The Aviation Subcommittee of the House Transportation and Infrastructure Committee heard an earful of testimony from airport executives about the importance of retaining tax-exempt bonds.
"With the funding levels of Airport Improvement Program unable to close the gap, and Passenger Facility Charge limits stretched to significant extent, as well as a sunset of Bipartisan Infrastructure funding, it is imperative to preserve the tax-exempt status of general airport revenue bonds," said Lawrence Krauter, CEO of the Cincinnati/Northern Kentucky International Airport.
"If our GARBs were taxable, that would divert another estimated $4 million annually from investing in projects and instead directing those resources to pay additional debt service."
The testimony came during a hearing on Tuesday that explored how the airports are coping with safety concerns while dealing with ongoing financial needs to maintain and update infrastructure.
Airports receive funding through a combination of federal funds dispensed by the Federal Aviation Administration via the Airport and Airway Trust Fund and the AIP.
Funds also flow in from airport generated revenue, state and local governments and the
"The federal cap on the PFC hasn't been updated in nearly twenty years," said Michael Landguth, president and CEO of the Raleigh-Durham Airport Authority. "Set at $4.50 in 2000, its purchasing power has eroded by more than 50%."
Airport execs use PFC inflows to issue bonds to keep up with building and maintaining runways and terminals, but funding is falling further behind.
"The challenge that this creates in building America's airports is that more debt has to be issued to supplement the shortfall in this funding source, and the PFC must be obligated for very long periods of time to service that debt," said Krauter in his written testimony.
The continuing resolution passed by Congress last month boosted funding for the FAA after a deadly crash at Ronald Reagan Washington National Airport in January and a series of near misses at other airports.
"The FAA bill increased AIP funding to $4 billion annually, added flexibility to the use of the AIP funds contained comprehensive environmental streamlining reform to expand the number of projects categorically excluded from NEPA reviews and cut bureaucratic red tape to expedite project deliveries," said Aviation Subcommittee Chairman Troy Nehls, R-Texas.
The $25 billion of airport funding provided by the BIL and the future of federal grants for airports is being weighed against the need for reauthorizing a surface transportation bill, a dwindling Highway Trust Fund and a T&I Committee focused on laying concrete and pouring asphalt.
"The Bipartisan Infrastructure Law was truly remarkable legislation in terms of what it was able to do for airports of all sizes," said Krauter.
"It really allowed airports to put facilities in that they otherwise wouldn't be able to afford, and that allowed them to stretch back to the revenue bonds. That allowed them to use that money to defer the need to issue as much debt. That is very critical because obviously there are limits to how much debt that you can issue."
Aviation received a D+ grade on the American Society of Civil Engineers Infrastructure Report Card.
According to ASCE's numbers, "Following the COVID-19 pandemic, air travel has fully recovered to 819.5 million in 2023 and continues to increase. Passenger traffic is forecasted to grow 58% to 1.28 billion annual passengers by 2040."
The ASCE is on the same page regarding the PFC.
"The continued failure to raise the cap on the Passenger Facility Charge represents a missed opportunity, because the projected funding gap is $114 billion over the next 10 years and additional resources will be needed to address this deficit."
