As ordered reported by the House Committee on Transportation and Infrastructure on February 11, 2016
H.R. 4441 would establish a federally chartered, not-for-profit corporation (known as the ATC Corporation) to assume responsibility for operating the U.S. air traffic control system, a function currently performed by the Federal Aviation Administration (FAA). The proposed corporation would be governed by an 11-member board of directors composed of individuals representing certain aviation stakeholder groups. To finance the costs of providing air traffic services, the bill would authorize the corporation to charge fees to users of such services and to issue debt.
The Secretary of Transportation would manage and oversee the transition of operational control over air traffic services to the proposed corporation, which would occur on October 1, 2019. Until that time, the bill would authorize appropriations for the FAA to continue to operate, maintain, and modernize the air traffic control system and carry out the agency’s other traditional responsibilities related to civil aviation. After the proposed transition of all air traffic control-related personnel and programs to the ATC Corporation, the bill would authorize additional appropriations for FAA and the Department of Transportation (DOT) to continue to meet traditional aviation-related responsibilities, such as performing certain regulatory and safety-related activities, making grants to airports to support capital projects, and subsidizing air service to certain rural communities.
Although the proposed corporation would be independent and autonomous, in CBO’s view it would effectively act as an agent of the federal government in carrying out a regulatory function. Hence, in keeping with guidance specified by the 1967 President’s Commission on Budget Concepts, the proposed corporation’s cash flows should be recorded in the federal budget. More specifically, fees charged by the proposed corporation should be recorded as federal revenues, and its expenditures should be classified as federal direct spending.
On that basis, CBO estimates that enacting H.R. 4441 would:
- Increase net direct spending by $89 billion over the 2017-2026 period;
- Increase net revenues by $69.2 billion over the 2017-2026 period;
- Increase net deficits stemming from revenues and direct spending by about $19.8 billion over the 2017-2026 period; and
- Result in discretionary outlays totaling $50.8 billion over the 2017-2026 period, subject to the appropriation of authorized amounts.
Pay-as-you-go procedures apply because enacting the legislation would affect direct spending and revenues. CBO estimates that enacting H.R. 4441 would increase net direct spending and on-budget deficits by more than $5 billion in one or more of the four consecutive 10-year periods beginning in 2027.
The estimated changes in direct spending and revenues under H.R. 4441 reflect CBO’s assessment of the budgetary effects of enacting H.R. 4441 as a stand-alone measure. Ultimately, however, the net budgetary impact of activities related to air traffic control under H.R. 4441 would depend on the details of additional legislation that lies beyond the scope of this cost estimate. H.R. 4441 does not address other important aspects of federal activities related to aviation—in particular, provisions of current law that govern aviation-related excise taxes that cover most of the FAA’s costs related to air traffic services and other programs. Similarly, although H.R. 4441 authorizes a marked reduction in future appropriations for the FAA that comport with the envisioned transfer of operational control over the air traffic control system to the ATC Corporation, whether subsequent reductions in future discretionary funding for the agency occur would depend on appropriations enacted by future Congresses. As a result, the ultimate net budgetary impact of corporatizing air traffic control under H.R. 4441 could differ considerably from the estimates presented in this analysis, but CBO cannot provide an analysis of such potential impacts because they would depend on the details of future legislation (see Additional Information).
H.R. 4441 contains intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA) because it would preempt state and local authorities. However, CBO estimates that the bill would impose no duty on state or local governments that would result in additional spending or a loss of revenues.
H.R. 4441 would impose a private-sector mandate as defined in UMRA on users of air traffic services provided by the ATC Corporation by requiring those entities to pay fees. The bill would impose additional mandates on air carriers, operators of unmanned aircraft, manufacturers of aircraft, and owners of certain towers in rural areas. CBO estimates that the aggregate cost of those mandates would well exceed the annual threshold established in UMRA for private-sector mandates ($154 million in 2016, adjusted annually for inflation).