GAO report says FAA Trust Fund going broke

The aviation trust fund, which is used to help finance the FAA and provide help for airports, is in danger of going broke, according to a report from the Government Accounting Office (GAO) which could signal a stronger pitch for user fees.

At the end of fiscal Year 2001, the uncommitted balance in the fund was $7.3 billion. This had declined to $1.4 billion at the end of FY 2008. The Congressional Budget Office recently forecast the uncommitted balance to fall still farther, to $752 million.

The reduction in airline operations and overly optimistic forecasts by the FAA are cited as the primary causes for the trouble. Airlines have reduced their active fleets by 18 % from the fourth quarter of 2007 to the fourth quarter of 2008, through which 38 cities lost scheduled service altogether and many others saw a sharp drop in the number of flights. Los Angeles International Airport, for instance, lost non-stop service to 12 of its 92 destinations, while the smaller airport at Little Rock, Arkansas, lost six of its 22 flights. That meant less fuel tax revenue and lower passenger facility charges. Passenger facility charges were about $145 million less in 2008 than in 2007. Actual revenues into the trust fund have been lower than forecast since 2001 and FAA now says it expects revenues to continue their decline in 2009.

According to the FAA, the Obama administration is considering transferring responsibility for revenue forecasts from the FAA to the Treasury Department.

Over-all, the GAO report says airports generally are in good financial shape but must consider taking steps to reduce expenses, delay some major projects, and find ways to increase revenue. Smaller airports could be more vulnerable. The report expresses concern that, if revenues to the trust Fund continue to drop below forecast levels, there could be a risk of insufficient resources to cover all the obligations the FAA has the authority to incur.

Rep. John Mica (R-Fla.) was quick to jump on release of the report to declare that Congress must work with the FAA to find alternative ways to match trust fund commitments with actual revenues. Mica, ranking minority member on the House Transportation and Infrastructure Committee, carried the Bush administration torch for user fees in the past session.

With the federal government’s budget already expected to raise deficits into the trillions of dollars, and a declining source of revenue going into the trust fund, aviation interests can expect major battles over fees, services and projects in the coming months.

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