The GAO Raises a Red Flag ...

...on aviation trust fund monies in a report issued this past week. At the end of the day, it may provide more fuel for the fire that is the debate on Capitol Hill on how the aviation system is funded, and how the associated funds are disseminated. The Government Accountability Office, in a report entitled “TRANSPORTATION PROGRAMS - Challenges Facing the Department of Transportation and Congress,†notes that the U.S. aviation system and FAA have been operating under a series of funding extensions since 2007. (In fact, the latest extension, which would authorize FAA through September 30, is now in play in Congress.) According to GAO, “the excise taxes that fund Airport and Airway Trust Fund revenues have been lower than previously forecasted, and forecasts of future revenues have declined because of a decline in airline passenger travel, fares, and fuel consumption. Moreover, the uncommitted balance in the Trust Fund has decreased since fiscal year 2001. For the short run, lower-than-expected excise tax revenues will reduce the Trust Fund balance even further and could affect funding for FAA programs this year and next. In the longer run, continued declines in Trust Fund revenues may require Congress to reduce spending on FAA operations and capital projects, increase revenues for the Trust Fund by introducing new fees or increasing taxes, or increase FAA’s funding provided by the General Fund.†The impasse on the Hill to get long-term reauthorization passed is indicative of the lack of leadership demonstrated by Congressional leaders in recent years. The Bush Administration didn’t help the reauthorization cause when it proposed new user fees and refused to reenter negotiations with the air traffic controllers. While it is expected that the Obama Administration will settle the controllers issue, the new President has signaled that he likes the new user fee idea. Reports staffwriter Kathryn A. Wolfe in Congressional Quarterly Today, “Even with a new extension in place, it is unclear whether lawmakers will be able to complete consideration of a larger bill, given uncertainties about what may be contained in the Obama Administration's version. Aides said the Administration is expected to send its draft FAA reauthorization to Capitol Hill around the same time as it sends its detailed proposal for the entire federal budget, which is expected in April. The broad budget guidelines that President Obama released last month suggested that the Administration may reopen a battle that most thought had been put to rest last year. It proposes to eliminate $7.2 billion in unspecified aviation excise taxes and replace them with "direct user charges." The proposal set off alarm bells among lawmakers, transportation experts, and industry groups alike. Details on which excise taxes the administration wants to get rid of, and what sort of user fees they would be replaced with, have not yet been detailed.†The devil will indeed be in the details. And expect that this GAO report will be cited as one justification for changing the way the system is taxed. Thanks for reading. jfi