NATCA Disputes Trust Fund Decline

 - November 2, 2006, 7:08 AM

In a report released early last month, the National Air Traffic Controllers Association said policy decisions by the Bush Administration, not inadequate revenues, are causing the declining balance in the Aviation Trust Fund.

After studying the health of the trust fund, NATCA executive vice president Ruth Marlin argued that trust fund revenues are not declining. “While the trust fund revenue did experience a temporary period of decline from 2000 through 2003, revenues rebounded last year,” she said. “Indications are that the trust fund revenues are increasing and growth is projected to continue.”

This is undoubtedly good news for general aviation interests, which are gearing up to fight any proposal that would change the way general aviation pays its share into the trust fund.

General aviation interests have long held that the aviation fuel tax is the most efficient and most equitable way of collecting GA’s contribution to the fund.

But the airlines are lobbying to change the method by which aviation users pay to run the national air transportation system. They are claiming that the airlines have been subsidizing general aviation, business aviation and government users of the National Airspace System (NAS) for years.

General aviation groups counter that they are marginal users of a system created for the airlines and that even if all GA aircraft were grounded, it would have little effect on the cost of operating the NAS.

$10 Billion Surplus in 1999

The Aviation Trust Fund (properly known as the Airport and Airway Trust Fund) was established in 1970 to make capital improvements by investing in airports, ATC facilities and equipment, and research and development. As recently as 1999, the fund boasted a surplus of more than $10 billion.

In recent weeks, Bush Administration officials and some influential members of Congress have said publicly that the Aviation Trust Fund revenues are declining and will probably continue to decline over the foreseeable future.

At the FAA’s annual aviation forecast conference in March, FAA Administrator Marion Blakey said her agency needs a revenue source “based both on our costs and our actual units of production.” She said expansion of low-cost carriers and decreasing ticket prices compound the problem further. Transportation Secretary Norman Mineta added that the fund is being rapidly depleted because airline passengers are paying less in ticket taxes. And Sen. Ted Stevens (R-Alaska), chairman of the Senate Commerce Committee, called for the issuing of bonds underwritten by future cash flow to upgrade the ATC system.

But NATCA, the union that represents the nation’s 15,000 air traffic controllers, said the issue of declining trust fund balances is one of policy rather than revenue, as the fund was not envisioned to be the major source of FAA funding.

“The funding mechanism was designed to include FAA operations funding from the general treasury as recognition that there is a significant national interest in maintaining and operating our ATC system,” the NATCA report said. “The administration’s recent budget submission to Congress for FY2006 has projected the percentage of funding from the general treasury is limited to 13 percent of operations, which represents historically low levels.”

Funding FAA Operations

Marlin noted that the percentage of FAA operations that is funded from trust fund revenue (and conversely the amount of trust fund revenue that is expended) is determined by Congress and has been subject to a number of policy and statutory restraints. A shift to increase the percentage of costs from the general treasury to the trust fund is a substantial change in policy that will reduce the trust fund’s uncommitted balance even though trust fund revenues are increasing.

“Any policy decision of this magnitude should be the topic of free and open debate,” said Marlin. “This policy change should not be presented under the pretense of a revenue shortfall.”

The trust fund provides 100 percent of the funding for the Airport Improvement Program, FAA facilities and equipment (F&E), and research, engineering and development (RE&D), while money from the trust fund as well as an appropriation from the general fund supports FAA operations. The trust fund has funded as little as none and as much as 100 percent of FAA operations, depending on congressional action.

Marlin conceded that the question of appropriate use of the trust fund is not new. While earlier debates focused on whether the trust fund could be used to pay for portions of the FAA’s operations, she wrote, more recent debates focus on whether the trust fund should provide the sole source of funding for the agency’s operations. “This dramatic shift in how the trust fund is viewed with regard to operations funding has sparked recent debate about the long-term viability of the trust fund,” she added.

According to the union official, the FAA’s own data illustrates that while the Airport and Airway Trust Fund suffered a brief but predictable decline as a result of the reduction in air travel after 9/11, it is equally clear that as air travel is increasing so too is the trust fund, and the FAA forecasts continued growth, she said.

“The question of available resources for FAA operations is limited by policy choices rather than trust fund forecasts,” Marlin declared. “The question of trust fund allocation and what percentage of FAA operations is appropriately funded from the general treasury versus the trust fund–more so than trust fund revenue itself–will determine whether adequate resources are available to meet the demands placed on the system.”