Rocky Mountain Helicopter Inc. will fly its aeromedical division out of Utah if the Utah Legislature fails to approve a bill allowing a sales-tax exemption for parts and equipment installed on its aircraft, the company president says.
And Rep. John L. Valentine, R-Orem, who sponsored HB43 calling for the exemption, in a letter to fellow legislators wrote, the "failure to enact this bill could cost Utah County 100 jobs, payroll of $8 million to $10 million and approximately $1 million in lost tax revenues."The current law states that the sale of parts and equipment installed in aircraft used primarily for scheduled interstate commerce is to be tax exempt. Rocky Mountain Helicopter equips helicopters for aeromedical service nationwide and does not have a regular flight schedule for its aircraft.
Valentine wants to amend the scheduled-flight provision and replace it with the stipulation that the aircraft be operated as a common carrier in interstate commerce. Rocky Mountain Helicopter would qualify for the tax exemption with that change.
The company buys helicopters from a manufacturer in Pennsylvania and outfits them as air ambulances at its completion center at the Provo Municipal Airport. It provides helicopters, pilots and aircraft maintenance on a contractual basis with 42 hospitals in 31 states. Company revenues approach $70 million a year.
If Rocky Mountain Helicopter were forced to pay taxes on parts used to repair and assemble its aircraft, President James B. Burr said, it would cost the company $300,000 to $400,000 a year.
At that cost, he said, "we simply can't compete."
Rather than try to make it in Provo, Burr said, the medical operation would be moved elsewhere and "jobs would go with it" through attrition. The Provo operation employs about 175 mechanics, half of which could be lost if the Legislature does not approve the sales-tax exemption for parts and equipment, he said.
Rocky Mountain Helicopter officials approached Utah County legislators about changing the law after the State Tax Commission informed the company it would begin taxing it for parts installed on aircraft operated in and out of state.
"We just asked for inclusion" in the exemption, Burr said. "We think it's certainly fair, just and right."
Burr said his company has had an informal agreement with the Tax Commission to only pay tax on parts installed and used in Utah aircraft. He said it has never paid tax on equipment used to overhaul aircraft from outside the state.
"We're not going to move the company," Burr said. The company has about 800 employees nationwide and 113 aircraft.
"We simply won't bring them here," he said of helicopters coming from out of state to be worked on. The company recently opened a new maintenance facility in Greenville, S.C.
Valentine, a tax attorney, said he thinks the company has valid concerns. The legislator said he "very definitely" fears losing Rocky Mountain Helicopter.
The bill could be considered on the House floor Wednesday, Valentine said. The Senate has yet to see it. The legislative session ends at midnight Wednesday.
"I think it has a fair chance of passing," Valentine said.