November 13, 2013
OPTIONS FOR REDUCING THE DEFICIT: 2014 TO 2023

Discretionary SpendingOption 16

400 - Transportation

Eliminate Grants to Large and Medium-Sized Airports

(Billions of dollars) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018 2014-2023
Change in Spending                        
  Obligation limitations 0 -1.0 -1.0 -1.0 -1.1 -1.1 -1.1 -1.1 -1.2 -1.2 -4.1 -9.8
  Outlays 0 -0.2 -0.6 -0.8 -1.0 -1.0 -1.1 -1.1 -1.1 -1.1 -2.6 -8.1

Note: This option would take effect in October 2014. Outlays for the grants to large and medium-sized airports are controlled by limitations on obligations set in annual appropriation acts rather than by contract authority (a mandatory form of budget authority) set in authorizing law. For the above estimates, the contract authority is assumed to equal the obligation limitations that would be in effect under the option.

Under the Airport Improvement Program (AIP), the Federal Aviation Administration (FAA) provides grants to airports to expand runways, improve safety and security, and make other capital investments. In 2012, about 30 percent of that money went to airports that are classified, on the basis of the number of passenger boardings, as large and medium-sized. Those airports—there were 64 in 2012, although the number fluctuates from year to year—account for nearly 90 percent of passenger boardings.

This option would eliminate the AIP’s grants to large and medium-sized airports but would continue to provide grants to smaller airports in amounts that match funding in 2012. That year, smaller airports received $2.3 billion, more than two-thirds of the $3.3 billion available under the program. Retaining only that portion of the program would reduce federal outlays by $8 billion from 2015 through 2023, the Congressional Budget Office estimates.

The AIP, like some other transportation programs, is treated in an unusual way in the budget. The program’s budget authority is provided in authorization acts as contract authority, a mandatory form of budget authority. But because the spending of contract authority is subject to obligation limitations contained in appropriation acts, the resulting outlays are categorized as discretionary.

The main rationale for this option is that federal grants substitute for funds that larger airports could raise from private sources. Those airports have financed many investments by using bond issues to leverage funds collected from passenger facility charges and other fees, although federal law limits the collection and use of such funds. Smaller airports may have more difficulty raising funds for capital improvements, although some have been successful in tapping the same sources of funding as their larger counterparts. By eliminating grants to larger airports, this option would focus federal spending on airports that appear to have the fewest alternative sources of funding.

One argument against ending federal grants to large and medium-sized airports is that those airports would be unable to substitute private sources of funding for reduced federal grants unless the current federal limits on the collection and use of passenger facility charges were eased. Another argument against ending such grants is that they allow the FAA to retain greater control over how those airports spend their funds by imposing conditions for aid.