AIRPORT PROGRAMS IN SISTER STATES Many of New Jersey's sister states are recognizing the benefits of a strong general aviation system. As an example, these states' economic development authorities distribute economic information to businesses to encourage corporate relocations. Typically, such material highlights the State's new or refurbished general aviation airport as one means of enticement. The conclusion can be drawn from this action is that investment in the general aviation infrastructure, to provide suitable general aviation airports, is a critical element in attracting high-growth, high-tech, stable businesses. To better understand how other states support their general aviation system, the Commission conducted a survey of sister states' aviation funding and policies. All 50 states plus Puerto Rico were sent questionnaires. The Commission received an 86 percent response rate, with 43 states and Puerto Rico returning the questionnaire. (See Appendix C for a complete analysis). All questions respecting budgets and funding address the two fiscal years of 1993 and 1994. The actual survey responses are Exhibit 28.129 In comparing New Jersey to the 42 states that responded to this survey, the Commission found the following: * Aviation Department Administrative Budget - New Jersey's spending on the administration of its aviation department, approximately $1 million, is far lower than the average of $4.5 - $5 million. New Jersey ranks l6th-17th out of the 42 respondents. * Budget for Operation of Airports - The average state spends $5 million on operating airports. New Jersey spends nothing. * Capital Improvement Dollars Spent On All General Aviation Public Use Airports - New Jersey's investment in capital improvements at all general aviation airports increased dramatically in 1994, to $4.6 million compared to the 1993 level of $0.7 million. New Jersey's respective ranks are 18th and 33rd. * Total Budget - New Jersey's Aviation Department Budget increased dramatically in 1994 to $6.6 million compared to the 1993 level of $1.8 million. New Jersey's respective ranks are18th and 31st. * Total Budget - Operations - Correcting the budget of the aviation department to exclude the operation of airports, New Jersey's spending remains the same since it does not operate airports. However, since the responses of other states have changed, New Jersey's ranks improve by one position to 17th and 30th. * Federal Airport Improvement Program Funding - New Jersey's receipt of $14.2 million and $9.6 million in Federal AIP Funds places it in the middle of the pack with ranks of 20th and 24th. The survey was designed to provide certain demographic information which is also set forth in Appendix C. This indicates that New Jersey has the highest population density of any state with 1,035 residents per square mile. The state with the lowest density is Alaska, with one resident per square mile. Puerto Rico and Rhode Island are similar to New Jersey with respective densities of 1,005 and 951. The only other states with densities greater than 500 are Connecticut (675) and Massachusetts (769). With a population of 7,730,188 and 50 airports, New Jersey has 154,000 residents per airport. Thus, New Jersey is far above the average of 61,000 residents per airport. That means, each of New Jersey's airports serves 2.5 times as many people as the average airport nationwide. The only respondent with more residents per airport is Puerto Rico, with 321,000. Thus, New Jersey ranks second from the bottom in terms of having airports per capita. Also, New Jersey has the fewest average square miles covered per each airport, with one airport for every 149 square miles. The demands on New Jersey's airports are even greater than the above numbers indicate because of the wealth and amount of travel of its residents. Page four of Appendix C shows that 68 percent of New Jersey's public use airports are privately owned. The only state with a higher percentage is Delaware, with 78 percent (Delaware has a total of nine airports of which seven are privately owned). Only four other states have public use airports of which 50 percent or greater are privately owned. It is clear that New Jersey's air transportation system is extremely vulnerable if privately owned airports continue to close. The funding numbers on page one of Appendix C speak for themselves. One noteworthy item, however, is the funding increases in 1994 relative to 1993. From other testimony and evidence that the Commission has reviewed, this has been a very positive move. Airport owners are beginning to believe that the Legislature and Administration has come to realize the importance of general aviation to the State's economy and has begun to reverse its record of long neglect of airports in New Jersey. Since the New Jersey funding for 1995 and 1996 has been more in line with the increased 1994 level, our funding analysis will be based upon the 1994 