a meeting between city officials and the airport authority board to avert a potential lawsuit authorized by the board in a Dec. 21 vote.

A Jan. 7 letter to city attorney Jim Zerkle from Don Craven, a lawyer representing the board, said such a meeting "can wait for a later date." Discussions between the lawyers "is more appropriate at this time," Craven wrote.

The Springfield Airport Authority, a local unit of government that operates the airport with an annual budget of about $5 million – an amount that includes revenue from property taxes – contends the city owes the authority at least $808,000 from sales taxes on aviation fuel sales between July 2004 and November 2019.

The authority backed up its claim in a legal analysis that says Federal Aviation Administration regulations require "local taxes on aviation fuel be expended for the capital or operating costs of the airport."

The analysis says the regulations began affecting the city's portion of sales tax that exceeded the tax rate in place after Dec. 30, 1987. The Illinois Department of Revenue adopted a change in how these taxes were recorded in 2017 to make it easier for taxing bodies to keep track of sales taxes that should be spent for airport purposes.

The state in 2019 ended the collection of local sales taxes on aviation fuel at Capital Airport beyond the rate authorized in 2004.

The authority said in its analysis that it first notified city officials of the city's "noncompliance with FAA airport revenue-use policies" in 2014. At that time, the city's obligation to repay the authority would have been $584,422 in sales tax revenue, according to the authority's calculations.

City officials, however, have a different interpretation of the federal regulations and state law.

Langfelder says in his letter that lawyers for the city and authority agree the federal rule didn't become effective until a "grace period" expired in December 2017.

The authority disputes the mayor's claim.

Langfelder also said the FAA, in an Oct. 22 status report, indicated the city doesn't owe the authority anything. The authority also disagrees with this interpretation by the mayor.

The two sides even disagree on whether the SAA has the authority to sue the city. Only the federal government can file enforcement actions based on federal regulatory requirements, the mayor said.

"The national federal regulations involved do not allow for enforcement by local governments or private citizens," Langfelder wrote.

Airport authority chairman Frank Vala, a frequent critic of the mayor, previously said he would personally file a lawsuit to recover the sales tax revenue if the SAA board declined to authorize a suit.

Langfelder did offer in his letter to spend $48,000 in city funds, pending city council approval, from sales tax receipts to hire a consultant who would "provide a strategy to increase services and flights to the airport to benefit the citizens of Springfield and surrounding areas."

Langfelder, who appoints four of the seven airport authority board members, has been critical of airport officials in the past for not doing enough to increase the number of commercial flights in and out of the airport.

"While I believe the city is well-positioned to defend against any such lawsuit, I am concerned that the proposed legal action is wasteful of taxpayers' money," Langfelder wrote. "I would rather avoid this waste of time and resources, and instead, work together to improve public services at the airport to benefit the community."

Craven said the airport board shares the mayor's concerns about efficient use of taxpayer dollars.

"The board simply wishes to ensure the city has been following state and federal laws that require the tax it collects from sales of aviation fuel be spent for airport-related purposes," Craven said.

He said the board disagrees with Langfelder's view on when federal law restricting the use of sales tax on aviation fuel to airport-related purposes became effective.

But, he said, "The board is hopeful that an amicable resolution to this matter is feasible."

Despite Langfelder's criticism, airport officials say they are doing their best during the COVID-19 pandemic, which has depressed business- and leisure-related travel and caused staffing challenges for airlines.

They point to $20.7 million in infrastructure upgrades and other improvements during the pandemic, as well as plans to complete $45 million more – 90% of it funded by the federal government – as examples of preparations to make the airport more attractive to the general public and to current and future tenants.

The $21 million removal and decommissioning of the airport's rarely used third runway is expected to begin this spring and be completed in 2023, airport executive director Mark Hanna said. The project will pave the way for development of a commerce park at the runway's southern edge.

Because of COVID-19-related trends in the industry, the airport's two United Airlines flights per day will drop to one in late March, Hanna said.

Hanna has said commercial air traffic overall is rebounding. He said numbers were up 59% in 2021 through November compared with a similar time period in 2020.

The 75-year-old airport, at Illinois Route 4 and Route 29, covers 24,000 acres, directly accounts for 2,630 jobs and has an annual total economic impact of $370.8 million, according to a recent Illinois Department of Transportation report.

Dean Olsen is a senior staff writer for Illinois Times. He can be reached at dolsen@illinoistimes.com.

About The Author

Dean Olsen

Dean Olsen is a senior staff writer for Illinois Times. He can be reached at:
dolsen@illinoistimes.com or 217-679-7810.

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  • Spring Cantata

    @ Springfield First United Methodist Church

    Sun., May 22, 10:30 a.m.