The House Ways and Means Committee approved legislation Wednesday renewing aviation taxes for five years, a key piece of the Federal Aviation Administration reauthorization that’s a must-pass Congressional priority this summer.
HR 3796 passed along party lines, with Democrats complaining the bill was rushed and contained a surprise border patrol earmark benefiting a top Republican lawmaker.
The legislation extends through 2028 key passenger aircraft and fuel taxes that fund the Aviation Trust Fund, which, along with supplemental general fund dollars, funds capital improvements for U.S. airports and the airways system.
Without reauthorization, the taxes are set to expire Sept. 30, along with the full budget.
Both chambers have held several hearings to craft a bipartisan FAA reauthorization package. The House Transportation and Infrastructure Committee is expected to hold a full markup of its bill in June and advance it to the full House floor in July.
Wednesday’s 23-18 party-line vote came after opposition from Democrats who said the committee should have at least held a hearing on the legislation — it was approved during a general markup session — in part because the aviation industry will change over the next five years.
The bill “rubber stamps three excise taxes with no hearings,” complained Richard Neal of Massachusetts, the panel’s ranking Democrat. “We understand clearly what is happening with air travel, it’s a very unpleasant experience and will not be helped by what’s proposed today.”
The air industry will likely change over the next five years with the possible introduction of sustainable fuels or electric planes, some Democrats said.
“I appreciate the need to extend excise taxes for the trust fund,” said Rep. Jimmy Panetta, D-Calif. “But we’re missing the opportunity to revisit these taxes before setting them in stone for another five years. If we had had a hearing on this issue, we could have at least had discussions about updates on new modes of travel and aircraft.”
Also attracting Democratic ire was a provision that requires the government to cover costs for border patrol agents at airports located within 30 miles of northern or southern borders. The measure is expected to apply to only a small handful of airports, including one in the district of Republican Conference Chair Rep. Elise Stefanik, R-N.Y.
“I just find this really objectionable,” said Rep. Dan Kildee, D-Mich. “This is an earmark for a particular member of the House of Representatives — without hearings, without any technical justification, without the support of the agency that actually is charged with the important responsibility of doing this work, at the expense of the people I represent.”
In recent years, the trust fund’s Airline Improvement Program, which provides grants for construction and safety projects at airports, has been supplemented by the General Fund, including $400 million in both fiscal years 2020 and 2021 and $554.2 million in fiscal years 2022, according to the FAA.
The legislation comes amid the busy summer travel season, which could prove important for airport revenue ahead of a potential recession, said Fitch Ratings in a note Wednesday.
“Looking past the busy summer travel months, macro headwinds from a potential economic downturn could weaken demand,” Fitch said. New labor contracts could hurt demand if airlines pass the costs down to customers, the ratings agency said.
But three rounds of federal stimulus have helped airports build liquidity balances that are “at or greater than pre-pandemic levels and some airports still retain federal relief funds to utilize over the next year,” Fitch said. “Debt service coverage ratio levels are normalizing under the cost recovery frameworks and leverage remains consistent with current rating levels.”