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SB 1365

An Act amending Titles 74 (Transportation) and 75 (Vehicles) of the Pennsylvania Consolidated Statutes, in Multimodal Fund, further providing for use of money in fund; in preliminary provisions relating to aviation, further providing for definitions and for Aviation Restricted Account and providing for Aviation Trust Fund; in authority of Department of Transportation, further providing for authority of department; in obstructions to aircraft operation, providing for prohibited conduct; in airport operation and zoning, providing for abandoned or derelict aircraft and further providing for power to adopt airport zoning regulations; in aviation development, further providing for service fees, for tax on aviation fuels, for allocation of funds, for agreement of maintenance and for tax on jet fuels and providing for tax on alternative aviation fuels and for aviation fees; in liquid fuels and fuels tax, further providing for imposition of tax, exemptions and deductions, for distributor's report and payment of tax, for disposition and use of tax and for refunds; imposing fees; imposing penalties; making transfers; abrogating regulations; and making editorial changes.

2025-2026 Regular Session Introduced by Dave Argall and 16 co-sponsors

Creates dedicated funding streams and expanded state oversight to support and modernize Pennsylvania aviation infrastructure, development, and technology.

Referred to Transportation
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WeVote Research Nonpartisan
Bill Summary · SB 1365

Overview

SB 1365 (Session: 2025-2026, Pennsylvania) amends Titles 74 (Transportation) and 75 (Vehicles) to reorganize and expand aviation-related funding and authorities. The bill creates an Aviation Restricted Account within the Multimodal Fund, establishes an Aviation Trust Fund, broadens the Department of Transportation’s (PennDOT) powers related to aviation development and airport regulation, expands fee and tax regimes for aviation fuels and alternative fuels, and adds new penalties and administrative mechanisms. It also introduces provisions on airport licensing, abandoned aircraft, and airport zoning enforcement.

Primary Purpose and Intent

  • Create dedicated funding streams and governance for aviation in Pennsylvania.
  • Strengthen PennDOT’s role in aviation development, workforce, technology, and airport infrastructure.
  • Ensure ongoing finance for airport projects, hangars, terminals, and related aviation activities through the Aviation Restricted Account and Aviation Trust Fund.
  • Modernize and expand the tax and fee regime to support aviation needs, including alternative aviation fuels and emerging technologies.

Key Provisions and Changes

Funding and Accounts

  • Aviation Restricted Account (within the Multimodal Fund)

    • Deposits sources include: aviation fuels taxes (6121, 6131, 6132), aircraft registration fees, fines/enforcement, sale of state airports, rents/fees, and related penalties.
    • Uses: grants under allocation of funds, local airport matching, workforce development, aviation development, and statewide aviation purposes (e.g., pavement preservation, obstruction mitigation, and other FAA-aligned activities).
    • Distribution specifics:
    • 50% to airports from which fuel was collected (for eligible aviation purposes).
    • 10% of annual FAA entitlement funding to each airport.
    • Minimums to certain licensed public-use airports (e.g., at least $25,000).
    • Unobligated funds can be carried forward.
    • Continuing appropriation and annual reporting requirements.

  • Aviation Trust Fund

    • Establishment in the State Treasury.
    • Funding sources: a dedicated 0.425% slice of the Tax Reform Code of 1971 (to the Aviation Trust Fund annually), plus other appropriations and interest.
    • Use of funds: semiannual transfers to the Aviation Restricted Account for eligible projects, plus a fixed distribution plan:
    • 25% to directly support commercial service airports.
    • 20% to general aviation airports.
    • 10% to support smaller public airports not in the National Plan.
    • 10% for airport hangar development.
    • 15% for grants or investments in emerging aviation technologies (e.g., advanced air mobility, electric aviation, UAS, and alternative fuels).
    • 2% for statewide aviation technical assistance and an aviation conference.
    • 0.5% for Aviation Advisory Committee expenses.
    • 7.5% for bureau use; up to 10% for administration costs.
    • Eligible aviation opportunity grants and broad authorization for capital, operating, or financing expenditures.

