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House, Senate Versions Differ On Airport Funding

This week, the House and Senate approved separate versions of the American Recovery and Reinvestment Act of 2009. Although similar in scope for providing assistance to airports, the stimulus packages contain notable differences in funding levels.

According to Annie Russo, Airports Council International-North America’s director of government and political affairs, some of the most important aspects of the stimulus package for airports include funding for the Airport Improvement Program, security and an exemption from the alternative minimum tax.  

In terms of AIP, the House has designated $3B, and the Senate, $1.1B.

Todd Knuckey, senior vice president and principal of aviation services for Hanson Professional Services Inc., a consulting firm specializing in providing architecture, engineering, scientific and program management services, says the Senate’s $1.1B is “not really sufficient to address a lot of needs in the aviation industry.” He adds that the House’s $3B is closer, but there are a lot of infrastructure needs out there that will not be addressed even under that amount.

“If they truly want to put those dollars to work, those numbers need to be larger,” he says.

For security, both bills have funding for the accelerated procurement and installation of baggage screening and checkpoint security equipment (inline explosives detection equipment). The House funding level is at $500M; the Senate is $1B.

Exemption from the alternative minimum tax on airport private activity bonds is something Russo says ACI-NA has been advocating for in the stimulus package. Both the House and Senate versions of the bill contain language regarding this exemption.

“With the credit crunch,” Russo explains, “there are just not as many people in the marketplace looking to buy bonds. And, because airport bonds are more risky because of the AMT, we’re having trouble finding buyers.”

She adds that ACI-NA thinks that an exemption from AMT on airport bonds will encourage more interest in them and attract more buyers.

Jane Calderwood, ACI-NA’s vice president of government and political affairs, says the bill will have a “stimulative effect” on the economy because it will put people to work on these projects.

Russo agrees, saying, “I think airports are eager to help stimulate local economies. We would argue that there is no better way to get federal funding into local communities than through any type of investment in airport infrastructure.”

The House bill states that grant recipients must enter into contracts or other binding commitments that will use at least 50% of the funding within 90 days of enactment, and the remaining funding committed within two years.

“The airports are ready to go,” Russo says. “Depending on the time frame, whether it is 90 days or 120 days, they are ready and able to go.”

Dale Wilde, business development manager at Hoyle, Tanner & Associates, says the “stimulus package and the FAA’s AIP are a logical fit.”

“The AIP provides an existing delivery system for projects that are already in the pipeline, are rigorously ‘vetted’ as to usefulness, produce significant construction jobs, provide long-term infrastructure improvements that support future economic growth and are located in every state of the Union,” he says. “We’re ready to go. We just need the final rules in place to know how to get going.”

Knuckey says he is hearing concern from the industry on this timeline. And although  Congress is encouraging states and sponsors to move forward, he says it’s important to keep in mind the time tables necessary to execute and abide by guidelines of the bidding and contract-award process.

A more critical issue for airports, says Knuckey, is the match component of the House bill, which requires airports to match the dollars granted under the formulas established by FAA; the Senate version does not have the match requirement.

“A lot of our clients are tied to government, municipal [and] county budgets, and those budgets are established based on tax infrastructure,” he explains. “If these bills pass with the match requirement, there’s a real likelihood that a lot of the communities will not be able to match the dollars and will have to pass on taking the monies.”