Fact Sheet

Reauthorization Legislative Update

The Administration sent a reauthorization proposal to Congress on February 14, 2007. Provisions of this document have been reviewed and modified by several committees and subcommittees in each house of Congress. Both the House and the Senate have released their own versions of an FAA reauthorization bill. These include:

S. 1300

• Introduced by the Senate Commerce Committee on May 3, this bill proposed a $25 surcharge on turbojet and most turboprop aircraft to finance NextGen system improvements. The revenue from this surcharge could then be leveraged for borrowing authority. While not as cost-based as the Administration’s proposal, it does ensure all users contribute to modernization and provides dedicated funding for NextGen.
• The Senate Finance Committee has not fully endorsed S. 1300. This committee marked-up an aviation tax proposal on September 21, which included several major provisions:
  • Extends current ticket and segment taxes. Both are taxes paid by passengers at the point of sale. This is a status quo approach, which ensures the burden for funding the air traffic system will remain disproportionately on the airlines and their passengers.
  • Raises the tax on the use of international passengers from $15.10 per arrival or departure to $16.65.
  • Increases the general aviation jet fuel tax from 21.8 cents to 35.9 per gallon. This increase is well below the levels proposed by the Administration and enables private jet owners to continue paying less than their fair share for the air traffic services they use.
  • Introduces a $58 per flight tax on fractional ownership. While not a true cost-based tax, fractionals would pay a fairer share for the services they use under this plan.
• It is unclear whether the $25 surcharge proposed by the Commerce Committee will be included in the bill voted on by the entire Senate.
• This bill has not been scheduled for a floor vote.

HR. 2881

• The House Transportation and Infrastructure Committee introduced this bill on June 27.
  • This bill failed to endorse or adopt most of the provisions the FAA proposed in its legislation to create a reliable, flexible, cost-based funding system.
  • Adopted some cost-based registration fees.
• The Ways and Means Committee added a tax proposal to HR 2881, which included:
  • Increased general aviation fuel taxes to $35.9 cents per gallon and aviation gasoline taxes to 24.1 cents per gallon. These increases were well below those proposed by the Administration.
  • All other taxes were extended at their current rates. This means continuation of an extremely inequitable tax system, where passengers and airlines pay much more for the services they use than other system users.
• The House passed HR 2881 on September 20 and then passed a three month extension of FAA programs and current aviation taxes (HR 3540) on September 24. The Senate has not yet acted on this extension.
• The Administration has issued a veto threat on HR 2881, due to several major weaknesses, which could have negative impacts on both the FAA and the US aviation community at large. These vulnerabilities include:
  • Maintaining the current tax structure, with no meaningful changes. The lack of cost-based financing jeopardizes our ability to implement NextGen in a timely and cost-efficient manner.
  • Authorization of FAA spending, in some areas, is well above levels recommended by the Administration. It is unlikely these authorized levels can be funded by the tax levels passed by the House without a large increase in General Fund contribution.
  • Attempts to re-open the existing air traffic controller contract negotiations. If passed into law, this would result in a significant increase in taxpayer costs and divert funds needed to address delays and congestion.
  • Denies funds for safety-related improvements to airports participating in the airport privatization pilot program.
  • Mandates rulemakings, reports to Congress, and studies for many safety-related programs. These new requirements will divert needed resources away from ongoing safety projects and jeopardize the Administration’s overall safety agenda, which has resulted in the safest period in US aviation history.

Congress Must Act Now

• FAA tax and program authorizations were extended through November 16 as part of a federal government continuing resolution.
• Failure of Congress to work-out a compromise bill, which the President can sign by this fall, may mean lengthy delays before the FAA is reauthorized. Historically, long authorization postponements are problematic for federal organizations:
  • Such delays plagued the Administration during the period between 1995 and 1997, causing problems for airport funding and other programs.
  • During the last highway reauthorization one short-term extension turned into twelve and lasted nearly two years. Such a series of short-term extensions would wreak havoc on airport grant programs and jeopardize timely progress on NextGen.
  • Progress on NextGen programs, including those concerning delay reduction and safety, will likely be hindered should long-term extensions be chosen over passing a new reauthorization bill.

For more information on FAA Reauthorization or finance reform please read these other fact sheets at www.faa.gov/regulations_policies/reauthorization:

• Overview: The NextGen Finance Reform Act of 2007
• Impact of Administration’s Financing Proposal on General Aviation
• Cost Allocation
• Passenger Benefits