One-two punch: House and Senate going GA’s way

September 21, 2007

An FAA funding bill favorable to all of aviation moved much closer to reality this week. The House of Representatives on Sept. 20 passed H.R.2881—the FAA Reauthorization Act of 2007. The very next day, the Senate Finance Committee significantly changed the tax provisions of S.1300, taking the Senate’s version of the FAA funding bill much closer to something general aviation could support.

What happens next?

The House has passed H.R. 2881. Good. The Senate Finance Committee passed GA-friendly changes to the taxes in S.1300. Except for the remaining $25 user fee, also good.

The House is finished for the moment, but more has to happen in the Senate. Now, Senate Majority Leader Harry Reid (D-Nev.) will schedule a time for S.1300 to be debated on the Senate floor. That probably won’t happen until mid-October.

AOPA will renew its lobbying to get the user fee language removed from the bill. The most likely scenario would be the introduction of an amendment to strike the fee. Considering that a similar amendment came within one vote of succeeding in the Commerce Committee, and considering the Finance Committee’s dislike of the fee, such an amendment stands a good chance of succeeding.

Once the full Senate approves S.1300, leadership from both the House and Senate will appoint members to a conference committee. That committee will iron out the differences between the two bills.

It most areas, it appears the two bills will be very similar, so a compromise agreement may not be too difficult.

But the organized labor issue will prove very difficult. While the Senate bill has nothing addressing unions, the House bill (H.R.2881) includes two provisions that do. One would reopen the contract negotiations between the air traffic controllers and the FAA, the other would change which unions could organize FedEx truck drivers. Some Republican members of Congress and the Bush White House can’t accept that.

It’s impossible to predict if the labor provisions would make it out of the conference committee, but the White House has threatened veto if they do. The president has also threatened veto if the final FAA funding bill doesn’t have user fees, but considering that there is practically no support for the administration’s funding proposals within Congress, it would seem unlikely that the Bush administration would actually shut down the air transportation system over the issue.

Of course, under this timeline, aviation taxes and the FAA’s authority to spend money would expire before Congress passes a final bill. To deal with that, Congress will likely pass an extension to the current FAA authorization bill. The House is likely to pass a three-month extension (through the end of the year) next week. The Senate will probably also pass an extension before Sept. 30.

“This was a tremendous week for general aviation in Congress,” said AOPA President Phil Boyer, “and AOPA members made it happen.”

As the Finance Committee was getting set to consider the tax changes, AOPA asked members in nine states to contact their senators on the committee. As members did before when the bill was in the Senate Commerce Committee, they phoned and faxed and e-mailed in massive numbers, and the showing of support “had a profound impact on the senators,” said Boyer.

“We also want to thank Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Sen. Chuck Grassley (R-Iowa) for standing firm against the pressure to penalize general aviation and reward the airlines,” Boyer said. “Their financing bill would provide all the money needed for the aviation system through a combination of aviation taxes and general treasury funds. And the amounts provided would eliminate the need for the $25 user fee the Commerce Committee passed in May.”

Except for that $25 user fee, the House and Senate FAA funding bills are now very similar in how they tax both general aviation and the airlines.

“We will soon be calling on AOPA members once again to help us when it comes time to support an amendment that would remove the user fee from the Senate bill,” said Boyer. Several senators are already preparing to offer that amendment when the bill comes to the Senate floor.

“If we can strike the user fees from S.1300, with H.R.2881 we have two great models for funding our future aviation system,” said Boyer. “Both bills have a modest general aviation fuel tax increase for air traffic control modernization (NextGen), and no tax cuts for the airlines.”

S.1300 will now be scheduled for a vote by the full Senate later this year, and then will go to a conference committee to resolve the differences with H.R.2881, the FAA funding bill already approved by the House.

H.R.2881 is a “historic bill addressing the needs of aviation today and into the future,” said Rep. James Oberstar (D-Minn.), chairman of the Transportation Committee. “These are all-time high investments.”

Rep. Jerry Costello (D-Ill.), aviation subcommittee chairman, said the bill would “increase capacity and safety and modernize the air traffic control system,” and that the NextGen system can be “absorbed within the existing FAA financing structure, and that’s exactly what we did. Our bill does not impose user fees as the administration recommended.”

Earlier in the week, the House Ways and Means Committee (which has jurisdiction over all taxes) set the stage for acceptance of H.R.2881 when it voted to keep airline taxes, including the airline fuel tax, at existing levels. Aviation gasoline taxes would increase from 19.3 to 24.1 cents per gallon (an increase roughly equal to inflation since the last fuel tax adjustment), and the Jet-A tax would go from 21.8 to 35.9 cents per gallon. Money from the increased taxes on GA fuel would be earmarked exclusively for air traffic control modernization.

They followed the recommendation of the House Transportation and Infrastructure Committee (the origin of H.R.2881) on what tax levels should be. From the beginning, the Transportation Committee had rejected user fees on any segment of aviation as an option for FAA funding.

“We said from the beginning, take user fees off the table and we’ll discuss whether there should be an adjustment in what GA pays,” said Boyer. “General aviation is willing to pay more to improve the air traffic control system, unlike the airlines who wanted to change the entire FAA funding system to obtain a huge tax cut for themselves.”

H.R.2881 would provide nearly $68 billion to the FAA over the next four years. Some $13 billion would be available to maintain and improve FAA facilities and equipment, including $5 billion for the start of the NextGen air traffic control modernization program.

Another $15.8 billion would be put into the Airport Improvement Program, and more than $37 billion for FAA salaries and other operational expenses.

“The House has demonstrated that the administration and the airlines were wrong,” said Boyer. “The system was never broken. We can continue to maintain and improve the world’s safest aviation system within the time-proven aviation tax system.

“We thank the leadership of the Transportation and Infrastructure Committee, and the Ways and Means Committee, and the members of the House of Representatives for doing the right thing for aviation.”

The bill passed by a vote of 267 to 151. Some Republicans who are normally strong GA supporters could not go along with a provisions of bill that would reopen contract negotiations between air traffic controllers and the FAA, and make it easier for the Teamsters Union to organize FedEx drivers. Those two provisions “caused me great concern for the long-term processes of this bill,” said aviation subcommittee ranking member Thomas Petri (R-Wisc.).

The White House has also threatened to veto the bill if it hits the president’s desk with those labor provisions in it, and without the user fees the administration proposed in February.