Election: Ready, Set...What?

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Elections, goes the conventional wisdom, have consequences and in last week's presidential contest, voters sent an ambiguous message to the body politic utterly lacking in anything certain. What does seem certain, however, is that aviation is unlikely to make it through the next four years unscathed.

User fees will probably come up again, as will funding for the FAA's favorite three-letter projects—all the technology related to NexGen—the revision of Part 23 and continuing budgetary support for airport improvements. According to AOPA's government affairs VP, Melissa Rudinger, who I spoke to last week, those are the largest targets on the legislative radar. There's another minor one, which we mentioned last week: The FAA is working on plans to scale back the 6000 or so instrument procedures to hundreds of airports as a cost-cutting move. What real impact that will have is unknown, but my view of it is that it's the leading edge of FAA budget constraints that will impact aviation at all levels, no matter what happens with the giant ticking time bomb called budget sequestration.

Over the weekend, the news columns were alternately filled with both partisan posturing and talking heads and pundits who insist both sides want a solution that will avoid Draconian budget cuts that will gut some federal agencies. But even if those drastic cuts don't come, you will be reading news stories from us about cutbacks in the FAA that will have big implications. The one I most worry about is a slowdown in certification projects for new aircraft, for avionics and for routine STCs and field approvals. We're already hearing stories that projects sent to the FAA are languishing for months with no action. Many small aviation businesses are barely holding on and escalating delays will be unsustainable for them. It will just squeeze out what little creativity remains among the cottage industry of mods and STCs.

Industry groups are feverishly working with the FAA on a simplification of FAR Part 23 to reduce the regulatory load on small aircraft, but there's no guarantee that this can be implemented before serious budget cuts kick in, and itself needs further funding to stay alive. It would be a disaster if it were delayed or tabled because of budget constraints. The same applies to the avgas transition plan, whose ARC reported out a long-term path to replace leaded avgas earlier this year. In the overall scheme of things, the budget it requires is coffee money for the FAA, but curtailing or cutting it entirely is hardly impossible.

So to a degree greater than most of us have ever known, aviation's vitality is tied to larger political and taxation considerations. What's protected GA in the past is a robust, bi-partisan Congressional aviation caucus that now has to be reassembled after the lame duck 112th Congress recesses in January. It's anyone's guess how large or effective that caucus will be and which experienced members will return to it. And even if it is effective, the harsh truth is that the money to support the aviation projects we all want and consider vital, simply may not be there.

If it's any consolation, every other special interest—and we are but one of hundreds—faces the same bleak outlook. After many years of no fees, low taxes and widely available—and good—services, I have the feeling that the party's just about over.

Comments (11)

What you did not mention is the degree to which the conversation studiously avoids the elephants in the room. Democrats like to argue that we need balance in the budget debate. Fine. Let's tax like Mr Obama proposes and get another $80B a year. Let's take another $50B a year from defense. While we're at it, let's cut procedures, charge for ATC services we've already paid for, and do all the things you discuss above. Problem is we have a $1T a year deficit caused by spending, mostly in three things whose costs continue to rise: Medicare, Medicaid and Social Security. So a $130B / yr improvement amounts to a declining piece of chump change compared to the real problem few are talking about. If we are serious about avoiding unnecessary and avoidable impacts on programs throughout the rest of govt, we should focus exclusively on the three programs causing the flail. Every time the topic is allowed to get off Medicare, Medicaid and Social Security is another time we've been led off topic and onto a discussion of programs which cannot hope to solve the problem.

Posted by: DANIEL DEDONA | November 12, 2012 8:54 AM    Report this comment

You're right, I dodged it intentionally for reasons you can probably surmise. But since you brought it up, fair game. There's a two-word answer: Simpson-Bowles. Everyone should have an opinion about this commission's work.

For those interested in a good summary, here it is: www.snipurl.com/25ku1w1

As noted in the report, this is a moving target. A large percentage of the cuts in discretionary spending ($1.2T) have already been made or proposed.

The unfortunate trend here is that after years of being funded primarily by fuel taxes, the FAA has in recent years required more support from the general fund. With the current fiscal situation, that's the wrong direction.

One proposed solution to address this without tanking the AIP is higher local taxes to support infrastructure--those are mostly passenger facility charges. They've been capped by the feds but I would suspect to see them rise quite a bit...like as much as $6 to $10 per enplanement.

