Airport and Airway Trust Fund

The Airport and Airway Trust Fund was financed from taxes on domestic and international airline travel, domestic cargo sent by air, and noncommercial aviation fuels. Although these taxes expired at the end of 1995, there is enough money in the Trust Fund to pay for its portion of the Federal Aviation Administration's (FAA) fiscal year 1996 budget. FAA estimates that with no tax receipts, the Trust Fund money available at the end of fiscal year 1996 would total $600 million. FAA also estimates that the taxes must be reinstated no later than December 1996 to enable the Trust Fund to finance $6.1 billion of FAA's $8.1 billion fiscal year 1997 budget as requested, with the General Fund paying for the rest. For each full month beyond December 1996 that passed with no tax receipts, an additional $550 million would be needed from the General Fund to finance FAA's fiscal year 1997 budget.

GAO found that: (1) between fiscal year (FY) 1990 and FY 1996, the Fund has financed all of FAA Grants-in-Aid for the Airport Improvement Program, Facilities and Equipment, and Research, Engineering, and Development accounts and half of the FAA Operations account; (2) the Fund can meet its $5.7 billion FAA FY 1996 budget responsibility; (3) if Congress approves the President's FY 1997 FAA budget of $8.1 billion, the Fund would be able to finance only a portion of the budget because the taxes that support the Fund no longer exist; (4) if the taxes that support the Fund are reinstated by December 1996, it could meet its $6.1-billion FY 1997 budget responsibility; and (5) if the taxes that support the Fund are not reinstated by December 1996, it will incur monthly deficits of $550 million through FY 1997.