Mr. Chairman, my name is Phil Boyer, and I am President of AOPA Legislative Action.
AOPA Legislative Action enjoys the financial support of 340,000 dues paying members. Together with our affiliated organization, the Aircraft Owners and Pilots Association, we promote the interests of those who contribute to our economy by taking advantage of general aviation aircraft to fulfill their business and personal transportation needs. There are more than 650,000 general aviation pilots nationwide.
Mr. Chairman, I am pleased to have the opportunity to offer our input in the process of funding our nation's aviation needs. Today I would like to offer an overview of our thoughts on funding priorities and a promise that we will continue to provide our input and support during the appropriations process.
I would like to begin with our views on charging user fees for FAA services in the context of the President's FY98 budget request. Then I would like to discuss the most pressing appropriations issues we have identified at this time - funding the Airport Improvement Program in an era of declining federal budgets, clarifying the intent of Congress with regard to foreign aircraft overflight fees, continuing transitional funding of Loran as a backup to the Global Positioning System, and assuring a smooth transfer of the aeronautical charting function between government agencies.
The FAA, Congress, and the aviation community have all spent many years struggling with the airway system modernization effort. In the last two years, both the FAA and Congress have completed several worthwhile initiatives that will move modernization forward.
Thanks to your leadership, Mr. Chairman, Congress adopted legislation freeing the FAA from most federal personnel and procurement rules. Because of these reforms, the FAA is now equipped to transform itself into a more efficient and effective agency.
With these significant advances in place, the debate concerning airway modernization has shifted prematurely from "how to do it" to "how to pay for it." Dictated by the goal of balancing the federal budget, the FAA, Congressional leaders, and the industry have already begun considering the financing issue. To the extent funding will be a problem in the future, what will be needed are innovative approaches, not drastic, hasty solutions.
User Fees are Premature
The first step in the process of finding reasonable solutions on which Congress, the FAA and the aviation industry can agree is through the work of the National Civil Aviation Review Commission (NCARC), which this Committee established and funded last year. The NCARC, and the independent assessment of FAA's funding needs now underway, could pave the way for a more rational debate on the future funding of the FAA.
However, the Clinton Administration has chosen to brush aside this Committee's reasonable and rational approach to the question of future funding needs of the FAA. Instead, the Administration has jumped the gun by requesting $300 million in new unspecified user fees for FY98 and a 100% user-funded system in the following fiscal year.
By pre-judging the work of the NCARC, the Clinton Administration is cynically ignoring the will of the people as expressed through Congress. This Administration is determined to impose destructive new fees on the aviation industry before finding any evidence that they are needed. The Administration has put the cart before the horse. For more than a quarter of a century, user excise taxes have adequately funded our aviation transportation system and generated a surplus for the aviation trust fund.
Compounding the error is the recommendation for user fees by the White House Commission on Aviation Safety and Security, the "Gore Commission." The Gore Commission's claim that only user fees can fund the system's future needs not only lacks any supporting evidence, but it dovetails a little too well with the Administration's budget request. As one member of the Gore Commission said in an open hearing, "The President appointed us, and to expect something widely divergent is somewhat unrealistic." When it came to financing, the Gore Commission was a rubber stamp for the White House.
The Gore Commission's recommendations on financing are so closely coordinated with the Administration's budget recommendations that they have been met with skepticism from both the industry and Congress. We still believe the NCARC could serve a pivotal role in the debate about long-term FAA financing reform. However, to avoid the same fate as the Gore Commission, the Administration's 13 appointees to the NCARC must be independent of the Administration and able to arrive at their own conclusions. The members should not be hand-picked to reflect on the views of the Administration.
Furthermore, the Gore Commission undercuts the intent of Congress by charging the NCARC with simply writing a user fee schedule. The NCARC's mandate is much broader. In fact, by establishing the NCARC last year, Congress specifically refused to endorse a user fee-funded agency. The FAA audit and recommendations from the NCARC have yet to be completed, so there is no evidence to show the existing tax system needs to be replaced with user fees. The Administration shouldn't be trying to fix a funding system that isn't broken. Yet what we see is the Administration trying to stampede us in one direction without the benefit of the facts.
