Totals reflect amount at end of the fiscal year SOURCE: Federal Aviation Administration

The once-hefty balance in the Airport and Airway Trust Fund has shrunk dramatically, and many say changes are needed to fix the problem. Construction interests are watching the issue because the fund pays for the Federal Aviation Administration Airport Improvement Program. This year AIP will pour about $3.5 billion into runways and other infrastructure. "We are concerned about the financing of aviation programs and the dropoff in the [aviation] trust fund balance," says David Bauer, American Road & Transportation Builders Association senior vice president for government relations.

Aviation taxes and FAA’s authorizing statute don’t expire until 2007. But House aviation subcommittee Chairman John L. Mica (R-Fla.) is airing trust fund questions now. FAA Administrator Marion C. Blakey told Mica’s panel on May 4 the fund’s uncommitted balance tumbled from $7.3 billion in 2001 to $2.4 billion last year. Air Transport Association President and CEO James C. May said the surplus has been so drained that "the bottom of the pot is coming into view." Even worse, if aviation tax revenue is 10% less than projected, the balance would hit zero in 2007, said Gerald L. Dillingham, Government Accountability Office director for physical infrastructure issues.

The fund’s income dropped because air travel slumped after 2001’s terrorist attacks and discount airlines drove ticket prices down. Transportation Dept. Inspector General Kenneth Mead says FAA also should control spending better before seeking new trust fund revenue. The fund finances air traffic control gear and part of FAA operations as well as AIP.

Blakey didn’t lay out a new plan, but says fees should be based on costs users impose on the system. A 7.5% ticket tax is the fund’s core, bringing in half of its 2004 revenue. But that levy has no relation to costs of providing services, she says. "It might as well be pegged to the price of milk these days," she says.

Todd Hauptli, Airport Legislative Alliance senior vice president, says the situation "has a lot of moving parts and a lot of interested parties." Aviation groups are sparring over who should pay more to solidify the fund. May said big airlines account for two-thirds of flight activity, but already pay 90% of the fund’s revenue. Those representing general aviation–users of corporate jets and other private planes–don’t want to see their fees soar. "There are no easy solutions here," says ARTBA’s Bauer. "Failing to act is not an option."