Obama Administration FY14 Budget Proposal

Today, the Obama Administration released their Fiscal Year (FY) 2014 budget proposal.  Overall spending under the proposal would be $3.77 trillion.  The full breakdown of the budget for all departments is available on the Government Printing Office website.

Below are highlights and descriptions that were taken directly from the budget.

Department of Transportation (DOT) and Federal Aviation Administration (FAA)

  • $77 billion for DOT
  • $15.6 billion for FAA
  • The Administration calls for a decrease in funding for the Airport Improvement Program (AIP) of $450 million, funding airport grants at $2.9 billion.  However, the budget proposes increasing the Passenger Facility Charge (PFC) to $8.00 in exchange for eliminating entitlement grants for large hubs.  Additionally, the budget proposes eliminating double entitlements.
  • The Administration provides no funding for the Small Community Air Service Development Program.
  • $9.4 billion for FAA Operations
    • $30 million for maintain and operate new En Route Automation Modernization (ERAM) systems that became operational during FY 2012 and FY 2013.
  • $2.8 billion for FAA Facilities and Equipment (F&E)
    • $1 billion for NextGen
    • $32 million for Area Navigation/Required Navigation Performance
    • $282 million for Automatic Dependent Surveillance Broadcast
    • $115 million for Air-to-Ground Data Communications
    • $62 million for NextGen Systems development
    • $1.8 billion to sustain current systems
  • $166 million for Research, Engineering, and Development (RE&D)
    • $12 million for the Joint Planning and Development Office (JPDO)

Proposed Policy Objectives

Provide $50 Billion in Upfront Infrastructure Investments.  The national transportation system continues to face an immense backlog of state-of-good-repair projects, a reality underscored by the fact that there are nearly 70,000 “structurally deficient” bridges in the country today.  To address this problem, the Budget includes $40 billion for “Fix it First” projects, to invest immediately in our Nation’s infrastructure with an emphasis on reducing the backlog of deferred maintenance on highways, bridges, transit systems, and airports nationwide. The Budget also includes $10 billion for competitive programs to encourage innovative reform and help get high-value infrastructure projects from the planning stage to execution, including $200 million for “Climate Ready Infrastructure” whose planning efforts and projects include measures to enhance the resilience of transportation infrastructure to extreme weather and other impacts of climate change. 

  • This funding includes $2 billion in AIP funding.  This funding will construct runways and other airport improvements such as runway safety area improvement projects and noise mitigation projects. 
     
  • On a call with the FAA Administrator to discuss the FAA budget proposal, ACI-NA learned that the $2 billion would be treated as normal AIP money, run through the normal AIP process and open to all airports.

Boost Private Investment Through “Rebuild America Partnership.”  The President’s plan will bring together an array of new and existing policies all aimed at enhancing the role of private capital in U.S. infrastructure investment as a vital additive to the traditional roles of Federal, State, tribal and local Governments. The President wants to enable and empower the private sector to upgrade infrastructure on which we all rely and that is crucial for continued economic growth.   

  • Create National Infrastructure Bank.  The President continues to call for the creation of an independent National Infrastructure Bank.  The Bank will have the ability to leverage private and public capital to support infrastructure projects of national and regional significance.  In addition, the Bank will be able to invest through loans and loan guarantees in a broad range of infrastructure projects, including transportation, energy, and water, and will operate as an independent, wholly-owned Government entity outside of political influence.
     
  • Enact America Fast Forward Bonds.  Recovery Act funding for “Build America Bonds” (BABs) helped to support more than $181 billion for new public infrastructure.  The program’s innovative design ensured that States, localities, and their private sector partners receive the best bang-for-the-buck when they finance their investments in new infrastructure.  The President’s new America Fast Forward (AFF) Bonds program will build upon the successful example of the BABs program, broadening it to include similar programs like the qualified private activity bonds program while also making the combined program more flexible.  AFF Bonds will attract new sources of capital for infrastructure investment — including from public pension funds and foreign investors that do not receive a tax benefit from traditional tax-exempt debt. In addition, the Budget proposes changes to the Foreign Investment in Real Property Tax Act (FIRPTA) aimed at enhancing the attractiveness of investments in U.S. infrastructure and real estate to a broader universe of private investors. 

Department of Homeland Security

The President’s FY 2014 budget proposes a total of $39 billion for DHS, a decrease of $615 million below FY 2013 enacted levels.

Transportation Security Administration (TSA)

  • $7.4 billion for TSA
  • $4.968 billion for Aviation Security
    • $3.89 billion for screening operations
    • $382.5 million for explosive detection systems
    • $103.4 million for checkpoint support
    • $1.07 billion for aviation security direction and enforcement
  • $827 million for Federal Air Marshal Service (FAMS)
  • $180 million for Transportation Threat Assessment and Credentialing

U.S. Customs and Border Protection (CBP)

  • $12.9 billion for CBP
  • The Administration proposes $221 million to add 1,600 CBP officers and more inspections equipment and technology at U.S. ports of entry.
  • $10.8 million for CBP Mobile Program to fund 1,500 additional mobile devices.
  • $8 million for Integrated Travel Processing to invest in technology to improve processing at air and land ports of entry through the acquisition of 60 kiosks at airports and at 8 high volume pedestrian crossings. 
  • $7.8 million for Enhanced Targeting at the National Targeting Center
  • The budget request includes a $54 million reduction for CBP IT Infrastructure & Systems Support.
  • $253 million for US-VISIT

Proposed Policy Objectives

Customs and Border Protection (CBP): Reimbursements under public-private partnership MOUs at Ports of Entry.

