The Airport and Airway Trust Fund Understanding the

The Airport and Airway Trust Fund Understanding the Basics September 2016 Federal Aviation Administration

Airport and Airway Trust Fund Brief History • The Airport and Airway Trust Fund (Aviation Trust Fund) was created by the Airport and Airway Development and Revenue Act of 1970 to finance aviation programs – Revenues are derived from aviation-related excise taxes on passengers, cargo, and fuel • Of $14. 3 B in 2015 – – Taxes on domestic transportation of persons (69%) Taxes on international passengers (23%) Taxes on domestic cargo (3. 5%) Taxes on aviation fuel (4. 5%) • Provides the majority of funding for the Federal Aviation Administration – – 71. 5% in FY 2013 80. 1% in FY 2014 92. 8% in FY 2015 87. 8% in FY 2016 (rest is from the General Fund of the US Treasury) December 17, 2021 Federal Aviation Administration 2

FAA Funding • The FAA has four main budget accounts: – Grants in Aid for Airports (AIP) 100% of funding comes from the Aviation Trust Fund via Contract Authority Appropriations acts include obligation limitations that usually equal level of CA Provides for airport grants and related research and administrative costs – Facilities and Equipment (F&E) 100% of funding comes from the Aviation Trust Fund via appropriations Provides capital and equipment spending for the FAA – Research, Engineering and Development (RE&D) 100% of funding comes from the Aviation Trust Fund via appropriations Provides for applied research for aviation – Operations Funding source is mixed between Aviation Trust Fund and general fund revenues; both via appropriations Covers operating expenses of the FAA December 17, 2021 Federal Aviation Administration 3

FAA Funding Structure and Flow (FY 2016 in millions of dollars) Facilities & Equipment Updated 8/15/16 based on 2016 enacted documented in FY 17 President’s Budget submission December 17, 2021 Total FAA Enacted $16, 281 Federal Aviation Administration 4

Trust Fund and FAA Budget History and Projections Actual Projected December 17, 2021 Federal Aviation Administration 5

Trust Fund Excise Taxes Structure Trust Fund Excise Tax Revenue Sources Rates effective as of January 1, 2016 Domestic passenger ticket tax 7. 5 percent Domestic flight segment tax $4. 00 per passenger per segment; indexed to the Consumer Price Index (excluding flights to or from rural airports) Tax on flights between the continental United States and Alaska or Hawaii (or between Alaska and Hawaii) $8. 90 per passenger; indexed to the Consumer Price Index International arrival and departure tax $17. 80 per passenger; indexed to the Consumer Price Index Tax on mileage awards (frequent flyer awards tax) 7. 5 percent of value of miles Domestic commercial fuel tax 4. 3 cents per gallon Domestic general aviation gasoline tax 19. 3 cents per gallon Domestic general aviation jet fuel tax 21. 8 cents per gallon Note: Effective after March 31, 2012 a 14. 1 cents per gallon surcharge for fuel used in fractional ownership flights 6. 25 percent on the price paid for transportation of domestic cargo or mail Tax on domestic cargo or mail December 17, 2021 Federal Aviation Administration 6

Airport and Airway Trust Fund FY 2015 Excise Tax Revenues (in millions of dollars) Total excise tax revenues $14, 268 December 17, 2021 Federal Aviation Administration 7

ATTF Tax receipts FY 2000 and 2015 ($M) FY 2000 FY 2015 7, 159 9, 838 523 497 1, 385 3, 311 Aviation Fuel Commercial Use 663 411 Aviation Fuel (Other Than Gas) 155 174 Aviation Gasoline 46 22 Any Liquid Used in Fractional Ownership Flight **** 15 Total excise tax receipts 9, 930 14, 268 Transportation of Persons by Air Transportation of Property Use of International Air Facilities Aviation Fuel Taxes Note—Tax receipts on aviation fuel other than gas are jet fuel taxes from general aviation jet fuel purchases. A recent GAO study found that these AATF trust fund receipts do not reflect all of the fuel taxes that were paid. GAO estimated that AATF receipts shortfall is about $150 million to $200 million annually. December 17, 2021 Federal Aviation Administration 8

FAA Accounts & AATF Funding 1 Includes sequestration December 17, 2021 Federal Aviation Administration 9

Trust Fund Safeguards • FAA/OST/OMB monitor the Aviation Trust Fund with emphasis on maintaining a positive uncommitted balance – This conservative approach helps to ensure the solvency of the fund • Title 49 of U. S. Code includes a provision (Sec. 48114) titled “Airport and Airway Trust Fund Guarantee” – Total budget resources appropriated from the Aviation Trust Fund each year should be equal to 90% of the estimated revenue and interest credited to the trust fund for that fiscal year; and a truing up for an over- or under- estimate of revenues from prior fiscal years December 17, 2021 Federal Aviation Administration 10