Bill Proposed to Suspend Diesel Fuel Tax for School Bus Contractors in New York

NEW YORK - A New York assemblyman has introduced a bill that that if passed will help ease the financial burden of unanticipated high diesel prices this school year.

A09064 temporarily removes state and local taxes on diesel paid by New York school bus contractors. The legislation would sunset June 30, 2006, and is intended to give school districts time to assess and budget student transportation costs, said Assemblyman Peter Rivera.

More than 55,000 diesel powered school buses transport more than 2 million students in 700 school districts across the state of New York .

"Increases in these diesel fuel costs will no doubt have a heavy negative impact on school district's budgets, and this is a situation that needs immediate action because it is an immediate problem," Rivera said.

Although the bill seeks to ease the burden of the high cost of diesel, said New York Association of Pupil Transportation Executive Director Peter Manella, it is only one element of a broader solution that is needed to address the problem, which also includes heating fuel and natural gas.

"The bill is a start, but our support for it is linked to passage of an overall approach," he said.

Manella points out that at least 50 percent of the school transportation services in the state of New York are district-operated. School districts already are exempt from state taxes on diesel, making the legislation directly applicable only to school bus contractors.

"It is not clear in any event that the contractors are required to pass any reductions along to school districts," he said. "Such returns are contingent on contract provisions that are negotiated between schools and contractors."

Manella favors a multi-pronged approach that includes aid for districts, relief for contractors, flexibility under contingency budgets, fund balance relief, and long-term changes like funding for alternately powered school buses.

Bob Brisman, owner of West Point Tours in Vails Gate, explained that school bus contractors priced their services this year based on fuel at much lower prices, so the tax exemption would simply align the cost of fuel with the current pricing of buses.

"It doesn't mean the school districts would get them as a reimbursement of sorts," he said. "It would save operators the prospect of other forms of balancing their budgets.

West Point Tours runs 160 school buses, and transports approximately 5,000 students daily. The fleet logs 2 million miles a year for three school districts in the mid-Hudson area about 55 miles north of New York City - Highland Falls-Fort Montgomery, Newburgh Enlarged City School District , and Cornwall School District .

While the proposed legislation will help school bus contractors through the fuel crises, New York School Bus Association Executive Director William Fahey agrees that a stronger solution makes more sense. He plans to propose a bill that would permanently repeal the tax on diesel.

"[Exemption from the tax] cuts the cost of our operators down a lot for this year," he said. "It may be the difference for some between profit and loss, actually."

Tim Birnie of Birnie Bus Service in Rome says it is difficult to understand paying the diesel tax when school districts next door are exempt from the additional cost. The legislation is overdue, he said, and should be extended to a permanent status as well as apply to all fuel used to transport school students - district and contract. Birnie Bus Services operates 650 school buses and has management contracts for another 120 that serve 20 school districts in upstate New York .

"We are all cognizant of the fact that this fuel situation is not going to go away," Birnie said. "It just seems to me that the legislature, instead of looking at stopgap measures, should look long term."