Goldman-Sachs, the Wall Street investment firm where Treasury Secretary Robert Rubin once worked, last week said the President's budget is full of "time-worn accounting tricks" and "highly dubious elements." Without any justification from an independent study, the user fees in the Clinton budget amount to nothing more than one of those dubious elements.
User fees are nothing more than new taxes. As the representative of the interests of general aviation pilots and aircraft owners nationwide, we are obviously concerned about the tremendous impact user fees would have on our members. In fact, a closer examination of the budget proposal shows the Administration also proposes to change the definition of "user fee" to one which no longer holds a direct link between the fee and the service rendered.
However, my concern extends beyond our own members and their pocketbooks. User fees would bring with them substantial liabilities that would upset the entire air transportation system. Any system of direct charges to users is sure to require a large and costly bureaucracy to collect, a politicized system for setting the fees, and possible threats to safety because of the unavoidable disincentive raised by imposing user fees. And we would oppose any mechanism that reduces the essential role of this Committee in the process of providing resources to the FAA and setting its spending goals and priorities.
The original justification the Administration used for requesting user fees was a scare tactic - the FAA claimed it would experience a $12 billion shortfall as Congress moved to balance the budget by 2002. We are now two years into that seven-year budget-balancing process, and I would like to pose some questions for the Administration. Has the Appropriations Committee failed to provide the FAA with adequate funding since it proclaimed the $12 billion crisis? Has the Appropriations Committee ever failed to provide the FAA with adequate funding? The answer to both questions is, "No."
Even the Office of Management and Budget (OMB) refuses to accept the outyear funding crisis projected by FAA. We have received the Office of Management and Budget passback document sent to the Department of Transportation in response to its budget request. As you can see in the chart below, OMB estimates significantly lower out-year funding for FAA for the same five year period in which FAA estimates that its funding will reach a crisis level. When the Administration itself is revising the estimates downward, it casts further doubt on the reliability of the FAA's projections.
FAA Outlay Projections ($ millions)| FY 95 | FY96 | FY97 | FY98 | FY99 | FY00 | FY01 | FY02 | |
| FAA (Revised) 1996 | 9,207 | 8,551 | 8,869 | 9,375 | 9,766 | 10,103 | 10,419 | 10,763 |
| OMB 1997 | 9,206 | 8,548 | 8,515 | 8,755 | 8,690 | 8,753 | 8,935 | 9,135 |
| Difference | 0.0% | 0.0% | 4.0% | 6.6% | 11.0% | 13.4% | 14.2% | 15.1% |
Consistent with the goal of a balanced budget, we think there are constructive and honest ways to deal with any funding problem which may arise in the outyears. One of our ideas, which we hope the NCARC will consider, is Linked Financing. Instead of using fancy new definitions and scoring changes, and handing the FAA a blank check as user fees would do, Linked Financing works within the traditional tax and appropriations structure and existing congressional budget procedures to provide FAA with the resources it needs. The NCARC is the proper forum for considering this and other alternatives, including keeping the current system without changes.
In August of last year, the excise taxes that supply revenue to the Airport and Airway Trust Fund, which had expired at the beginning of last year, were reinstated in time to stop the FAA's steady and dependable source of revenue from drying up. That was a wise move. The excise taxes have served as a stable and reliable source of funds for decades. However, the reinstatement lasted only until the end of the calendar year. Now we face an even more imminent threat of exhausting the revenue in the Trust Fund - the Treasury Department says it could happen as early as next month. The excise taxes should be reinstated again as soon as possible. The Ways and Means Committee recently cleared a bill to reinstate the taxes, and we hope this Committee will support that effort.
