Airports Don't Fare Well in Bush Budget

As the aviation community waits for the other shoe to drop, airports are hopeful that the next FAA reauthorization proposal treats them better that this week’s 2008 federal budget submission.

The Bush Administration’s outline for the FAA 2008 spending plan cuts the Airport Improvement Program (AIP) spending, again reduces the Essential Air Service (EAS) program, and fails to fund the Small Community Air Service Development Grant program. Furthermore, the Transportation Security Administration (TSA) proposed budget does not include any funding for the purchase of in-line Explosive Detection Systems (EDS) baggage screening equipment.

The FAA will soon submit legislation – perhaps as early as next week – that reauthorizes the agency for another three years. The administration has already says that it will seek a change in the funding mechanism for the FAA. It wants to end a reliance on the ticket tax paid by commercial airline passengers by also instituting a user fee to be paid by general and business aviation.

The Airports Council International-North America (ACI-NA) is not wading into the funding debate. It is not siding with the airlines or with general aviation, says Greg Principato, the ACI-NA president. “We have not taken sides in that debate. Our view is that everything is on the table.

“The current trust fund environment is not stable or predictable. It depends upon fares and traffic. If there is a fare war then the support for the system goes down. It does not make sense. If you are planning infrastructure improvements it is difficult to do in that environment,” Principato says.

Funding Airport Projects

The administration proposes cutting the AIP program by 27 percent next year. The AIP would be funded at $2.75 billion compared to the $3.5 billion it is slated to receive this year.

Congress is scheduled to enact a continuing resolution by Feb. 15 to fund the federal government, including the FAA, for the remaining months of the fiscal year at the same levels as the 2006 spending measures. The last Congress adopted only two appropriation bills for 2007 and as a result the federal government has been operating on continuing resolutions that mirror the 2006 spending plans.

An early analysis of the 2008 FAA budget indicates that the AIP program is being cut, not because of a lack of funds, but a change in priorities, says Principato. “We are concerned about the budget. It seems to on the face of it represent a reduction in infrastructure funding. This does not seem to be a good way to go.”

"Airports are disappointed that the administration has again chosen to request an artificially low funding level for AIP," says Todd Hauptli, the American Association of Airport Executive (AAAE)'s senior vice president for legislative affairs. "We are however confident that Congress will again reject this proposal and choose to fund the AIP at a much more robust level than that proposed by the administration."

Small airports could be hurt the most with a cut in the AIP funding, says Todd Jorns, the legislative director for the Regional Aviation Partners (RAP), a lobbying group of smaller airports, local governments and airlines. If AIP appropriations fall below $3.2 billion, then small, non-hub airports will receive only 18.5 percent of the funds – instead of 20 percent.

In good news-bad news scenario, Principato says the current FAA reauthorization legislation with these caps on AIP funding for non-hub airports expires on Sept. 30. The FAA’s much smaller budget is for the fiscal year that begins the next day.

“We will have to see what happens,” Principato says concerning the language in the yet-to-be submitted reauthorization measure. He says he presumes the next reauthorization measure would detail a new AIP distribution formula.

The budget narrative does give airports some hope, he says. Without naming the Passenger Facility Charge (PFC) program, Principato says the FAA alludes that the reauthorization act will be provide airports with greater flexibility for locally generated revenues.

ACI-NA has been lobbying the FAA to authorize a $3 hike in the upper limit an airport can levy for PFCs. The group wants $7.50 as the new cap. Principato notes that the current $4.50 maximum PFC adjusted by the inflation rate for construction labor and materials would be $7.50 in 2008.

Since the PFC is an airfare ticket surcharge, it does not flow through the federal treasury. ACI-NA is seeking a streamlining of the PFC program in the next reauthorization act that gives the airports greater flexibility in working with the bureaucracy, he says.

Air Service Recruitment

Just as he has in every year since he has taken office, Bush wants to fund the EAS program at $50 million, explains Maurice Parker, RAP’s executive director. However, Parker says that the FAA apparently has not inserted language in the budget bill that would make it more difficult for a community to qualify for the EAS subsidy. In the last several budget submissions, Parker says, the FAA sought financial support — on a sliding scale — from the communities participating in the EAS program.

At the same time, Parker says the FAA in the budget measure did not propose any new ideas to enhance or replace the government subsidies that assure small communities have air links to the national grid.

The current FAA authorization measure calls for EAS to be funded at $127 million. Last year, Congress ignored the president's EAS proposal and instead provided $109.4 million. The pending legislation to fund the FAA through October continues to fund EAS at the $109.4 million mark, Parker says. RAP has been talking to lawmakers in an effort to raise funding beyond $109 million, but the word came back that the Democratic leadership would not permit a funding hike.

The Bush budget for the second year in a row does not provide any funding for the Small Community Air Service Development Grant program. In 2006, Congress provided $10 million instead of earlier $20 million annual appropriations.

Jorns says the continuing resolution contains $10 million to fund the grant program this year.

Parker is confident that Congress will ignore the president and again provide some funding for grants in 2008. At a recent hearing on the merger implications of U.S. Airways and Delta, senators expressed support of both this program and EAS.

Airport Security

The Bush budget plan does not fund the continued installation of explosives detection systems, Principato notes “We are very concerned about the level of federal support. At this rate it will be 20 to 25 years before we have in-line EDS in every airport.”

At the ACI-NA meeting in Reno last September, a TSA committee reported on several creative financing programs that could accelerate the installation of EDS systems. None of the suggestions contained in the report were in the TSA budget proposal, Principato says. "For some reason, the report has not been made final. We are very concerned about that.

“This has been a very big issue for the airline. They want us to work with them to get some real funding and financing. This is something the airports and airlines can come together on.”

After testifying on the FAA budget before a House committee, Transportation Secretary Mary Peters told reporters that the administration is working on some ideas to get the private sector to build the security systems and then lease it back to the federal government.

The ideas have not been formalized into legislation, she says. Furthermore, since this would be a TSA program it would not be included in the forthcoming FAA reauthorization measure.

There is a pending Senate measure, Principato adds that would make a $400 million federal investment in EDS – this would be $150 more than what has been previously appropriated. “That is a good start, but we have a ways to go.”