Year of Aviation

'Year of Aviation'

With raised expectations, industry looks for long-term funding reform. Here are the basics of the debate

BY John F. Infanger, Editorial Director

March 1999

For better or worse, blame it all on U.S. Rep. Bud Shuster (R-PA). In 1998, the Chairman of the House Committee on Transportation & Infrastructure was successful in spearheading a long-term funding plan for the nation's highway system. At that time, Rep. Shuster stated that he was targeting 1999 as the "year of aviation." The aviation industry and its assorted disparate interests are attempting to hold him to his word.

"I think it's sort of a double-edged sword, because he has raised the expectation of all the aviation interests," states Henry Ogrodzinski, president of the National Association of State Aviation Officials. "You've got all these competing interests which want a slice of the pie one way or another. And I'm afraid that's going to terribly complicate the year of aviation."

The core of Rep. Shuster's legislative initiative calls for putting into place a five-year plan for funding the nation's aviation and airport infrastructure system. Along the way, he would also like to take the Aviation Trust Fund off budget and has suggested that the Federal Aviation Administration should be taken out of the Department of Transportation's purview and made into an independent agency.

However, this all comes at a time when the Airport Improvement Program and FAA funding have only been authorized and appropriated through March 31st - or, one-half year (as of press time). His proposal would fund the system through the end of FY1999 (September), and then begin a new five-year plan.

In the other Congressional body, Sen. John McCain (R-AZ), Chairman of the Commerce, Science, and Transportation Committee, is spearheading an initiative of his own, which most notably calls for a two-year aviation funding plan and making slot-controlled airports more accessible to smaller communities. Sen. McCain's proposal, in reality, includes FY99 in its two-year plan, so its long-term effect only takes the industry through fiscal year 2000. The Senator also opposes taking the Aviation Trust Fund off budget, calling such a move bad government.

The Administration's Proposal
Amid the raised industry expectations and ensuing debate, the Clinton Administration has once again proposed eliminating any general fund contribution to fund the aviation system while also implementing new user fees to fund the nation's air traffic control system. It also calls for $1.6 billion in funding for the Airport Improvement Program - significantly less than the $2 billion many in industry see as the minimum required to maintain the necessary infrastructure. Jack Olcott, president of the National Business Aviation Association, may have summed up the viewpoint of industry and Congressional leaders best when he called the Administration's entry into the debate an "unnecessary distraction."

Adds Olcott, "With Congress poised to make significant progress on issues of critical importance to business aviation and the entire aviation community, it is unfortunate that the Administration has decided to resurrect the ghost of user fees past." He also echoes industry's position when he states that elimination of the general fund contribution to funding the system ignores the public benefit received from a safe, efficient system.

Under the Administration's plan, the air traffic control system would become a performance-based organization (PBO) funded by user fees, with an associated gradual reduction of excise taxes. Non-ATC operations would be funded by excise taxes. Costs for commercial aviation would be charged to users through a cost-accounting system FAA expects to implement in late 1999. General aviation would continue to pay excise taxes but be exempt from the new user fees.