City Council to consider changes to citys discount policies

With a budget shortfall of more than $200,000 projected for the airports 201516 fiscal year budget, city staff members are working to identify ways to increase revenue at the Georgetown Municipal Airport, said Georgetown Transportation Director Ed Polasek.

In 2013 a business analysis completed by CH2MHill recommended the city re-evaluate land, tie-down and building leases as well as fuel rates at the airport. A market analysis is being done for the leases and is expected to go to council in November, Polasek said. Once that is completed, city staff is expected to begin an analysis of the fuel prices and possible discounts.

We have to fix the whole financial model. Thats what is going to be the hard part, he said. You have to find a way that everybody is equally paying their share for the true maintenance and operations of the airport.

In July the city discontinued a volume-buyer discount from aviation fuel sales until it would be financially feasible to resume discounts and re-evaluate fuel prices and discount policies, Polasek said. Polasek said the city stopped offering the discount after discovering it had never been approved by City Council, which is responsible for setting all rates and fees.

Polasek said had the discount been approved by council, the city would not have discontinued it.

The suspension of the discount upset some airport-based business owners, including Pilots Choice Aviation owner Beth Jenkins.

The volume discount is something that should happen, she told City Council at its Aug. 26 meeting. We got no notice that they were cutting off the discount. Thats not how you run a city and run a business.

Jenkins said since January 2001 she has spent more than $1.5 million on fuel at the airport.

In 2013 aviation fuel sales brought in $103,522 in gross margin. After operation and maintenance costs for the fuel sales the city made a net margin of $27,522which was used to help fund operations of the airport, Polasek said.

Our [retail] markup is out of balance with the true cost to operate the airport, Polasek said. We cant afford to operate with the discount.

Without the fuel discount, the city could potentially increase the net margin by $50,000, he said.

Our base fuel rate doesnt even give us the revenue we need to operate the airport, Polasek said. We still have $150,000$160,000 we have to make up. The only way we can do that is to look at the fuel margin and look at other ways we can increase revenue at the airport. Otherwise the taxpayersproperty tax and sales taxare going to have to continue to support the airport, and thats not the policy direction we have from the council.

City Council directed staff to continue to study the issue.