CSAC Bulletin Article

Congress Preparing to Move Aviation Extension
Fuel Tax Grab Unresolved

June 23, 2016

With the latest extension of Federal Aviation Administration (FAA) spending authority slated to expire on July 15 – and with Congress still a long way off from finalizing a multi-year reauthorization bill – key lawmakers have been actively discussing the need to pass another extension.  While several short-term and long-term options have been floated, committee leaders appear ready to embrace a proposal that would keep aviation programs running into 2017.

For their part, a number of senators have continued to press House leaders to take up the Senate’s 18-month FAA reauthorization bill (S 2658, reordered as HR 636), which the upper chamber approved back in April.  House leaders, however, have been disinclined to simply accept the Senate measure and have been trying to build support for their own committee-approved six-year reauthorization bill (HR 4441).  Despite efforts to advance the legislation, disagreements over provisions of HR 4441 that would shift air-traffic control (ATC) responsibilities from the FAA to a federally chartered, non-profit corporation have kept the bill from gaining traction.

It should be noted that some members of Congress are urging committee leaders to include certain policy modifications as part of the new FAA extension measure.  While CSAC has explored the viability of adding to the extension provisions that would reverse a recent FAA ruling that will negatively impact certain self-help counties, the effort to secure those provisions remains an uphill battle.  Accordingly, efforts to overturn the FAA’s administrative decision will likely have to wait until Congress considers a long-term aviation bill.

Under the FAA’s ruling, States and local governments will be required beginning in 2017 to spend the proceeds of any aviation-related tax – those derived from excise taxes or local voter-approved sales taxes – on airport uses only.  The ruling conflicts with current practices whereby some States and localities spend such proceeds on a number of non-aviation-related governmental functions (including roads, schools, public safety, etc.).

It is estimated that the FAA’s policy amendment will mean a loss of over $100 million for the State of California and its local governments.  Nationwide, a recent study suggests that state and local governments will lose roughly $190 million a year under the FAA rule change.

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