FAA: The Current System Is Unsustainable...

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Funding Must Change, Blakey Says

A congressional hearing yesterday explored the question of what to do about the ailing Aviation Trust Fund as the House Aviation Subcommittee began to examine options. The Fund, which supports airports and the airspace system as well as FAA operations, is suffering from a dwindling reserve (which could be gone by 2008). The law that authorized the current funding structure, which depends largely on an airline ticket tax, expires in 2007. (The future of the fund beyond that is now under discussion. No decision has yet been made to dissolve it.) "That [ticket-tax] approach will not sustain us into the future," FAA Administrator Marion Blakey told the panel yesterday. "I see a need for fundamental change." The Trust Fund (officially known as the Airport and Airway Trust Fund) has been in place since 1970. It gets it revenues from taxes on passenger tickets, flight segments, international arrivals and departures, frequent flier mileage awards, cargo and mail transportation, and fuel consumption. A general aviation jet fuel tax of 21.8 cents per gallon and the GA avgas tax of 19.3 cents per gallon together comprise just 2 percent of the trust fund revenue, according to the FAA, though NBAA calculates GA's contribution at 6 to 7 percent.

For the past four years, Trust Fund revenue estimates have been overly optimistic, resulting in a drain on the fund. If revenue projections for FYs 2005 and 2006 are as overoptimistic as they have been in recent years, the cash balance could potentially reach zero before the next reauthorization bill takes effect (FY 2008). Transportation Secretary Norm Mineta and FAA Administrator Marion Blakey have called for a dialogue on alternative ways to finance the aviation system in the future.