figures. From pages four and five of Appendix C, New Jersey's total aviation budget less operation of airports is $133,000 per airport. Although New Jersey ranks 10th, it is far below the average of $546,000. Per thousand residents, it is $862. On this basis, New Jersey ranks 23rd and is far below the average of $12,000. It is somewhat meaningless to compare New Jersey to other states for capital improvement funding at privately owned airports. This comparison would not reflect New Jersey's singularly large number of privately owned airports, or New Jersey's high real estate values. Further funding and incentives for these essential and vulnerable airports are indicated. At the very least, New Jersey's funding programs should be brought up to national standards.130 At publicly owned airports, the capital improvement funding of $109,000 per airport earns a rank of 12th, but is considerably below the average of $464,000. Looking at the big picture of capital improvements, with publicly and privately owned airports combined, New Jersey ranks 11th with $93,000 per airport compared to the average of $395,000. On a per capita basis, New Jersey ranks 22nd with $606 per thousand residents compared to the average of $8,447. The types of projects funded by capital improvement investments, such as runway repavings and extensions, lighting, etc. are of the utmost urgency and importance. It is imperative that the funding level be consistent with the demands placed upon our airports. With only Puerto Rico having on average more residents served by each airport, New Jersey's investments in airports should be near the top of our peer group, and certainly no lower than the average. Just to achieve the per airport average, capital funding needs to be increased four-fold, from approximately $5 million to $20 million. Because capital improvement spending is currently 70 percent of the total budget, the increase in capital investment to $20 million would require a concomitant almost four-fold increase in the Aviation Division's total budget from six million to approximately $24 million. Even with a budget of $24 million, New Jersey would still be well below the states with which it is in competition. On a per airport basis, New Jersey would have to increase its total budget by a factor of six to $36 million to achieve t he survey average. On a per capita basis, the total budget would have to be increased by a factor of 14 to $84 million to achieve the survey average. For approved programs, the federal government provides funds to states for the capital improvement of their airports under the Federal Airport Improvement Program (AIP). One measure of how well a state's administration is doing is to determine how much it is securing in AIP funds. Using the raw funding numbers, New Jersey's AIP rank is in the middle of the pack in the low 20's. For 1993 and 1994, New Jersey's average AIP was approximately $12 million, considerably below the $21 million survey average. Examining this on a per airport basis (page five of the Appendix C), New Jersey's rank improves to 14 with a dollar amount close to the survey average. On a population basis, New Jersey is closer to the bottom of the pack with a rank of 34; the State's funding level is 16.6 percent of the survey average. AIP eligibility is determined by many factors, including the number of reliever airports in the State. New Jersey has 14 airports with reliever status and should rank high in amounts received in this category. The survey was designed to allow a comparison of state aviation policies and programs. Page two of Appendix C covers responses to questions about sources of funding for the states' aviation programs. Some state divisions receive 100 percent of their funding from appropriations from general revenues. Other divisions receive no general funds, relying instead on dedicated revenues from avgas taxes and other fees. Page three, column two of Appendix C, contains the answers to a particularly important question: "Does your state have any tax abatement/sale of development rights/subsidy or other unique programs designed to assist your privately owned public use airports?" Three of the respondents (Indiana, Massachusetts and Michigan) have a property tax exemption for their privately owned public use airports; one has an effective exemption with the state reimbursing the airport for the property tax (Pennsylvania); and one respondent assesses airport land based upon its agricultural valuation (Minnesota). Additionally, one state (Maryland) has a bill pending for property tax exemption and another state has a bill pending for agricultural valuation (Missouri). Three other states (Colorado, South Dakota and Wyoming) have programs to return avgas taxes and one (New Hampshire) registration fees to the airport from which those revenues originate. The justification of these programs is that a private business providing public