October 1, 1997
Back in May I told you that the National Civil Aviation Review Commission (NCARC), the panel charged with studying FAA financing, had no general aviation representative. Defying the law Congress passed to set up the NCARC, the Clinton administration stuffed the commission with airline and airport representatives. Now the NCARC is about to issue its recommendations, and guess who would see a hefty tax hike. General aviation.
Under the NCARC's proposed scheme, airlines and most other system users would pay through "cost-based user charges," which may mean user fees. The good news is that even without direct representation on the commission, the latest NCARC draft report indicates that general aviation would continue to pay a fuel tax. It appears that AOPA Legislative Action's numerous appearances and testimony before the commission members had an impact. The bad news is the claim that general aviation doesn't pay its fair share: "It is clear from existing aviation allocation studies that the current level of tax payments do not cover the costs GA imposes on the FAA. The commission believes that fuel taxes imposed on GA should be reevaluated based on an accurate analysis of the costs of providing ATC and related services to them." How much should our taxes go up? Well, earlier this year, the commission staff proposed doubling our fuel taxes.
Throughout this process I testified that even if GA was exempted from fees imposed on the airlines, it could create a double-edged sword. A two-tiered system of users would be established — those who are perceived as paying for the services they use, through a direct user fee, and those who are perceived as not paying. The business decisions and desires of the airlines paying user fees would affect the FAA's bottom line immediately. FAA policymakers would have much less incentive to listen to a group in the non-user fee category. And, how long would two separate systems last, or what airport and airspace restrictions would be created based on the two unique categories?
The report calls for changing the budget treatment of the FAA in Congress to increase spending and converting the FAA to a "performance-based" organization. It parrots the Clinton administration claim that the agency will need billions more than it expects to get from Congress in order to stay afloat. Yet, the report fails to acknowledge that the FAA has not demonstrated sound fiscal policy in managing its own affairs. It also makes full funding of airports a top priority. Naturally, several large-airport managers and the association representing primarily air carrier airports were on the commission. The amount of this increased "full funding" for small airports, such as those you and I use, is not specified.
Luckily, the NCARC recommendations come at an awkward time for the people who want to tinker with the FAA's funding mechanism. Congress spent all summer struggling to find middle ground among the major airlines, which waged a lobbying war over changes in the taxes their passengers pay. By August, Congress had increased taxes on most airline passengers, making almost every airline a loser. Only general aviation came out ahead. President Clinton signed the airline tax changes into law on August 5 as part of the mammoth Taxpayer Relief Act of 1997. As in any fight over who pays for what, the squabbling over this tax bill wasn't pretty, and few legislators or aviation industry leaders I've talked to want to go through it again. The Taxpayer Relief Act extends the aviation excise taxes for 10 years, giving the FAA a stable and reliable source of revenue again and taking away the need for user fees or other drastic changes in agency financing. The tax increases on airlines will add another $800 million or so to the total each year through 2002. AOPA Legislative Action lobbied in support of the bill, which also extended general aviation fuel taxes — with no increases — for 10 years. Also, the 4.3 cents per gallon we have paid for deficit reduction since 1994 will now go into the Airport and Airway Trust Fund.
With final adoption of this legislation the FAA would appear to be back on a firm financial footing. That would seem to make the NCARC report irrelevant — a solution in search of a problem. Unlike most congressional commission reports, however, which make a few headlines and then get tossed into the circular file, the recommendations of the NCARC are mandated to go straight to the Senate on a "fast track," in the form of a draft bill.
The FAA has claimed that the sky is falling for long enough. Two years has exposed the funding gap for what it is: budget posturing! It's nothing but a negotiating ploy to squeeze more money from the taxpayers.
AOPA maintains that by using an evolutionary, not revolutionary, approach to ATC system modernization, the FAA can increase capacity without the kind of massive expenditures that went to waste in the agency's "big bang" modernization efforts of the 1980s. And the reforms we have already put into place, relieving the agency of the burdens of federal personnel and acquisition rules and giving it more autonomy from the Department of Transportation, should save more. The NCARC totally ignored these solutions.
Perhaps it will take a few more years before common-sense reforms finally prevail over radical schemes at the FAA. Right now, however, with its guaranteed pipeline to Congress, the NCARC requires AOPA to continue to confront proposals that would make general aviation pay more. With your support, however, we will battle whatever legislation ensues in the coming months and continue to support what Congress established in August: an extension of our present form of taxation for all users, which has served aviation well for more than 30 years.
Department of Transportation,
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