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Inspector General Testifies Before the House Aviation Subcommittee Regarding FAA Financing Proposals

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On March 21, the Inspector General testified before the House Transportation and Infrastructure Aviation Subcommittee regarding FAA financing proposals. The Inspector General stated that: (1) there are important reasons to consider alternative mechanisms to finance FAA that have been well documented in previous reports and commissions on reforming FAA; (2) FAA's current financing mechanism could support both FAA's ongoing efforts and the potential cost of developing the next generation air traffic control system (NextGen), if FAA's projected revenues materialize; (3) FAA's method for allocating costs among user groups is reasonable, but reflected tradeoffs that primarily resulted in fewer costs being allocated to general aviation operators; and (4) FAA's cost recovery proposal does not completely link costs and fees, and, therefore is not fully consistent with FAA's rationale for moving to user fees.

While the decision of how best to finance FAA is a policy call for the Congress, FAA needs to continue to take steps to control costs regardless of whether it is funded in the future by excise taxes or user fees. Greater clarity is needed with respect to how FAA will manage and execute NextGen initiatives, particularly given past experiences with cost growth and schedule slips. In addition, FAA's proposed borrowing authority presents serious risks unless it is accompanied by strong controls. Finally, FAA's timetable for development of a fee structure is ambitious.