Aviation Authority and Departmental Powers

  • Expands PennDOT authority to oversee programs related to commercial air service development, aviation workforce development, emerging technologies, and statewide significance projects.
  • Requirements for airport licensing and public hearings for new airports or conversions (military to joint-use) within defined proximity to existing airports.
  • Licenses for airports generally valid for one year (except certain airport licenses may have shorter durations).
  • Commonwealth participation in project funding: 75–100% of eligible costs for department-funded grants.

Taxes, Fees, and Deductions

  • Jet fuels and aviation fuels taxes reform:
    • Jet fuels tax (6131): previously 1.1¢ and escalating; new framework imposes an 8¢ per gallon starting Jan 1, 2027, with annual adjustments based on inflation until ceilings/floors are reached; later adjustments tied to CPI-U.
    • Alternative aviation fuels tax (6132): phased-in tax on alternative fuels with rates tied to jet fuel equivalents, escalating through 2030, 2035, and 2040.
    • Aviation fuels tax (6121) to be deposited into the Aviation Restricted Account; adjustments are aligned with broader liquid fuels tax changes.
  • Transfer, disposition, and administration of these taxes are directed to the Aviation Restricted Account.

Fees and Licenses for Aviation Facilities

  • New aviation fees under a dedicated Aviation Fees subchapter:
    • Registration fees for based aircraft (beginning 2028): noncommercial aircraft up to $750 max; commercial aircraft up to $2,500 max, with based aircraft registration required annually.
    • Fees for licensing and inspection of aviation facilities:
    • Private facilities: annual license fees and inspection fees.
    • Fees deposited into the Aviation Restricted Account.

Prohibited Conduct and Abandoned Aircraft

  • Prohibited obstruction of aircraft operations; civil penalties up to $1,000 per violation, with daily penalties for continuing violations; penalties deposited to the Aviation Restricted Account.
  • Department may establish procedures for identifying, handling, and disposing of abandoned or derelict aircraft, including cost recovery.

Airport Zoning and Local Compliance

  • Adds enforcement authority to the department for airport zoning within municipalities that fail to adopt or enforce airport zoning regulations.

Reporting and Oversight

  • Annual spending and status report due January 1 each year (beginning 2027) detailing balances, distributions, recipient/project details, administrative costs, and unobligated funds; reports distributed to legislative chairs and posted publicly.

Who/What Would Be Affected

  • Public and private airports (commercial and general aviation), heliports, and aviation facilities.
  • Airport sponsors and owners who would apply for aviation development grants and maintenance agreements.
  • Commonwealth agencies and departments using aircraft for official purposes.
  • Taxpayers through aviation fuels taxes, jet fuels taxes, and alternative fuels taxes.
  • Aviation industry stakeholders: operators, manufacturers, service providers, and workforce development entities.
  • Local governments and communities via grant programs and local match requirements.

Procedural and Timeline Aspects

  • Effective date: 60 days after enactment.
  • Initial and ongoing fiscal allocations are structured for multiple fiscal years with CPI/PPIs-based adjustments through 2027–2028 and beyond.
  • Annual reporting requirement starts by January 1, 2027, with subsequent annual reports.
  • Fees and taxes for aviation fuels and alternative fuels begin to take effect according to the specified phased schedule (jet fuel, alternative fuels) with CPI-based adjustments.

Potential Impacts

  • Increased dedicated funding for aviation projects and statewide aviation initiatives.
  • clearer governance for aviation development and workforce programs.
  • enhanced support for emerging aviation technologies and infrastructure through the Aviation Trust Fund.
  • new or higher taxes on aviation fuels and alternative fuels to fund aviation programs, with potential downstream effects on operators, airports, and fuel distributors.
  • strengthened local airport investment via grant programs and mandatory state participation.
  • greater Department of Transportation oversight on airport licensing, zoning, and obstruction management.

Compiled from official sources — confirm details with the bill’s official record.

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