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"House, Senate Part Ways on Financing in FAA Reauthorization Measures"



Thursday, September 20, 2007

House, Senate Part Ways on Financing in FAA Reauthorization Measures 
By Kathryn A. Wolfe
Congressional Quarterly Today 


Both chambers of Congress will be working Thursday on legislation to
reauthorize the Federal Aviation Administration.

The full House will vote on a $68 billion measure (HR 2881) to reauthorize
the agency, while a Senate committee will mark up portions of its own FAA
bill. The Senate measure also includes provisions intended to ensure the
solvency of the Highway Trust Fund.

In the House, lawmakers are expected to adopt a hefty manager's amendment
that includes language to tighten oversight of foreign aircraft repair
stations, clamp down on excessive airline scheduling, establish health and
safety standards for flight attendants and create new protections for people
stranded on delayed aircraft.

The House will vote on an amendment by Ted Poe, R-Texas, that would require
foreign aircraft repair stations to subject their employees to drug and
alcohol testing, as is the case for domestic aircraft mechanics.

Additionally, the House will consider an amendment by Florida Democrat Ron
Klein that would require the Transportation Department to investigate more
consumer complaints, including flight cancellations, overbooking, baggage
concerns and other issues.

As expected, the rule for floor consideration would automatically add to the
underlying bill a financing measure (HR 3539) that would raise the general
aviation fuel tax from 21.8 cents per gallon to 35.9 cents per gallon, and
the commercial aviation fuel tax from 19.3 cents per gallon to 24.1 cents
per gallon. The extra revenue would be dedicated to air traffic control
modernization.

However, the rule will not contain language that would automatically pass a
three-month extension of the FAA's authorization (HR 3540). The current
extension (PL 108-176) expires Sept. 30, and it is unclear how the House
will proceed on extending its programs.

The White House issued a veto threat Wednesday against the House's FAA bill,
saying it would not do enough to tie the agency's revenues more directly to
the costs imposed on the air traffic control system by its various users.

The statement of administration policy said the bill "falls far short of
providing critical reforms proposed by the administration. Indeed, it would
make the status quo worse by undoing progress achieved in prior Congresses."

The administration wants to replace the current system of fuel and ticket
taxes with new usage fees, such as per-flight charges based on distance
traveled. The administration said such a shift is necessary to fund system
upgrades to handle the increasing volume of air traffic.

Senate Finance Markup 

On Thursday, the Senate Finance Committee will mark up tax legislation that
eventually will be added to the chamber's FAA bill (S 1300).

The Senate panel's version would raise the tax on general aviation fuel to
36 cents per gallon, but the measure's similarities with the House bill end
there. 

It would not change commercial aviation fuel taxes. But it would classify
aircraft owned by multiple parties (called "fractionals") as general
aviation for the purposes of jet fuel taxation, repeal the ticket tax these
types of planes are currently subject to, and impose a $58-per-flight
departure tax on them.

Additionally, it would change the international departure and arrival tax
from $15.10 per flight to $16.50, and index it for inflation.

Highway Provisions 

The committee's draft bill includes provisions intended to ensure the
solvency of the Highway Trust Fund, which fuels federal infrastructure
investment.

In July, the Office of Management and Budget estimated that the Highway
Trust Fund could have a shortfall of $3.8 billion to $4.3 billion by fiscal
2009 unless lawmakers find new revenue streams or significantly cut highway
spending.

The Congressional Budget Office has echoed those estimates, saying further
shortfalls can be expected in fiscal 2010 and beyond.

Appropriators made it clear that lawmakers should not expect the trust fund
to be bailed out by spending from the general Treasury, and that it would be
up to the Finance Committee to remedy the problem.

The measure the committee will consider would add about $3.4 billion to the
trust fund by temporarily prohibiting money from being transferred from it
to the general Treasury for non-highway uses, including some transit
purposes, and suspending tax credits for certain kinds of fuels, among other
initiatives.

The draft also contains some provisions designed to combat fuel fraud,
including changing the location where gasoline taxes are collected and
imposing an excise tax on removing certain fuels from foreign trade zones.

Losses to the general Treasury caused by these changes would be offset by
increasing the penalty tax on oil spills from 5 cents per barrel to 10 cents
per barrel through the end of 2017, and moving up by one year the effective
date of a law (PL 108-357) that prohibits "corporate inversions," whereby
companies avoid paying U.S. income taxes by setting up post office boxes in
tax haven countries. 

The Senate Finance Committee markup is scheduled for 4 p.m. Thursday in 215
Dirksen.

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