User fees lose steam with Congress, ATA

 - May 27, 2009, 5:04 AM

Even though the nation’s airlines are playing nice with general aviation over the contentious question of user fees, the Obama Administration has clearly signaled that it wants to fund the FAA with more user fees in Fiscal Year 2011.

The 2010 budget proposal for the FAA released last month by the White House makes it obvious that President Obama wants a fundamental change in funding in FY 2011 by dramatically reducing General Fund support for aviation in America.

The Administration proposal for 2011 envisions $9.6 billion coming from user fees–up more than $2 billion from the initial estimate earlier this year. And that figure rises to $11 billion by 2014.

And although the Air Transport Association (ATA), which represents the airlines, maintains that the taxes and fees paid by turbine-powered general aviation aircraft have not kept pace with the dramatic growth of that segment since 1970, it is no longer pushing for user fees on GA. Instead, the association has joined others in the aviation industry, as well as with many members of Congress, in advocating a greater contribution from the General Fund to help pay the costs of running the FAA and modernizing the ATC system.

Testifying before the Senate aviation subcommittee last month, ATA president and CEO James May said that new FAA reauthorization legislation, which has been under debate in Congress since 2007, should embrace new thinking about infrastructure funding, including giving the FAA authority to issue tax credit bonds, making NextGen eligible for funding from a National Infrastructure Bank and significantly increasing General Fund contributions.

Former FAA Administrator Marion Blakey also emphasized the importance of establishing a solid funding regime to support NextGen, including long-term FAA authorization and increasing the annual contribution from the General Fund to the FAA.

“Underlying the funding discussion is a basic question of whether the U.S. is committed to retaining its global leadership position in civil aviation or will cede the gold standard to the EU, Australia or Canada,” said Blakey, who is now president and CEO of the Aerospace Industries Association.

She told the panel that the three significant challenges ahead for accelerating NextGen are building infrastructure, publishing systemwide satellite-based procedures wherever possible and equipping aircraft to take advantage of NextGen benefits as soon as possible.

The House Transportation and Infrastructure (T&I) Committee passed H.R.915, the “FAA Reauthorization Act of 2009,” in March, and early last month the chairmen and ranking members appeared before the House Committee on Ways and Means to testify on the bill.

While the T&I committee believes that aviation excise taxes (including taxes on fuel) and not user fees should continue to fund the FAA and modernization of the ATC system, the amount and types of tax are under the jurisdiction of the Ways and Means Committee.

T&I chairman James Oberstar (D-Minn.) told his colleagues on Ways and Means that the programs in H.R.915 can be funded by existing aviation excise taxes, coupled with a “reasonable” General Fund contribution that is consistent with what the industry has requested, and a “relatively small” increase in revenue derived from general aviation fuel taxes.

“Therefore, I recommend that the Committee on Ways and Means increase the general aviation jet fuel tax rate from 21.8 cents per gallon to 35.9 cents per gallon, and increase the aviation gasoline tax rate from 19.3 cents per gallon to 24.1 cents per gallon,” he said. “It is worth noting that general aviation operators support this proposal, and that witnesses representing the [AOPA] and [NBAA] appeared before the House aviation subcommittee this year and testified in favor of it at our February 11 hearing.”

NBAA president and CEO Ed Bolen, who flew from EBACE in Geneva to testify before the Senate aviation subcommittee, told the senators that despite the challenges it faces, the business aviation community remains steadfast in its support for FAA reauthorization legislation, including an adjustment to the GA fuel tax to help pay for aviation system modernization.

“Make no mistake about it, these are very difficult times and projections are that things will get worse in 2010,” Bolen said. “However, in spite of all the challenges faced by the business aviation community, one thing has remained constant–our continued support for comprehensive FAA reauthorization legislation and modernization of the nation’s air traffic control system.”

In a statement the day before the Senate hearing, AOPA president Craig Fuller said the association “remains convinced that the current system of fuel taxes collected at the pump and ticket taxes collected at the counter, combined with a healthy contribution from the general tax fund, remains the best way to pay for the nation’s aviation system and avoid an unfair burden on general aviation and costly new bureaucracy.”