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American Airlines worried sales tax hike could cost $500,000

By David Perlmutt and Ely Portillo
dperlmutt@charlotteobserver.com

American Airlines will likely oppose a November referendum to boost Mecklenburg County’s sales tax by a quarter cent, saying it could cost the airline $500,000 in added taxes on fuel and parts.

That’s what some county commissioners and County Manager Dena Diorio say American Airlines’ lobbyist Tracy Montross is telling them.

Montross declined comment.

But American spokeswoman Michelle Mohr confirmed in a statement the airline is worried. “We are concerned about any tax increase that will affect our customers and business operations,” Mohr said.

Last week, commissioners narrowly approved adding the referendum to the ballot as a way to generate about $35 million annually, 80 percent of it to raise pay for Charlotte-Mecklenburg Schools employees.

But during the Charlotte Chamber’s intercity trip to Minneapolis last week, commissioners and Diorio said that Montross approached them with concerns about the extra sales tax.

For years, the state granted US Airways a sales tax cap on fuel and exemptions on lubricants, parts and accessories bought in North Carolina, saving the airline $8.5 million in 2011 alone, a state report said.

State lawmakers last year extended that cap to July 2015. It is set to expire then, so the merged American Airlines would lose its benefits just as Mecklenburg began collecting on the quarter-cent addition if voters approve it in November.

Commissioner Dumont Clarke, the board’s vice chair and the referendum’s co-sponsor, said Montross approached him with American’s concerns.

“She said, ‘Hey, you know this could cost the company a lot of money if it gets passed by voters. We’d like to have some dialogue,’ ” Clarke said. “They’re a great corporate citizen, and we’d prefer not to do anything that would cause them to decide this is not where want to do business.”

Clarke said he’d be happy to meet with American officials.

But, he added, “I also told her ‘I’m not pulling (the referendum) back.’ 

Diorio said Montross told her the airline is as much concerned about the cap expiring as it is with the possible quarter-cent increase in Mecklenburg’s sales tax.

“They have a cap and next year the legislature’s tax reform will lift that cap,” she said. “So, it’s not just about the sales tax. They have other concerns about the cap being lifted. If the cap was still in place, we wouldn’t have as much of an impact of what we’re doing locally.”

Republican commissioner Karen Bentley, who voted against the referendum, confirmed in an email that American is “NOT supportive” of the sales tax increase. She said Montross told her it could cost the company $500,000.

“Given that they are one of the largest employers in Mecklenburg County, we should be concerned about this,” Bentley wrote. About 9,900 American employees are based at the carrier’s Charlotte hub.

Fellow Republican commissioner Matthew Ridenhour, who also voted against the referendum, emailed that Montross called him Monday about the same concerns. He said Montross told him that she, Diorio and board chairman Trevor Fuller, the referendum’s other co-sponsor, would be meeting soon “to see if there is something that could be done.”

Ridenhour said he’s against any “special favors or treatment” for businesses. To the five Democrats who voted to add the referendum, he said: “I hope their bed is comfy now that they are laying in it.”

Perlmutt: 704-358-5061
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