Budget Report: H.R. 3539 [110th]: Airport and Airway Trust Fund Financing Act of 2007
The following is a report prepared by the Congressional Budget Office. It has been coverted to a text-only format below by GovTrack.
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CONGRESSIONAL BUDGET OFFICE
COST ESTIMATE
September 18, 2007
H.R. 3539
Airport and Airway Trust Fund Financing Act of 2007
As ordered reported by the House Committee on Ways and Means
on September 18, 2007
SUMMARY
H.R. 3539 would extend, through fiscal year 2011, several existing taxes that are dedicated
to the Airport and Airway Trust Fund. Effective January 1, 2008, the bill also would
increase the excise tax rates on noncommercial aviation-grade kerosene and aviation
gasoline. The Joint Committee on Taxation (JCT) estimates that enacting H.R. 3539 would
increase revenue by $822 million over the 2008-2012 period and by about $1.8 billion over
the 2008-2017 period, relative to the current baseline projection for taxes dedicated to the
trust fund.
The bill also would extend, through fiscal year 2011, the authority to expend amounts from
the trust fund (including interest) for major programs administered by the Federal Aviation
Administration (FAA). In doing so, the Congressional Budget Office (CBO) estimates that
the bill would authorize appropriations totaling $54.2 billion over the 2008-2011 period.
Assuming appropriation actions consistent with the bill, CBO estimates that implementing
H.R. 3539 would increase discretionary spending by $7.7 billion in 2008 and by $51.0 billion
over the 2008-2012 period. Enacting the bill would not affect direct spending.
Because H.R. 3539 would increase the tax on noncommercial aviation-grade kerosene (jet
fuel) to 35.9 cents per gallon, including floor stock, JCT has determined that the bill contains
a private-sector mandate as defined in the Unfunded Mandates Reform Act (UMRA). JCT
also has determined that the bill contains no intergovernmental mandates as defined in
UMRA.
ESTIMATED COSTS TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of H.R. 3539 is shown in Table 1. The costs of this
legislation fall within budget function 400 (transportation).
TABLE 1. ESTIMATED BUDGETARY IMPACT OF H.R. 3539
By Fiscal Year, in Millions of Dollars
2007 2008 2009 2010 2011 2012
CHANGES IN REVENUESa
Estimated Revenues 0 118 169 174 178 183
SPENDING SUBJECT TO APPROPRIATION
Spending from the Airport and Airway
Trust Fund under Current Law
Authorization Levelb 11,846 0 0 0 0 0
Estimated Outlays 12,310 4,714 1,944 774 214 35
Proposed Changes
Estimated Authorization Level 0 12,524 13,218 13,876 14,532 0
Estimated Outlays 0 7,740 11,074 12,857 13,895 5,366
Spending from the Airport and Airway
Trust Fund under H.R. 3539
Estimated Authorization Levelb 11,846 12,524 13,218 13,876 14,532 0
Estimated Outlays 12,310 12,454 13,018 13,631 14,109 5,401
Sources: Congressional Budget Office and Joint Committee on Taxation.
a. Estimated changes in revenue through 2017 are displayed in Table 2.
b. The 2007 level is the amount of discretionary budgetary resources provided from the Airport and Airway Trust Fund for that
year for major FAA programs. Discretionary budgetary resources include appropriations for FAA operations, facilities and
equipment, and research programs, as well as limitations on the obligations of contract authority for the Airport Improvement
Program. It does not include additional amounts appropriated to the FAA from the General Fund.
BASIS OF ESTIMATE
For this estimate, JCT and CBO assume that H.R. 3539 will be enacted near the start of fiscal
year 2008 and that appropriation actions consistent with the bill will be taken in each fiscal
year.
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Revenues
The existing excise taxes that are dedicated to the Airport and Airway Trust Fund are
scheduled to expire on September 30, 2007. The taxes consist of levies on transportation of
persons and property by air, use of international air facilities, and use of aviation fuels and
are estimated to generate revenues of over $11 billion in fiscal year 2007. The bill would
extend at the current rate, through fiscal year 2011, all of the taxes except those on certain
aviation fuels. The bill would increase the rates of tax on noncommercial aviation-grade
kerosene and aviation gasoline effective January 1, 2008, through fiscal year 2011.
Under the projection rules in section 257 of the Balanced Budget and Emergency Deficit
Control Act, which are followed for Congressional scorekeeping purposes, estimates of the
revenue effects of legislation assume that expiring excise taxes dedicated to a trust fund are
extended indefinitely and are measured relative to a baseline that assumes the expiring excise
taxes are extended at the same rates that would be in place immediately before their
scheduled expiration. As a result, the estimated increase in revenue from the bill results from
the increase in the excise tax rates, which are assumed to remain in effect throughout the
2008-2017 period.
JCT estimates that enacting the higher tax rates in H.R. 3539 would increase revenues by
$118 million in 2008, $822 million over the 2008-2012 period, and $1.8 billion over the next
10 years, as shown in Table 2. Those amounts are net of reductions to income and payroll
taxes.
TABLE 2. ESTIMATED REVENUES UNDER H.R. 3539
By Fiscal Year, in Millions of Dollars
2008- 2008-
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2012 2017
Estimated
Revenues 118 169 174 178 183 188 193 198 204 209 822 1,815
Spending Subject to Appropriation
By extending the authority to expend amounts from the Airport and Airway Trust Fund, the
bill would authorize appropriations totaling $54.2 billion over the 2008-2011 period for
major FAA programs, CBO estimates. Under the bill, any increased revenues resulting from
higher tax rates on noncommercial aviation-grade kerosene and aviation gasoline would be
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authorized to be used exclusively for activities related to modernizing the nation's air traffic
control system. Of the total amount authorized to be appropriated under the bill, CBO
estimates that about $850 million would support such activities. In total, assuming
appropriation actions consistent with H.R. 3539, CBO estimates that implementing the bill
would increase discretionary spending by $7.7 billion in 2008 and by $51.0 billion over the
2008-2012 period, with remaining spending of $3.2 billion occurring in later years. That
estimate is based on historical spending patterns for FAA programs.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
Because H.R. 3539 would increase the tax on noncommercial aviation-grade kerosene (jet
fuel) to 35.9 cents per gallon, including floor stock, JCT has determined that the bill contains
a private-sector mandate as defined in UMRA. JCT has determined that the bill contains no
intergovernmental mandates as defined in UMRA.
ESTIMATE PREPARED BY:
Federal Revenues: Barbara Edwards
Federal Spending: Megan Carroll
ESTIMATE APPROVED BY:
G. Thomas Woodward
Assistant Director for Tax Analysis
Peter H. Fontaine
Assistant Director for Budget Analysis
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