Airport Improvement Program
Let me turn now from the general funding issue to a specific program that is bound to experience significant changes. The Airport Improvement Program is a model of success for federal involvement in national transportation infrastructure improvements. AIP is an important program that must continue as a means of ensuring a national system of public airports able to connect rural America with the larger commercial service airports in major metropolitan areas. Funding levels for AIP were increased slightly for FY97 after several years of decline; however, as with many federal programs, AIP funding levels are likely to continue to be at risk.
During the same period that aggregate AIP grants declined, however, the proportion of that aid received by the large primary airports increased from less than a third in the 1980s to three-quarters of total AIP funding in 1994 - all at a time when larger airports began tapping into the substantial potential of locally imposed passenger facility charges.
Funding of large primary airports at this increasingly higher level is coming at the expense of the smaller non-hub and general aviation airports which communities depend on as their link to the air transportation system. However, these smaller airports have the least access to other sources of capital. Most primary airports can and do levy passenger facility charges (PFCs), and PFC revenue accounts for a greater and greater share of primary airport resources. Large airports also can finance capital improvements through bond issues.
With perhaps as little as $1 billion annually, coupled with increased reliance by primary airports on PFCs and other financing resources, AIP could more efficiently address the financial needs of non-hub commercial service and general aviation airports providing vital community access to the air transportation system.
By requesting $1 billion annually for AIP in FY98, the Clinton Administration may be moving in this direction. However, this approach requires more than just cutting the overall AIP funding level. As it is currently structured, the Administration's request for AIP would impact small airports without alternative sources of revenue. The state allocation, through which many general aviation airports get the bulk of their federal support, would drop from the FY97 level of $270 million to $137 million, while the Small Airport Fund would decrease from $108 million to $82 million. The smaller airports affected by these cuts are a vital part of our integrated national air transportation system.
As long as AIP continues to provide the necessary resources to small airports that lack alternative sources of revenue, we support the Committee's effort to meet the nation's transportation needs and balance the budget at the same time, and we hope the Committee will take this opportunity to protect small airports.
We understand the tremendous pressures this committee will face in developing the FY98 bill, especially as we are asking that the Committee reject the Administration's $300 million user fee request. Should the Committee feel compelled to accept an AIP funding level close to the Administration's AIP request, we would seek language which would hold harmless funding to states and the Small Airport Fund.
Overflight Fees
Another important issue that has emerged recently is the implementation of fees for foreign aircraft which fly over the U.S., but neither take off from nor land on U.S. soil. The Committee allowed FAA to develop an overflight fee schedule as part of the FY97 bill. Most foreign countries charge a modest fee when U.S. or other airliners fly over their airspace, so the Act took advantage of this untapped source of revenue.
The FAA is charged with developing an overflight fee schedule, and the agency has indicated that it may interpret the law as requiring overflight fees on general aviation flights in addition to commercial flights. While the law does give the FAA latitude in deciding which overflight costs may be recovered, we do not believe the Committee intended to require fees for international overflights by general aviation aircraft. Such a fee on general aviation could have serious safety implications, and would likely provide only a tiny proportion of the total revenue generated by the fees.
We request the assistance of this Committee in clarifying for the FAA that Congress did not intend that foreign overflight fees be levied on general aviation aircraft.
Loran C
AOPA Legislative Action appreciates the Committee's strong support in recent years for steps prompting action on initiatives to take advantage of the substantial investment made by the federal government and users in Loran C and the compatibility the technology has with the Global Positioning System (GPS). Loran is a well-proven, cost-effective, and highly reliable system. In view of uncertainties about the Coast Guard budget, there has also been bipartisan support in Congress for the DOT to consider joint, shared funding arrangements among the various modes that benefit from the use of Loran technology.
