House panel splits over proposal to increase aviation user fees

Increasing user fees to guarantee funding for improving the nation's aviation system sharply split House Transportation and Infrastructure Aviation Subcommittee members at a hearing Wednesday.

Temporary reductions in passengers after the terrorist attacks of Sept. 11, 2001, and the SARS epidemic, coupled with the increase of low-cost carriers that are now controlling ticket prices, threaten to bankrupt the federal Aviation Trust Fund in the next couple of years. Aviation Subcommittee Chairman John Mica, R-Fla., said the United States should consider converting to a user fee system based on recommendations by a commission headed by Transportation Secretary Norman Mineta in 1997 and the use of fees by other countries.

Mica said the subcommittee needs to examine "who is paying what and how that matches with the FAA's cost of providing services to each user group."

But several subcommittee members opposed any increase in fees. Rep. Sam Graves, R-Mo., said user fees, particularly for general non-commercial aviation, are "completely the wrong direction to go."

Aviation Subcommittee ranking member Jerry Costello, D-Ill., said a user fee-based system "raises more questions than answers." Federal Aviation Administration Administrator Marion Blakey said the agency does not "want to rush to judgment on any user fees or excise taxes."

Aviation excise taxes that are deposited into the federal Aviation Trust Fund, including taxes on domestic tickets and commercial fuel, expire in 2007. Fewer general revenue dollars are available to cushion that loss as the administration seeks to reduce the budget deficit while increasing spending on homeland security and other defense-related spending.

Blakey said ticket taxes are "absolutely unrelated to the cost of the service." And she noted that while smaller planes carrying fewer passengers are taking a larger share of aviation traffic, "it costs us the same amount to move that aircraft" as it does larger planes.

Mica also suggested bonds be considered because some see them "as an attractive way to modernize the air traffic control system without requiring the users to pay for that investment upfront." But Costello questioned how bonds would affect the federal discretionary budget.

Mica and Costello both criticized the FAA for issuing "overly optimistic" revenue estimates. Blakey contended that the FAA has shown "remarkable progress" in reducing costs, but Transportation Department Inspector General Kenneth Mead said the FAA needs to take additional steps to control costs while continuing to make progress on managing labor costs.

GAO has found that the uncommitted balance in the trust fund has decreased from $7.3 billion in 2001 to $4.8 billion in 2002 and has continued to decrease by about $1 billion every year since. It is possible that the trust fund would go bankrupt in the next two years, though the FAA would continue to fund air traffic control services while suspending some projects funded by the Airport Improvement Program and technological improvements for facilities and equipment.