AMAC Membership Update

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White House Releases FY15 Budget Proposal

White House Releases FY15 Budget Proposal Includes Potential Negative Impacts for Airport DBE and ACDBE Programs.

White House Announces Proposed FY15 Budget with Cuts to Airport Improvement Program (AIP):
Earlier today, the White House released its FY15 Budget Proposal. The FY15 Budget Proposal provided top-level figures for the federal government and outlined some key programmatic highlights.

On the aviation front, major proposed policy changes include a dramatic decrease in funding for Grants-in-Aid for Airports (AIP), to be made up for by increasing the maximum passenger facility charge (PFC) from $4.50 to $8.00.

In conjunction with this policy shift, smaller airports and general aviation focused airports would be provided increased AIP resources, while larger commercial airports would be made more reliant on PFC funding sources.

What this Means:

Should this proposed shift be enacted, it would remove $450 million in funding from the protections of the Airport Disadvantaged Business Enterprise (DBE) and Airport Concessions Disadvantaged Business Enterprise (ACDBE) programs, including the 10% aspirational requirement and other goal-setting standards.

Fortunately, this is merely the first step in the budget and appropriations process, and such a policy change would require congressional approval. Congress has been skeptical of similar proposed AIP-to-PFC funding shifts in the past, including when the administration proposed such a shift last year in its FY14 budget, and it is unlikely that the White House’s proposed FY15 budget will be taken up in either of the House or Senate.

Nonetheless, this is the second year in a row that the White House has proposed this AIP-to-PFC funding shift, and the continued discussion and consideration of this policy marks a real threat to minority-owned, women-owned, and disadvantaged business enterprises (M/W/DBEs).

Next Steps – AMAC Industry Day on Capitol Hill on Tuesday, April 1, 2014:

Continued and sustained promotion of the full participation of M/W/DBEs in the airport and aviation space is essential. Aviation M/W/DBE programs provide a true service to our nation’s airports by supporting local jobs and opportunities, ensuring businesses are stakeholders in airport communities, and strengthening local economies.

It is imperative that AMAC and its members get out in front on this issue and ensure that their Representatives and Senators in Washington understand the need to protect the critical M/W/DBE programs that have successfully created jobs and supported airport communities.

On Tuesday, April 1, 2014, AMAC’s Industry Day on Capitol Hill will provide a forum for engagement with policy makers. Industry Day will allow AMAC members to ensure their Members of Congress know that airport contracting opportunities must be protected.

Historical Background:

On the federal level, the U.S. Department of Transportation’s (DOT) M/W/DBE programs provide for airport authorities to implement annual contracting and subcontracting goals and to administer appropriate programs to certify and assist M/W/DBE businesses. For the FAA, these requirements are carried out through the Airport DBE and ACDBE programs. Importantly, these programs implement a 10% M/W/DBE aspirational requirement for federally allocated airport funds. Unfortunately, this requirement only applies to those airport funds received AIP, not to funding received pursuant to the federally PFC program.

Like AIP, the federal PFC program is an integral part of airport infrastructure funding. The federal PFC program authorizes airports to implement a per passenger fee of up to $4.50 per flight to pay for FAA-approved projects. In FY13 alone, PFCs provided airports with a $2.815 billion funding stream. PFCs support an array of projects that preserve or enhance the safety, security, and capacity of the national air transportation system. PFC funds are often used in conjunction with AIP apportionments and have the added advantage of being eligible to fund bonding costs.

The chart below outlines historic AIP and PFC levels over the past decade. The allocated AIP figure (the red line) generally tracks the amount authorized (the blue line), as it should, except in FY09, when AIP received a major plus up from the American Recovery and Reinvestment Act, and in FY13, when $253 million was diverted from AIP to pay for the FAA’s Contract Tower program.

Through the most recent years, you can see downward pressure taking hold of AIP, while PFC levels continue to move slowly upward.

The White House’s proposed FY15 budget would continue this troubling downward trajectory for AIP.

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AIP vs. PFC Funding Streams

Fiscal Year AIP Authorized AIP Allocated PFCs Allocated Total Allocated Percent AIP
2003 $3.295 billion $3.274 billion $2.062 billion $5.336 billion 61.35%
2004 $3.294 billion $3.375 billion $2.036 billion $5.411 billion 62.37%
2005 $3.384 billion $3.409 billion $2.163 billion $5.572 billion 61.18%
2006 $3.424 billion $3.411 billion $2.926 billion $6.337 billion 53.83%
2007 $3.402 billion $3.341 billion $2.865 billion $6.206 billion 53.83%
2008 $3.471 billion $3.471 billion $2.636 billion $6.107 billion 56.84%
2009 $3.385 billion $4.558 billion $2.519 billion $7.077 billion 64.40%
2010 $3.378 billion $3.434 billion $2.730 billion $6.164 billion 55.71%
2011 $3.378 billion $3.448 billion $2.711 billion $6.159 billion 55.98%
2012 $3.199 billion $3.289 billion $2.796 billion $6.085 billion 54.05%
2013 $3.192 billion $2.968 billion $2.815 billion $5.783 billion 51.32%