According to a provision of AIR-21, which  was continued in the Century of Aviation Reauthorization Act (Vision  100)—FAA’s current authorizing legislation—total appropriations made  available from the fund in each fiscal year shall equal the level of receipts  plus interest in that year, and these appropriations can be used only for  aviation investment programs, which are defined as FAA’s capital  accounts plus the Trust Fund’s share of FAA operations. Specifically, the Trust Fund’s uncommitted balance decreased from $7.3  billion at the end of 2001 to $4.8 billion at the end of 2002 and has  continued to decrease since then, reaching about $1.9 billion at the end of  2005. However, the rate of decrease has slowed; in 2005, the uncommitted  balance decreased by about $500 million, after falling by at least $900  million in each of the previous 3 years. The uncommitted balance has fallen in recent years because Trust Fund  revenues have fallen short of forecasted levels by over $1 billion in 3 out of  the last 4 fiscal years. For example, in 2001, the difference between  forecasted revenue and actual revenue coming in to the Trust Fund was  $383 million less than expected. In 2002, the difference jumped to $2.3  billion due to the impact that unanticipated external events such as the  September 11, 2001, terrorist attacks had on the aviation industry. Thus, if actual revenues approximate forecasted  revenues, there should be no substantial change in the uncommitted  balance. However, as shown in figure 5, for each year beginning with 2001,  actual revenues, including interest, have been less than forecasted, so that  in each year since then, the uncommitted balance has fallen. Fund’s Uncommitted Balance Is Projected to Be Positive through 2007 but Depends on Realization of Forecasted Passenger Traffic Levels and Airfares

Based on its revenue forecast and appropriations for 2006, FAA forecasts  that the Trust Fund’s uncommitted balance will decrease by the end of  2006 to about $1.7 billion. FAA forecasts that if, for 2007, the Congress  continues to follow the Vision 100 formula for linking budget resources  made available from the fund to expected revenues, then there will be  little change in the uncommitted balance—$1.7 billion—during that year. If, instead, the Congress adopts the President’s budget request for FAA for  2007, FAA forecasts that the fund’s uncommitted balance by the end of  2007 will rise to about $2.7 billion. This higher forecasted uncommitted  balance occurs because the President’s budget calls for an appropriation  from the Trust Fund that is about $1 billion lower than the Vision 100  formula. We believe these scenarios raise concerns because, in the past, the Trust  Fund’s uncommitted balance was used to offset lower-than-expected Trust  Fund revenues and decreased general fund contributions. FAA could help  address these concerns by continuing to look for ways to improve  efficiency and reduce costs. However, the zero-balance scenario would  most likely have implications for Congress in funding FAA programs. To assess the current financial status and projected financial viability of  the Airport and Airway Trust Fund, we obtained financial data from FAA  and interviewed FAA officials familiar with the information. We used a  sensitivity analysis to project what would happen if Trust Fund revenues  in fiscal years 2006 and 2007 were 5 percent and 10 percent lower than the  levels projected by FAA in March 2006 under each of these proposals. Accordingly, our findings on the financial outlook of the Trust Fund are  based on GAO projections, not FAA’s.
Why GAO Did This Study

The Airport and Airway Trust Fund was established by the Airport and Airway Revenue Act of 1970 (P.L. 91-258) to help fund the development of a nationwide airport and airway system and to fund investments in air traffic control facilities. It provides all of the funding for the Federal Aviation Administration's (FAA) capital accounts, including: (1) the Airport Improvement Program, which provides grants for construction and safety projects at airports; (2) the Facilities and Equipment account, which funds technological improvements to the air traffic control system; and (3) the Research, Engineering, and Development account, which funds continued research on aviation safety, mobility, and environment issues. In addition, at various times during its history, the Trust Fund has funded all or some portion of FAA's operations. To fund these accounts, the Trust Fund is credited with revenues from a variety of excise taxes related to passenger tickets, passenger flight segments, international arrivals/departures, cargo waybills, and aviation fuels. Including interest earned on its balances, the Trust Fund received $10.8 billion in fiscal year 2005. The various taxes that accrue to the Trust Fund are scheduled to expire at the end of fiscal year 2007. GAO was asked to provide information and analysis about the financial condition and future viability of the Trust Fund.

What GAO Found

The Trust Fund's uncommitted balance decreased from $7.3 billion at the end of fiscal year 2001 to about $1.9 billion at the end of fiscal year 2005. In 3 of the last 4 fiscal years, the Trust Fund's uncommitted balance has fallen by over $1 billion because revenues were lower than FAA forecasted due to the impact of unanticipated events such as the September 11, 2001, terrorist attacks. However, the rate of decrease has slowed; during fiscal year 2005, the uncommitted balance decreased by about $500 million. Under FAA's current authorization, appropriations from the Trust Fund are based on forecasted revenues. Thus, if actual revenues approximate forecasted revenues, there should be no substantial change in the uncommitted balance. However, for each fiscal year since 2001, because actual revenues have been less than forecasted, the uncommitted balance has fallen. Based on its revenue forecast and appropriation for fiscal year 2006, FAA forecasts that the Trust Fund's uncommitted balance will fall by the end of 2006 to about $1.7 billion. If the Congress continues to follow the formula from Vision 100--FAA's current authorizing legislation that links appropriations made available from the fund to revenue forecasts--then FAA expects there will be little change in the uncommitted balance for fiscal year 2007. If, instead, the Congress adopts the President's budget for FAA for fiscal year 2007, FAA forecasts that the fund's uncommitted balance by the end of 2007 will rise to about $2.7 billion. This higher forecasted uncommitted balance occurs because the President's budget calls for an appropriation to FAA from the Trust Fund that is about $1 billion lower than the Vision 100 formula. If revenues in fiscal years 2006 and 2007 are below forecasted levels, the Trust Fund's uncommitted balance will be less than forecasted and, in one scenario we analyzed, will reach zero by the end of 2007. This scenario raises concerns because, in the past, the Trust Fund's uncommitted balance was used to offset lower-than-expected Trust Fund revenues and decreased general fund contributions. FAA could help address these concerns by continuing to look for ways to improve efficiency and reduce costs. However, the zero-balance scenario would most likely have implications for the Congress in funding FAA programs.