The Budget includes a proposal to allow the Commissioner of Customs and Border Protection (CBP) to approve requests from interested parties to reimburse CBP for enhanced inspectional services. Under current law, 19 U.S.C. 58b, CBP is authorized to receive reimbursement only if the Secretary of Homeland Security determines that the volume or value of business cleared through the facility at issue is insufficient to justify the availability of CBP services and if the governor of the State in which the facility is located approves such designation. The proposed legislation would authorize CBP to (1) receive reimbursement from corporations, government agencies, and other interested parties for inspection services in the air, land and sea environments at both the domestic and foreign locations; (2) receive reimbursement at international and landing rights airports that already receive inspection services; and (3) collect reimbursable expenses including salaries, benefits, temporary duty costs, relocation and, as applicable, housing, infrastructure, equipment and training. This would allow CBP to provide services to requesting parties that it could not provide in the absence of reimbursement.

Customs and Immigration User Fee Increase

CBP has proposed a $2.00 increase to both the IUF and COBRA air and sea passenger user fees, as well as proportional increases in other IUF and COBRA fee categories.  The IUF increase is projected to provide approximately $166 million in additional funding, supporting up to 974 additional CBP officers.  The COBRA user fee increase is projected to provide approximately $194 million in additional funding, supporting up to 903 additional CBPOs. In future budget requests, CBP will tie these fees to the Consumer Price Index so they keep pace with the rising costs of processing international trade and travel.

The proposed COBRA and IUF legislative changes are intended to bridge the gap in the staffing needs identified in the FY 2013 Report to Congress on Resource Optimization at Ports of Entry, related to current service levels.  The public-private partnerships, resulting in reimbursable agreements, are intended to fund overtime and enable CBP to expand CBP inspection services as requested by public and private stakeholders. All of these legislative proposals will lead to a reduction in wait-times for travelers and cargo and an increase in seizures of illegal and counterfeit goods, resulting in a positive impact on the Nation’s economy.

Aviation passenger security user fee, $18b/10yrs

Transportation Security Administration (TSA):  Aviation passenger security fee increase. Since its establishment in 2001, under the Aviation and Transportation Security Act, the aviation passenger security fee has been limited to $2.50 per passenger enplanement with a maximum

fee of $5.00 per one-way trip. This fee covers less than 30 percent of TSA’s aviation security costs, including overhead and the Federal Air Marshal Service, which have risen over the years while the fee has remained the same. The Budget proposes to replace the current “per enplanement” fee structure with a “per one-way trip” fee structure so that passengers pay the fee only one time when traveling to their destination. It also removes the current statutory fee limit and replaces it with a statutory fee minimum of $5.00 in 2014, with annual incremental increases of 50 cents from 2015 to 2019, resulting in a fee of $7.50 in 2019 and thereafter. The proposed fee would increase collections by an estimated $25.9 billion over 10 years. Of this amount, $7.9 billion will be applied to increase offsets to the discretionary costs of aviation security and the remaining $18 billion will be treated as mandatory savings and deposited in the general fund for deficit reduction.

TSA Exit Lane Staffing

The FY 2014 request proposes to transition access control at exit lanes to the Airport Authorities/commercial airports pursuant to federal regulatory authorities, which will result in a savings of $88.1 million and 1,487 FTE in FY 2014. Staffing exit lanes is not a screening function, but rather falls under the purview of access control, which is the responsibility of the airport operator.  TSA will work with airports to integrate exit lane security into their perimeter security plans and assess those plans regularly. This proposal will enable TSA to focus its resources on screening functions and risk-based security measures.

Federal Flight Deck Officer (FFDO) and Flight Crew Training

TSA’s request includes a reduction of $25.5 million and 40 FTE for the Federal Flight Deck Officer and Flight Crew Training program from FY 2012. TSA proposes that FFDO and Flight Crew Training programs be funded in the future by the airlines through a reimbursable agreement with the Federal Law Enforcement Training Center (FLETC) with training provided at FLETC locations, enabling TSA to direct limited appropriated funding to risk-based programs.

United States Visitor and Immigration Status Indicator of Technology (US-VISIT)

To better align the functions of US-VISIT with the operational components, the budget proposes the transfer of US-VISIT.

ACI-NA Statement on the Budget

“We are pleased that the Obama Administration has recognized the need to increase the local airport user fee to fund necessary safety and modernization projects”, said George Kelemen, ACI-NA Senior Vice President, Government and Political Affairs.  “America’s airports have documented $71.3 billion dollars in projects critical for air travelers, shippers and airlines over the next five years. However, the Passenger Facility Charge (PFC) user fee, which has not been increased in 13 years, should be raised to at least $8.50 to restore its original purchasing power.  The PFC is a key component in funding airport modernization so the U.S. aviation industry can maintain its global competitiveness”.

“However, given that the PFC user fee cannot be increased by the Administration, we look forward to more details on their plan for legislative action to accomplish the increase” Kelemen added.

ACI-NA also expressed concern about the proposal to cut Airport Improvement Program (AIP) funding by almost a half a billion dollars, to $2.9 billion.  “Airline passengers and general aviation – aviation users, not taxpayers – pay for airport improvements through taxes and segment fees” said Kelemen.   "By cutting AIP, the Administration's budget hinders airports’ ability to secure the resources necessary to provide safe and efficient facilities that reduce delays and inconvenience. This is especially true for smaller airports which would lose significant formula funding under the proposal.”

The Administration also proposes making significant changes to the tax treatment of municipal bonds, which would increase airport funding costs.

PFC user fees, AIP grants and bonds are the primary sources of airport infrastructure funding.

Please contact ACI-NA’s Government Affairs staff should you have any additional questions or concerns.