AOPA Legislative Action is among the most vocal advocates of an early transition to GPS as the sole means of aerial navigation. However, we believe it is essential that Loran be available until it is proven that GPS can meet the sole-means-of-navigation requirement. Recent developments have indicated that reliance on GPS as the sole means of navigation will be further delayed. Nevertheless, some DOT and FAA officials continue to advocate early termination of Loran. This Committee has been explicit in its direction to the DOT and FAA regarding the need for Loran, but DOT, FAA, and other agency officials refuse to listen. Users clearly want Loran to back up GPS, but these same officials seem willing to ignore safety and the strong backing of virtually every segment of the user community.
We want to emphasize the importance of continuing funding for operating and upgrading Loran. The Loran system is a cost-effective complement to GPS. It is compatible with GPS and can easily serve as a backup navigation technology in the event of any GPS problems. It would be short-sighted to place all our hopes on GPS without such a backup. Since Loran equipment is already installed in more than 100,000 general aviation aircraft, it is the most logical choice.
We appreciate the Committee's previous support for our position regarding Loran. We hope the Committee will again support continued funding of Loran, with funding shared among agencies of the DOT.
Transfer of Aero Charts Function
As you know, AOPA Legislative Action has urged special attention to aeronautical charting improvements several times during the past decade. We have targeted specific charting enhancements which improved the utility of aeronautical charts and ultimately translated into a safer flying environment for general aviation pilots. Thanks to the past efforts of this Committee, funding was secured on several occasions to ensure that FAA could implement these enhancements and enable the pilot community to realize direct and immediate safety benefits.
We are now working cooperatively with the FAA, DOT and the National Oceanic and Atmospheric Administration (NOAA) to address a more general problem which has threatened to force the elimination of at least some important aeronautical charting products altogether. While FAA determines most of the content and format of aeronautical charts, the charts themselves are actually produced and distributed by NOAA. Serious funding shortfalls during the past several years have caused the agency to reexamine its mission and priorities, and the aeronautical charting function has been directly impacted. In the past, we have successfully worked through the appropriations process to develop short-term fixes for NOAA's funding needs. Now, we hope we can work with the Committee to find a long-term solution for this problem.
Acting in response to an investigation of this issue by the Inspectors General of the Departments of Commerce and Transportation, the FY98 Administration request proposes to transfer responsibility for producing and distributing aeronautical charts from NOAA to FAA in a two-step process. In FY98, the Administration proposes that NOAA operate the program for FAA on a reimbursable basis, with the program being completely transferred to the FAA in FY99. Others suggest that the program be relocated to the Department of Transportation or other agencies. AOPA's priority is to continue to provide the high quality charting services that our members have relied upon for many years.
If the charting program is transferred from NOAA to another agency, there will be transitional issues which must be worked out between the two agencies and in Congress. It would require authorizing legislation and other adjustments at the beginning of the budget process before a transfer can occur. We know that there will be significant concerns about the source of funding for the program if it is transferred to another agency. We want to work with you to ensure that adequate funding is provided, whether from this Subcommittee or from the Commerce and Justice Subcommittee, so that the receiving agency does not have to absorb any additional costs.
Summary
To summarize, since Congress intended that the pending National Civil Aviation Review Commission be the proper forum for considering any changes in FAA's financing mechanism, AOPA Legislative Action strongly opposes as premature the imposition of unspecified user fees at any level.
We urge the Committee to continue to provide the necessary resources to small airports, especially those that lack alternative sources of revenue.
We request the assistance of this Committee in clarifying for the FAA that Congress did not intend that foreign overflight fees be levied on general aviation aircraft.
We hope the Committee will again support continued funding of Loran as a backup for GPS.
Finally, we want to work with the Committee to ensure that adequate funding is provided, whether from this Subcommittee or from the Commerce and Justice Subcommittee, for the proposed transfer of aero charting functions from NOAA so that the receiving agency does not have to absorb any additional costs if the transfer is carried out.
That concludes our testimony. I appreciate the opportunity to present our views to the Committee. AOPA Legislative Action is pleased to remain involved in the appropriations process throughout the congressional session, and we will gladly offer further comments on specific funding items as the need arises.