Introduction

The Airport Improvement Program (AIP) provides federal grants for airport development and planning. ⁽¹⁾ AIP funding is usually spent on capital projects that support airport operations including runways, taxiways, aprons, and noise abatement. The funds obligated for the AIP are drawn from the Airport and Airway Trust Fund (hereafter referred to as the aviation trust fund), which is supported by a combination of user fees, mostly airline ticket taxes, and fuel taxes.

On April 5, 2000, President Clinton signed the Wendell H. Ford Aviation Investment and Reform Act for the 21^st Century (FAIR21, P.L. 106-181). The bill's enactment was the culmination of a two year effort in Congress to come to agreement on a multi-year reauthorization of the Federal Aviation Administration (FAA), which includes the AIP's authorization.

During the the 106^th Congress, both the House and Senate set forth very different FAA reauthorization proposals. Many of the provisions in both versions concerned narrowly focused changes in grant distribution and eligibility criteria. However, the two versions also reflected differences in broader policy areas, including the AIP funding level, and the length of the reauthorization period, the passenger facility charge (PFC) ceiling, and the budgetary treatment of the aviation trust fund. The most difficult issue was formed by the House proposals to take the aviation trust fund off budget and erect budgetary "firewalls" to ensure that all trust fund revenue would be spent annually for aviation purposes, while at the same time mandating that FAA Operations and Maintenance spending also be supported from general fund revenues. Members in both houses and many appropriations and budget committee members opposed these changes.

The House, Senate, and enacted versions of the FAA reauthorization bills had major differences regarding AIP.

Authorization Levels. The Senate version of H.R. 1000 (S. 82 as amended), the Air Transportation Improvement Act, that passed in the Senate on October 5, 1999 and included AIP authorization levels of $2.41 billion for FY1999; $2.475 billion for FY2000; and $2.41 billion annually for FY2001 and FY2002. The House version, the Aviation Investment and Reform Act for the 21st Century, or AIR 21, which passed in the House on June 15, 1999, set annual AIP authorizations as follows: $2.475 billion for FY2000, $4.0 billion for FY2001, $4.1 billion for FY2002, $4.25 billion for FY2003, and $4.35 billion for FY2004. Beginning in FY2001, the House-passed spending levels would more than double current spending. The enacted bill, FAIR21, authorizes AIP at $2.475 billion for FY2000, $3.2 billion for FY2001, $3.3 billion for FY2002, and $3.4 billion for FY2003.

PFC Cap. Raising the cap on the Passenger Facility Charge (PFC) is one of the most contentious policy issues related to the AIP. Meant to be a source of funds for capital development that would complement AIP, the PFC is a local tax that may be levied at an airport with FAA approval. ⁽²⁾ The Senate version of H.R. 1000 would have left the cap at its current $3 level. AIR21 would have doubled the fee, but set special conditions on PFCs above the $3 level. At the $4 through $6 levels large and medium hub airports would forego 75% of their AIP funds. The FAIR21 splits the difference, setting the cap at $4.50. PFCs have been extremely popular with airports because they allow for a broader range of improvement projects than AIP, and also because PFCs give airports more freedom from airline involvement in the project decision making process. Airports also argue that PFCs are pro-competitive allowing airports to build gates and facilities that can encourage new entrant carriers without incumbent airline approval (although some would deny this has been done). The airlines argue that the PFC is just another tax on air travelers and is anti-consumer because it raises travel costs. Airlines also argue that airports are using PFCs to fund projects of marginal value instead of projects that offer meaningful safety or capacity enhancements. ⁽³⁾

Aviation Trust Fund Treatment. Only AIR21 included provisions that alter the budgetary treatment of the aviation trust fund. AIR21, in its initial version, included two legislative approaches to assure that all aviation trust fund monies would be spent each year for aviation purposes. ⁽⁴⁾ The first would have taken the fund off budget. The second would have created discretionary spending guarantees or "fire walls," an arrangement similar to that created for the Highway Trust Fund by the Transportation Equity Act for the 21^st Century (P.L. 105-178)(TEA21). The bill would have guaranteed the spending of aviation revenues that flow into the aviation account and also mandated that the Treasury fund 30% of the guaranteed FAA funding levels set forth in the bill from general tax revenues.

