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Legislative Update: Senate Appropriators Urged to Lift PFC Cap

March 8, 2017

Today the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development (THUD) held a hearing entitled, “Investing in America: Funding Our Nation’s Transportation Infrastructure Needs”.

Chairman Susan Collins (R-ME) stated, “The impetus for today’s hearing is the Administration’s intention to invest $1 trillion in our nation’s infrastructure over the next ten years.” Todd Hauptli, President and CEO of America Association of Airport Executives (AAAE), provided insight on the current state of aviation infrastructure and gave recommendations for dealing with the significant challenges on the horizon.

Hauptli identified Passenger Facility Charges (PFCs) as “the biggest bang for the buck to build critical safety and security infrastructure at our nation’s airports without stressing the federal budget”. PFCs are local airport user fees that are imposed locally and used for key airport projects. Congress placed a $4.50 cap on PFCs in 2000, and the cap has remained unadjusted despite annual construction inflation. “Eliminating the cap would allow airports to finance a greater share of critical infrastructure projects with their own local revenues,” said Hauptli.

When questioned on how PFC increases would affect rural communities, Haupti explains that if larger airports choose to raise their PFC caps, they would forego their Airport Improvement Progam (AIP) entitlement funds, and those dollars would flow into the Small Airport Fund.

In making the case for increased AIP investment, Hauptli points out that authorized funding levels for AIP have dropped in recent years from $3.515 billion to $3.35 billion. AIP funds key airport projects that improve safety, security, capacity, and efficiency. Hauptli explained that the FAA estimated that airports have $32.5 billion in AIP-eligible projects between 2017 and 2021 or approximately $6.5 billion annually. He acknowledged that funding levels are unlikely to double anytime soon but said doing away with the PFC cap could potentially “open the door to recalibrate the AIP program”.

Hauptli explained the importance of retaining the tax exemption for municipal bonds and eliminating the tax burden of the Alternative Minimum Tax (AMT) on airport private activity bonds. He urged Members to “close the bag fee loophole” by making baggage fees subject to the same aviation excise taxes as base air fares. Hauptli also expressed support for funding the Contract Tower Program, the Essential Air Service (EAS) program, and the Small Community Air Service Development Program.

Categories: Advocacy
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