A Time for Decisions

AAAE's No. 2 man Spencer Dickerson continues to insist that "security, security, security" remains perched as the top concern for U.S. airports today - from funding to installation to standards.

Bonds, a primary funding mechanism for airports, are a hot topic of discussion in Congress currently as the Hill rethinks the alternative minimum tax (AMT). As Van Beek explains, AMT bonds remain attractive to airports because they are tax-exempt. In the end, the question to be answered, he says, is will airports be able to offer bonds that are attractive to investors. "Over time," he explains, "airports have tried to argue that we should get more of our debt as fully tax-exempt because [airports are] public utilities. It's a legislative effort we're pursuing."

Funding the System

With Congressional reauthorization for funding the aviation system now under discussion, and with reduced revenues in the Trust Fund, some are suggesting that what's needed is an overhaul of the tax base. Essentially, the system is currently funded via the airline ticket tax and the fuel excise tax on aircraft users.

Comments Chambers of Inter-VISTAS, "One of the most significant issues facing the industry is how to finance the FAA in the future. Much like the legacy airline model, the FAA funding model does not appear to be viable in the future."

Explains AAAE's Dickerson, "The [Trust Fund] surplus is disappearing quickly, so we won't have the flexibility and the uncommitted surplus when the taxes expire in 2007.

"I think there's a general agreement within the industry that being self-funded is important because then you're not competing with other governmental priorities. Now, saying that, how you get there is the controversial part."

Ed Bolen, president, National Business Aviation Association, agrees about it being a contentious issue, and maintains that the current tax system is equitable. "The current structure has been in place since 1970; it has worked pretty well. I think you would be hard-pressed to find a more effective tax than the fuel tax. It does a great job of measuring the use of the system - the larger the airplane, the more you pay because of the more fuel you burn."

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