This morning, the President unveiled the Administration’s Fiscal Year 2013 Budget Request to Congress, which includes $15.172 billion for the Federal Aviation Administration (FAA). This represents a decrease in funding for the FAA over current funding levels due to a proposed cut to Airport Improvement Program (AIP) grants for large and medium hub airports. The Administration proposes to offset this cut by asking Congress to grant these airports the authority to increase Passenger Facility Charges (PFC’s) to pay for new airport projects.

The President’s budget requests slight increases for the FAA Operations, Facilities and Equipment, and Research and Development accounts, and proposes to spend just over $1 billion on NextGen, which is $99 million more than was appropriated for 2012, according to budget documents.

The Budget also proposes to levy a $100 per flight user fee on commercial and certain general aviation flights to help pay for air traffic control operations. This is the second time the Administration has proposed this fee, which is opposed by the aviation industry.

Overview of the Budget Request
The President’s FY 2013 budget request proposes $15.172 billion in new budget authority for the FAA. This is a $728 million decrease in funding for the agency over the 2012 enacted level of $15.9 billion. However, the budget assumes that Congress will offset this cut by authorizing an increase in PFC’s for large and medium hub airports.

Notably, the Budget proposes to decrease the share of the FAA’s operations budget that is funded from the Treasury’s General Fund by more than $1.5 billion and make up the difference by increasing the share provided from the Airport and Airway Trust Fund. This would be a departure from recent FAA budgets, which have included significant General Fund contributions, and reflects the Administration’s desire to cut spending derived from general government revenue to help reduce the federal budget deficit.

Below is a breakdown in the budget request by account, in billions unless otherwise noted.
 

Proposed Revenue Raisers
The Budget calls for a $926 million reduction for AIP grants for large and medium hub airports and proposes to offset this cut by asking Congress to allow these airports to increase PFC’s. Although the airport community has been advocating for a PFC increase for many years, Congress ultimately rejected this request in the recently passed FAA reauthorization bill (H.R. 658) and instead proposed level funding for AIP through 2015. In light of this development, it’s very unlikely that Congress will reconsider its decision during the upcoming budget process, which means that appropriators will have to look for ways to maintain adequate funding for AIP within current budget constraints.

The Budget also includes a controversial $100 per flight fee for commercial and general aviation turbine aircraft flights beginning on October 1, 2012, which it estimates would raise $863 million in FY 2013. The Administration made a similar proposal last fall, which was met with overwhelming opposition from the airlines, the general aviation industry, and other sectors of the industry. Trade associations representing these constituencies have already announced their opposition to today’s user fee proposal. Like the increase in PFC’s, user fees were rejected in the FAA bill and as a result the President’s proposal has very little chance passing Congress.

To access the President’s Budget Request for the FAA, please click on one of the following links: 

• Department of Transportation Budget Highlights
• Department of Transportation Budget

Analysis
Former Senator Byron Dorgan, who chairs Arent Fox’s Aviation practice, made the following statement regarding the President’s budget request for the FAA:

“The President’s FAA budget does call for an increase in desperately needed spending for NextGen. That’s good news. But, it also proposes a large cut to the Airport Improvement Program and justifies it by calling on Congress to increase the Passenger Facility Charge which the Congress has already rejected. That approach will derail the critical effort to modernize American’s airports and infrastructure that serve both general and commercial aviation. This budget should be a blueprint for building critical infrastructure, but without adequate funding our country will continue to fall behind. We can’t let that happen!”

For more information about the President’s 2013 budget request, please contact one of the Arent Fox professionals above.