Skip Navigation

The Airport and Airway Trust Fund has been a focal point for controversy surrounding the current congestion in the aviation system and the level of federal support for aviation programs. The existence of an accumulated surplus in the fund has led some to question whether users of the aviation system are receiving their fair share of government spending given the aviation excise taxes they pay. At the request of the Senate Budget Committee, this study examines the Airport and Airway Trust Fund, analyzes the sources and implications of the current accumulated surplus in the fund, and provides some options the Congress might consider for the future financing of aviation programs. In keeping with the mandate of the Congressional Budget Office to provide objective analysis, the report makes no policy recommendations.

Mark R. Dayton of CBO's Natural Resources and Commerce Division wrote the report under the supervision of Jenifer Wishart. Mitchell Rosenfeld made substantial contributions throughout the project. Everett M. Ehrlich provided valuable assistance in the initial phases of the study. The author wishes to thank W. David Montgomery, Linda Radey, John Sabelhaus, John Fischer, Kathleen Ausley, Tom McDonnell, and Steve Hornburg for their many helpful suggestions and comments. Francis S. Pierce edited the manuscript. Nancy H. Brooks provided production support. Gwen Coleman typed the drafts, and Kathryn Quattrone prepared the report for publication.
 

James L. Blum
Acting Director
December 1988
 
 

SUMMARY

I - INTRODUCTION AND HISTORY OF THE TRUST FUND

• Purpose of the Trust Fund: Capital Account versus User Financing
• Legislative History of the Trust Fund
• Financial History of the Trust Fund

II - AN ANALYSIS OF THE ACCUMULATED SURPLUS IN THE TRUST FUND

• Who Pays for What?
• Base-Case Recalculation of Trust Fund Balances
• Trust Fund Balances with Capital-Only Financing
• Trust Fund Balances with Full User Financing
• Conclusion

III - BASELINE AND ALTERNATIVE PROJECTIONS OF THE TRUST FUND

• Baseline Projections
• The Trust Fund with No Tax Rate Reduction
• Alternative Calculations of Trust Fund Balances
• Conclusions

IV - OPTIONS FOR AVIATION SPENDING AND FINANCING

• Option I: Continue Current Policy
• Option II: Eliminate the Tax Rate Reduction
• Option III: Restructure the Trust Fund as a Dedicated Capital Fund
• Option IV: Transform the Trust Fund into a Full User-Pay System

GLOSSARY
 

TABLES
1.	Aviation Excise Tax Rates: 1970-1990
2.	Airport and Airway Trust Fund
3.	Base Case and Full Funding of FAA Spending by the Trust Fund
4.	Baseline Projection of FAA Outlays
5.	Baseline Projections of the Airport and Airway Trust Fund
6.	Projection of the Airport and Airway Trust Fund with No Tax Rate Reduction
7.	Baseline and Alternative Projections of Trust Fund
8.	Alternative Projections of the Trust Fund with No Tax Rate Reduction
9.	Summary of Projected Tax Revenue, FAA Expenditures, and Trust Fund Balances
10.	Projection of Trust Fund Revenue, Outlays, and Balances Under Option I
11.	Projection of Trust Fund Revenue, Outlays, and Balances Under Option II
12.	Projection of Trust Fund Revenue, Outlays, and Balances Under Option III
13.	Projection of Trust Fund Revenue, Outlays, and Balances Under Option IV
FIGURES
S-1.	Federal Outlays for Airports and Airways in 1988
1.	Total Trust Fund Receipts and FAA Outlays, 1971-1988

This document is available in its entirety in PDF.