Tuesday, August 02, 2011

No Fiscal Reponsibility In FAA Tax Showdown

There's no fiscal responsibility to be seen in the showdown over FAA programs that has resulted in the expiration of a tax that funds FAA operations other than critical security, air safety, and traffic control functions. The tax, which adds $10-15 per ticket, isn't being collected and that's costing the FAA $125 million a week.

The financial picture makes no sense if you're a fiscal conservative and want to see the agency properly funded (which I do).
Lawmakers risk losing more than $1 billion in revenue from uncollected airline ticket taxes in a quarrel between Senate Democrats and House Republicans who are demanding a $16.5 million cut in rural air service subsidies.The shutdown is less than two weeks old and already the government has lost more than $250 million in revenue because airlines’ authority to collect ticket taxes has expired. The entire annual budget of the rural air services program is about $200 million.

“I’m a fiscal conservative,” Sen. Kay Bailey Hutchison, R-Texas, told the Senate on Monday. “I’m trying to make the cuts that are necessary, trying to do the things that are right, but ... that just doesn’t add up.”
The feds are losing $125 million a week in revenues because the GOP wants to eliminate the rural air program and opposes changes to the union election rules. With a recess looming, they could be looking at $1.2 billion in lost revenues by the time they get around to a vote.

So, it means that the FAA capital program is on hold. This increases the costs of those projects already underway due to idle construction sites and lengthening construction times add costs.

For example, this is what the tax conflict is doing to New Mexico's airports:

There's no fiscal responsibility in this stance.

This is the GOP holding its collective face until it turns blue in the face to get its way. It's a temper tantrum.

Oh, and some of the airlines (Delta) are having a chance of heart - and will begin refunding the tax that it had been collecting even though it was no longer authorized.

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