infrastructure should logically receive the tax revenues that it generates. In total, eight states have annual programs to support privately owned airports either through property tax relief or revenue sharing. Two additional states have bills pending on property tax relief. Thus, ten of the 41 respondents with privately owned public use airports, or almost 25 percent, have or will have consistent annual assistance programs. New Jersey is far behind her sister states in supporting privately owned, publicly used airports. Expensive real estate and the high capital investment required make owning and maintaining a private airport increasingly difficult. Since 68 percent of New Jersey's airports are privately owned, the failure of this support leaves the State's air transportation infrastructure very vulnerable. The worst comparison is that New Jersey does not seem to have any clear plan for the development of its airport system. It is a system substantially inadequate to serve the future needs of the State (the population density of which is forecast to grow inexorably) and, yet, there is no program to develop a system to serve that population. Perhaps it is because there were once so many private individuals who were willing to provide this element of the public transportation system to New Jersey free of charge, that the State is late in developing such a plan. Other states have had such plans in place for decades. North Carolina, in the 1950s and 1960s, at the direction of the State Division of Aeronautics, put an airport suitable for business aircraft in every county in the state.131 Today, North Carolina has over 50 percent more turbine aircraft per capita based in its state than New Jersey.132 In the 1960s, the Governor of Ohio also launched an ambitious program to provide for a paved, publicly owned airport in every county. The payoff to this investment can be seen in the number of turbine powered business airc raft located in Ohio - 430 compared to New Jersey's 216.133 On a per capita basis, this is 50 percent better than New Jersey. Other states, including Wisconsin, Minnesota, Michigan, Pennsylvania and Florida, have seen what North Carolina and Ohio have done, and are beginning to invest heavily in general aviation airports. In recent years Florida has spent over $100,000,000 of state funds (e.g. prior to federal funding) annually on its general aviation airports. Connecticut pays 7.5 percent of the ten percent required to secure the 90 percent Federal AIP funds; the private airport owner pays only 2.5 percent. Eleven states (Idaho, Iowa, Maryland, Massachusetts, Minnesota, Maryland, Montana, Nebraska, Nevada, Oklahoma and Virginia) either provide their airports with funds earmarked specifically for promotion of the airport or provide promotional materials for the airport to use to invite industry into their states. These states recognize that airports can attract businesses, especially businesses with highly paid employees, and valuable products that warrant expeditious air travel. North Carolina is currently promoting its Global Transpark, a combined airport/industrial and office park. The Global Transpark offers shipping by air cargo, rail and truck - a true intermodal system. Mountain Air Cargo is based there. This location appeals to companies that need to make or receive time-critical shipments, including international shipments.134 The North Carolina Economic Development Office is promoting this facility in its letters and brochures, which it sends out to encourage businesses to relocate to North Carolina.135 A great number of these brochures have been sent to businesses in New Jersey. North Carolina intends to duplicate this Global Transpark in several locations. Footnotes: 129 Appendix C contains a copy of the survey form as well as the spreadsheet compilation and analysis of the responses. In the spreadsheet compilation, the New Jersey row is highlighted for ease of viewing. At the bottom of the page, there is an average row, "AVG", which is the average value of the responses. The "RANK" row, is New Jersey's rank within the response pool. Attached to the end of Appendix C is a Definitions Section, explaining each of the columns in Appendix C. The reader may find it helpful to read that section first. 130 It is important to add however, that this, alone, will not be enough if New Jersey intends to enter the competition, which other states have already started, to keep the prime employers in New Jersey in the next century. Prior to 1994, New Jersey was nearly last in all categories in this survey. This long neglect will not be overcome by merely bringing airport funding programs up to the national average. 131 NJGASC, 1/30/96, page 116. 132 Exhibit 11, 1997 NBAA Business Aviation Fact Book, page 18. 133 Exhibit 11, 1997 NBAA Business Aviation Fact Book, page 18. 134 Exhibit 57, North Carolina Global TransPark brochures. 135 NJGASC, 9/26/95, page 15.