Issue Brief |
Proposed User Fees (in billions of dollars) | ||||
---|---|---|---|---|
Year | 2000 | 2001 | 2002 | 2003 |
User fees to replace excise taxes | $5.8 | $7.1 | $7.7 | $11.1 |
Additional user fees | $1.7 | $1.7 | $1.7 | $0.9 |
The Clinton Administration wants to maintain the current excise tax system in FY99. But after that, they propose to phase out the taxes, including avgas, and replace them with user fees. The phase-in would lead to a 100% user fee-funded system by 2003. The wording from the President’s budget proposal:
"Beginning in 2000, the excise taxes that are levied on domestic air passenger tickets and flight segments, international departures and arrivals, domestic air cargo, and aviation fuels are proposed to be phased out over a five year period, and replaced with more efficient, cost based user fees charged for FAA services. As part of a continuing effort to create a more business-like FAA, the Administration will propose legislation by which the FAA would be entirely funded by cost based user fees by 2003." (emphasis added)
AOPA opposes both the imposition of a user fee-based financing scheme for FAA and any increase in the amount of revenue the aviation community now pays the federal government.
The budget request does not explain who in the aviation community would pay the additional $6 billion, why they would pay it, why it is needed by the government, or for what it would be spent.
The FAA has enjoyed a stable, reliable source of revenue for three decades. A total of about 70% of funding for the Federal Aviation Administration and Airport Improvement Program (AIP) grants to airports comes from excise taxes paid by general aviation pilots on aviation fuel, by airline passengers on tickets, and by shippers on air cargo. These funds are collected in the Airport and Airway Trust Fund for use only for aviation purposes. The Office of Management and Budget estimates that the trust fund will generate an $8 billion surplus by the end of FY99.
In recognition of the many benefits aviation provides to all taxpayers, the rest of the FAA's spending currently comes from the General Fund fed by regular tax money. According to the President’s budget, the additional $6 billion in user fees would go to a "Transportation Fund for America" with no other explanation. FAA Administrator Jane Garvey has acknowledged that these additional fees are intended to replace the General Fund contribution.
The bill exempts general aviation from user fees, allowing GA pilots to continue to pay through a fuel tax. However, the NCARC report singled out GA for a tax hike, and the Administration, when it introduced its FAA reauthorization plan this year, repeatedly claimed that GA is "subsidized." It is unlikely that any "deal" that exempts general aviation pilots from user fees or a tax increase would last very long.
President's Budget Request for FAA (in billions of dollars) | ||
---|---|---|
Fiscal Year | 1998 Enacted | 1999 Request |
Operations | $5.3 | $5.6 |
Facilities & Equipment | $1.9 | $2.1 |
Research, Engineering & Development | $0.2 | $0.3 |
Airport Improvement Program | $1.7 | $1.7 |
TOTAL | $9.1 | $9.8 |
In the short-term, the President's budget proposal for FY99 proposes healthy increases in FAA spending. The Administration is asking for a record $9.8 billion for FAA, which is a 7% increase over the current year. Spending on facilities and equipment would increase 14% to $2.1 billion to aid modernization efforts. The budget would keep funding for Airport Improvement Program grants at $1.7 billion, the amount Congress set last year. And no new user fees would fund this spending in 1999.