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White House Seeks Cuts in FAA Budget, Outlines ATC Plan
May 24, 2017
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  • The White House yesterday provided a more detailed look at its budget, with plans to cut $300 million from the FAA’s funding in the short term and to reshape the tax structure to accommodate a user-funded independent air traffic control (ATC) organization in the long term.

    While they did not come as a surprise, both the Fiscal Year 2018 budget and ATC reform proposals immediately drew fire from the industry. NATA president Martin Hiller decried the FY2018 budget as setting the table for a “self-fulfilling prophecy” for the need for an independent ATC organization, while NBAA president and CEO Ed Bolen called the ATC proposal troubling.

    In a three-page fact sheet, the White House lays out its case for adopting many of the concepts of last year’s House proposal for carving the ATC organization out of the FAA. “The FAA is struggling to keep up with the quickly evolving needs of the nation’s airspace users,” the White House said of its agency. “Air traffic control has become a technology-dependent enterprise. To accommodate growing air traffic volume and define more efficient flight paths, modern technology is required. However, the FAA must constantly make trade-offs that favor maintaining legacy assets nationwide, rather than investing in cutting-edge technology that other nations use to manage their air traffic.”

    Echoing arguments of other ATC reform backers, the White House noted that 60 other countries have separated ATC from government and work with private capital to modernize technology and facilities “in a more iterative way that focuses on driving stakeholder benefits. It is time for the U.S. to follow suit.”

    The White House called the House proposal, which was spearheaded by House Transportation & Infrastructure Committee chairman Bill Shuster (R-Pa.), “an excellent starting point,” and outlines a multi-year process to transfer the day-to-day air traffic control reform to a new “non-governmental, non-profit corporation.” The White House vision calls for government to continue to regulate safety and restates the House proposals of a board of directors to manage the organization and a user-fee structure. “These concepts will drive more and better services than the FAA provides today, and therefore create an efficient governance mechanism that is responsive to its users,” the White House said.

    The corporation could develop its own technologies and potentially sell its services to other countries. The White House acknowledged the need to work with the user community over access and to preserve the safety and efficiency of the system, particularly as the airspace expands to include drones.

    Under the proposal, airline transportation taxes would be eliminated, but other aviation excise taxes would remain—at a rate to be determined. The other taxes would help cover the costs of the remaining portions of the FAA, including its safety and certification functions and the Airport Improvement Program, among other areas. “The precise tax rates for the remaining aviation excise taxes have not yet been developed,” the White House said. “The administration will work with Congress to establish successor tax rates.”

    As for the FY2018 budget, the White House is proposing almost $300 million in cuts over the enacted Fiscal Year 2017 budget, with $135 million shaved out of the Operations account, including funding for personnel, and $120 million in Facilities & Equipment. Airport Improvement Program would remain at current levels, but the Research, Engineering and Development program would go down by $26 million, according to an analysis by NATA.

    “Investment in our nation’s aeronautical infrastructure is just as important to our long-term economic prosperity as tax cuts and increased defense spending,” Hiller said. “We cannot make the justification for ATC privatization a self-fulfilling prophecy by making cuts to important programs that need immediate funding. The proposed FAA budget would reduce spending on the modernization of our air traffic control system and continue what has been a six-year downward spiral in airport funding.”

    Hiller further expressed concern about the “potentially detrimental impact on general aviation and rural investment” that the independent ATC proposal would have. “Targeted budget changes, including clear and unambiguous exemptions from the impacts of sequestration and government shutdowns, would be more effective than potentially destabilizing the world’s safest, most complex air traffic control system,” he added. “We urge Congress to continue to appropriately fund a modernization program that is delivering real benefits and to increase the investment in our airport infrastructure.”

    Bolen agreed, “For several years, NBAA has said the public airspace belongs to the American public and should serve all Americans. The president’s budget takes the public’s elected representatives out of the equation and leaves it to a private board to ensure the public’s interest is being well served.”

    The independent ATC concept, he added, “has raised a host of concerns, not just among aviation stakeholders, but also among congressional lawmakers from both political parties, mayors from across the country, organizations from the political left and right, consumer groups and a majority of Americans.”