Budget Pie in the Sky

The Federal Aviation Administration says a government plan to bring U.S. air traffic control into the 21st century might never take wing if it has to rely on the aviation trust fund for support.

In recent months, FAA Administrator Marion Blakey has been calling attention to "a troubling gap" emerging between revenue coming into the trust fund and what it costs to run her agency.

The uncommitted balance of the aviation trust fund has lost 83 percent of its value since 2001. It's in danger of dwindling to zero after September 2007, when all taxes and fees coming into the trust fund are set to expire.

Blakey blames revenue forecasts that were "too rosy" by as much as 11 percent in the past five years, and other factors mostly out of FAA's control. Those include dramatic drops in passenger boarding after Sept. 11, and the SARS disease outbreak in 2003, sharply falling business fares, and structural changes in the industry.

Also to blame, according to Transportation Department Inspector General Kenneth Mead: $5 billion in cost growth in long-delayed FAA air traffic control modernization projects that leaves little for more initiatives. He also cites rising operating costs due in part to air traffic controllers' salaries.

The trust fund was set up in 1970 to help fund the development of a national airport and airway system. Roughly three-quarters of trust fund receipts are linked to the price of a ticket, not to the cost of government air traffic control and safety services.

FAA depends on the aviation trust fund for an increasing share of its $14 billion budget. Operating costs were supposed to be handled through the Treasury's general fund, but it has provided only 21 percent of FAA's budget on average in the past 10 years. The aviation trust fund has been forced to take up the slack-so much so that it paid 63 percent of FAA's operating costs in 2005.

"Certainly, no one thinks that the trust fund, as it is constituted now, can pay to make the capital in-vestment for the next generation system," Blakey told the House aviation subcommittee in May. The labor union representing 20,000 air traffic controllers, engineers and safety professionals begs to differ.

The National Air Traffic Controllers Association asserts there's no crisis, just evidence of regrettable decisions to drain the trust fund to pay for operations. "We should not underestimate the strength of the current [FAA] funding system," NATCA Executive Vice President Ruth Marlin told the subcommittee. "The trust fund is a stable and strong source of revenue [and] we should keep it that way by rejecting radical changes based on a manufactured crisis."

Blakey wants changes in the way government aviation coffers are filled after 2007. Proposed solutions-all controversial-include a different tax structure, user fees, bond issues and peak-hour pricing for government services. Blakey declined to advocate any particular solution, saying FAA will seek the simplest and most equitable alignment of revenue to costs.