Of course, the airlines will lobby to sequester that money for use only at airports with airline service. What does this do to the AIP from which little airports draw grants? Dunno. But I don't see a positive trend there.

Bottom line, as airline passengers and airspace users, we're going to have to pay some higher taxes. And we may still see service and facility reductions.

Posted by: Paul Bertorelli | November 12, 2012 9:34 AM    Report this comment

Paul,

Good summary of Bowles Simpson. Within the flying game I've made my peace with paying extra fuel taxes like AOPA has recommended for many years. I expect as you suggest we'll pay a lot more than enough to cover aviation expenses.

Outside of flying, the reference's Conclusions says is clearly ". . . the amount of Bowles-Simpson deficit reduction that policymakers have not yet achieved comprises another $1.4 trillion in program cuts, mostly from mandatory or entitlement programs, $2.5 trillion in revenue increases, and additional savings from both spending and revenues if the Social Security proposals are included."

I'm not in the $250K+ category, but it annoys me to constantly hear we all need to pay our "fair share", when what we're really paying for is entitlement programs our "elected representatives" artfully refuse to rein in.

I don't know exactly how to fence them in other than to constantly turn the conversation back to the big three. If every public conversation was turned back to these programs, at every level, in every forum (perhaps especially here), it would eventually focus attention where its needed. It's certainly not happening on the networks. Considering how every citizen is going to be impacted, it's not hard to identify the fora where the focus needs to be applied. Now to figure out how to get everyone to take the pledge ;-).

Posted by: DANIEL DEDONA | November 12, 2012 4:15 PM    Report this comment

"I don't know exactly how to fence them in other than to constantly turn the conversation back to the big three."

Simpson-Bowles does address this. It recommends a higher retirement age, a higher eligibility age and what really amounts to means testing for some of these benefits. Personally, I favor all of those. But I also recognize I'll be paying higher fuel taxes--both for autogas and aviation gas--to pay for all this.

I don't like that. But I'll do it.

Posted by: Paul Bertorelli | November 12, 2012 6:35 PM    Report this comment

I don't understand all this defeatist attitude. The President and Congress have a excellent bipartisan plan that will enable funding for all the entitlement programs with tax cuts for everyone. There are just a few small matters to settle, then they will present it. Basically the country will simply borrow its way out of debt and spend its way to prosperity.

Posted by: Richard Montague | November 13, 2012 7:53 AM    Report this comment

So, I wonder if the EPA will now be embolden to stop Leaded Fuel sales in the USA? Then add user fees and watch GA disappear.

Posted by: Mark Fraser | November 13, 2012 8:56 AM    Report this comment

Being mid-70's now, my plan is to die and let you guys figure it out.

Posted by: John Wilson | November 13, 2012 6:57 PM    Report this comment

The airlines should be required to pay taxes on all of the extra charges they impose: baggage fees; onboard food; etc. These things used to be included in the basic ticket charge, which is taxed. There has been very little said about the airlines avoiding taxation by splitting out charges that used to be included in the ticket price. Time to make all airline fees taxable.

Posted by: James E. Ellis | November 14, 2012 9:10 AM    Report this comment

Airlines, like other businesses, do not pay taxes, they are simply a conduit from the consumer to the government. Raise taxes for the airlines, they extract a little more from the folks who buy tickets.

Posted by: Richard Montague | November 14, 2012 9:42 AM    Report this comment

Everybody focuses on the Presidential side of the election--but they neglect to note that the House (from which all tax legislation flows) remains unchanged. No real difference from the last 4 years, and certainly better than the Pelosi-led House.

Regarding the elimination of instrument approaches as a cost-cutting measure--once again, government is focusing on the wrong expenditure. With GPS approaches, there is no reason to have to check the approaches twice a year--after all, there aren't any ground facilities like VORs and ILSs. A monitor to check GPS signals--and the occasional check for new obstructions should suffice.

Given the advances in electronics, I don't think we need to provide King Airs for flight check any more (remember when the FAA "needed" DC-3s and jets for the same mission?)

Typical government thinking--"maintain the status quo, instead of coming up with new solutions."

Posted by: jim hanson | November 14, 2012 11:56 AM    Report this comment

I'm with you on the SS adjustments Paul. I would add they need to up the salary that they tax beyond the $108k.

Btw... With the 2% reduction in the payroll tax the lasts two yrs, I wonder where the money is coming from to fill the additional hole that is being created.

Posted by: Richard Mutzman | November 18, 2012 2:25 PM    Report this comment

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