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Turbulence over transfer to balance books
$15 million from an airport fund that boosted the state's ledgers came in for criticism by aviation executives.
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A month after Gov. Tim Pawlenty and DFL legislators hailed a session-ending budget deal, a Senate subcommittee on Tuesday weighed the effect of taking $15 million from a little-known state airport fund to help balance the state budget.
An array of state aviation executives, along with officials from Target Corp. and Supervalu Inc., told the panel that the transfer would probably delay building projects at many of the 136 publicly owned airports in Minnesota.
In Duluth, said Brian Ryks, the city's airport authority executive director, officials were counting on $1.4 million from the airport fund to help build a new passenger terminal.
Subcommittee members said the effect of the $15 million transfer to the state's general fund, which went largely unnoticed during the Legislature's final weekend, was compounded because of a previous transfer from the fund. That separate $15 million transfer in 2003, the panel was told, was supposed to be repaid in July 2007, but that didn't happen until this year. When the money was finally transferred back to the airport fund, officials said, it was almost immediately transferred back out last month with no provision to repay it.
"Did people just forget?" asked Sen. Ann Rest, DFL-New Hope, chairwoman of the Transportation Subcommittee on Airways, Waterways and Railways. "I find it distressing, quite frankly."
Norman Foster, the state Department of Finance's executive budget director, said the complicated transfers were "relatively rare" and told the subcommittee that one reason the problem wasn't detected was that "there was sufficient cash in the fund to keep the [airport] activities going."
Aviation officials, however, said they feared the fund would be regularly raided to help ease the state's budget woes because its importance was not understood.
The airport fund, which dates to 1945, receives most of its revenue from aviation gasoline and special fuel taxes, an airline flight property tax and an aircraft registration tax.
Jon Krall, the aviation director for Supervalu, said the company paid a $200,000 first-year aircraft registration fee for the planes it has at Minneapolis-St. Paul International Airport. He said that figure compared with a $300 registration fee the company paid in Idaho. "I can't even confidently look our management team in the eye and say, 'Don't worry, those funds go to support the airport,'" he said, referring to the $15 million transfer.
Sen. Michael Jungbauer, R-East Bethel, said the fund transfer not only reflected poorly on Pawlenty, who Jungbauer said has portrayed himself as pro-business, but contributed to the public's distrust of their elected officials.
"People are [already] very suspicious of government, very suspicious of where the taxes all do go," he said. "[This] makes us look like liars."
Mike Kaszuba • 612-673-4388
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