The amended version of H.R. 1000, that emerged from the second Transportation and Infrastructure Committee mark up on May 27, 1999, altered the original bill's treatment of the aviation trust fund. The newly reported bill kept provisions to take the trust fund off budget but eliminated the "firewall provisions" and in place of a guaranteed 30% general fund share, the amended bill, capped the general fund share at the 1998 level ($3.351 billion). These provisions were included in the version of AIR21 that was passed by the House on June 15, 1999. Even the somewhat reduced funding levels in H.R. 1000, as amended in committee, would have been dependent on the off budget provisions being in the enacted legislation. The formula changes in H.R. 1000 were, in part, adjustments needed to deal with the allocations at the higher funding levels that the bill would authorize.

The Senate version of H.R. 1000 (as amended by S. 82) made no changes in the treatment of the aviation trust fund.

House proposals concerning the aviation trust fund failed to survive conference. Instead the enacted bill, (P.L. 106-181) included language that makes it "out of order" in the House or Senate to consider legislation that would not use all aviation trust fund receipts and interest annually. A second capital priority "point of order" provision makes it out of order to consider legislation for any fiscal year through FY2003 for Research and Development or Operations and Maintenance if the sum of the obligation limitation for AIP and the appropriation for Facilities and Equipment are below their authorized levels. Supporters of these provisions hope that these provisions will assure that AIP will be funded at the fully authorized level.

AIP Funding Distribution Changes. The main changes to AIP funding distribution in the House version of H.R. 1000 result from provisions that would have tripled most allocation formulas and minimums. While the Senate's version of the bill does not include as many formula changes it does include language establishing a 5% allocation of to states that include a General Aviation Metropolitan Access and Reliever Airport, as defined in the bill. FAIR21 calls distribution changes that result in a doubling of the primary airport formula funding and other changes.

The remainder of this report presents a side-by-side comparison of major AIP provisions in the Senate-passed Air Transportation Improvement Act, the House -passed Aviation Investment and Reform Act for the 21^st Century, and the enacted version of H.R. 1000, the Wendell H. Ford Aviation Investment and Reform Act for the 21^st Century ( P.L. 106-181).

Appendix

Airport Definitions ⁽⁵⁾

Commercial Service Airports. Publicly owned airports that receive scheduled passenger service and board at least 2,500 passengers each year.

• Nonprimary Commercial Service Airports. Board at least 2,500 but no more than 10,000 passengers each year.

• Primary Airports. Board more than 10,000 passengers each year. Primary airports are subdivided into four categories of airports based on percentage of annual nationwide passenger boardings:

Large Hub Airports. Board 1% or more of total U.S. traffic.

Medium Hub Airports. Board 0.25% but less than 1% of total U.S. traffic..

Small Hub Airports. Board 0.05% but less than 0.25% of total U.S. traffic.

Nonhub Airports. Board more than 10,000 but less than 0.05% of total U.S. traffic.

Cargo Service Airports. Airports that are served by aircraft that provide air transport for cargo only and have a total "landed weight" of over 100 million pounds.

Reliever Airports. Airports designated by the FAA to relieve congestion at a commercial airport and provide improved general aviation access to a community (i.e. to draw general aviation activity away from congested commercial primary airports).

General Aviation Airports. All other airports. General aviation includes business, personal, and instructional flying, agricultural spraying, air ambulances, etc.

Footnotes

1. ^(back)For more information on the AIP and related policy issues see, U.S. Library of Congress. Congressional Research Service. Airport Improvement Program: Airport Finance Issues for Congress. CRS Report 98-593 E; and Airport Improvement Program: Issue Brief. CRS Issue Brief IB10026.

2. ^(back)Because of the complementary relationship between AIP and PFCs, PFC legislation is generally folded into the AIP provisions of FAA reauthorization legislation. The legislative origin of the PFC is Title IX of the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508).

3. ^(back)For a more extensive discussion of the PFC debate see, Kirk, Airport Improvement Program: Airport Finance Issues for Congress. CRS Report 98-593 E. pp. 13-15, 18-19.

4. ^(back)See Fischer, John W. Airport and Airway Trust Fund Issues in the 106^th Congress. CRS Report RS20177. For an explanation of the use of discretionary spending guarantees (firewalls) see: Fischer, John W. The Transportation Equity Act for the 21^st Century (TEA21) and the Federal Budget. CRS Report 98-749 E. pp. 4-6. The on-budget off-budget debate concerning transportation trust funds have, at times, been controversial, for a discussion of these issues see, Fischer, John W. Transportation Trust Funds: Budgetary Treatment. CRS Report 98-63 E. pp. 4, 10-12.

5. ^(back) Federal Aviation Administration. Fifteenth Annual Report of Accomplishments Under the AIP. p. 6-7.

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