Senate raises avgas and jet fuel taxes to shore up Aeronautic Trust Fund

The Senate approved Senate Bill 178 to increase the avgas tax from 6 cents to 7 cents per gallon and to raise the jet fuel tax from 4 cents to 7 cents per gallon. The measure passed on the floor by a 2/3 threshold, with a recorded vote of 28 yeas and 7 nays.

Why it matters: Sponsor Senator Hoehn said the revenue will bolster the South Dakota Aeronautic Trust Fund used as the state match for federally funded airport projects such as runway construction and maintenance. Hoehn said neither tax has been increased since 1995 and described a multi-decade funding shortfall that risks closures of small airports.

Details and fiscal estimate: Hoehn told senators the increase would add roughly $500,000–$600,000 per year to the trust fund by one estimate and that federal funding typically covers 90–95% of major projects, with the state fund providing the required match. He said the fund is not at a sustainable level for projects the Department of Transportation anticipates in the next decade.

Support and opposition: Hoehn said she organized meetings with pilots and representatives of the aviation community; she reported letters of support from the South Dakota Pilots Association, an Experimental Aircraft Association chapter, and a charter operator. Senator Divert argued the fuel tax could reduce pressure on local property taxes because municipalities sometimes backfill airport shortfalls. Opponents raised concerns about raising taxes, though multiple senators supported the measure as a modest, user-based fee.

Vote and next steps: The Senate recorded 28 yeas and 7 nays; the President declared the bill passed by the required two-thirds majority and the title was deemed correct.

Ending: The bill now advances per the legislative process to the next stage.