{"id":844,"date":"2016-10-13T15:26:37","date_gmt":"2016-10-13T15:26:37","guid":{"rendered":"http:\/\/crp.trb.org\/acrp0331\/?page_id=844"},"modified":"2016-12-13T18:56:12","modified_gmt":"2016-12-13T18:56:12","slug":"federal-state-and-local-funding-sources-for-airports","status":"publish","type":"page","link":"https:\/\/crp.trb.org\/acrpwebresource1\/federal-state-and-local-funding-sources-for-airports\/","title":{"rendered":"Federal, State and Local Funding Sources for Airports"},"content":{"rendered":"

Federal, State and Local Funding Sources for Airports<\/h1>\n
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There are different revenue structures for airports with scheduled commercial passenger service, airports with freight or cargo activity, and airports with solely GA<\/span> traffic. Military airports and bases receive funding from the U.S. Department of Defense and are not addressed here.<\/p>\n

An airport’s degree of reliance on federal grants is generally inversely related to its size. For example, federal grants contributed a little over 10 percent of the funding for the nation’s 71 largest airports but accounted for 50 percent of the funding for the other 3,233 national system airports. (GAO<\/span> 1996 Report to Congress, Airport Financing, Funding Sources for Airport Development<\/i>, Page 2)<\/p>\n

Funding comes primarily from the sources listed here. Click on the link to read more about each.<\/p>\n

AIP<\/span> funding<\/a><\/strong> for capital improvement projects is available to NPIAS<\/span> airports.<\/p>\n

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The theory behind NPIAS<\/span> is that the national airport system is stronger if airports across the country are well-maintained and have adequate facilities to accommodate demand and interstate commerce. AIP<\/span> funding is authorized and appropriated through Congressional action. An overview of AIP<\/span> funding can be found in the FAA<\/span>’s AIP<\/span> Handbook<\/a> which is Order 5100.38D. In the Order, specific information about the types of available funding is found in Chapter 4.<\/p>\n<\/div>\n

PFCs<\/span><\/a><\/strong> are per passenger charges collected from commercial passenger service activity.<\/p>\n

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PFCs<\/span> are collected only at airports owned by public agencies with scheduled passenger service. They are a per-person fee collected by an airport for passengers who enplane (or board) their flight at that airport. In instances where the passenger connects through another airport before arriving at their final destination, PFCs<\/span> are split between the first two airports that the passenger flies through. Airports beyond the origin and first connection do not receive revenue from the PFCs<\/span> from a ticket nor do destination airports. Airlines collect PFCs<\/span> on behalf of the airports at the point of sale for tickets. Airports may use PFCs<\/span> for certain categories of projects as set forth in federal law. Airlines cannot prohibit or block the use of PFCs<\/span>, but can have the opportunity to review PFC<\/span> expenditures and to protest PFC<\/span> allocation.<\/p>\n

PFCs<\/span> can be used to fund projects not eligible for AIP<\/span> funds provided that the projects are eligible for PFC<\/span> funds. Airports may also use PFCs<\/span> to make up the local match portion of AIP<\/span> grants. Airports submit a PFC<\/span> application to the FAA<\/span> which outlines the amount of the PFC<\/span> to be collected per ticket, how long the collection period will be for the particular application, and what the PFC<\/span> funds will be used for. Once approved by the FAA<\/span>, the Airport can begin collecting PFCs<\/span>. PFC<\/span> collection authority is tied to a specific application, meaning that such authority lapses if airports do not have an approved PFC<\/span> application.<\/p>\n<\/div>\n

State governments<\/a><\/strong> may provide funding for aviation as part of their transportation program.<\/p>\n

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State government funding varies greatly across the county depending on how state grants are funded, and what organization distributes the funds. Common entities for aviation funds are departments of transportation and aviation. Airports might also be eligible for economic development funds depending on the type of project being pursued. State governments typically fund aviation trusts through fees and taxes levied on aircraft owners and airport users in the state. This can include revenue generated from fuel flowage fees. Like PFCs<\/span>, state grants can sometimes be used to fund projects that are not eligible for AIP<\/span> funding, and can be likewise used to make up part or all of the local match for an AIP<\/span> grant. State grants are sometimes the sole source of capital funding for airports that are not part of the FAA<\/span>’s NPIAS<\/span>.<\/p>\n

Similar to AIP<\/span> grants, state funding typically comes with “assurances” about what airport sponsors must do as a condition of the receipt of funds. These assurances are intended to protect the state’s infrastructure investment and maintain safe and efficient airport access for users. State funding is generally competitive as there are more projects than there are funds available. States prioritize projects using a variety of metrics. Common prioritization metrics include cost-benefit ratios, need and justification, geographic location, and potential of a project to receive other types of funding (projects with a high likelihood of FAA<\/span> funding may be given lower priority or a smaller grant).<\/p>\n<\/div>\n

Local funding<\/a><\/strong> is often provided through a general fund allocation and other local sources may be available.<\/p>\n

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Local funding will vary depending on how the airport is owned and operated. However, local funding is generally provided through tax revenue and usage fees collected by the sponsor or airport operator. Ideally, airports generate sufficient revenue to cover operating costs and build a cash reserve for capital projects; however, this is not always possible. Smaller airports that are sponsored by cities, counties, and states typically do not generate enough revenue to cover their costs and, as a result, receive some or all of their operating budget from the sponsor’s general fund. Similarly, local funding may be used to cover capital costs for projects not eligible for or unlikely to receive FAA<\/span> and state funding, or to make up part of the local match for state and FAA<\/span> grants.<\/p>\n

Airports that use their sponsor’s general fund often compete with other departments (e.g. schools, emergency services, and public works) for funding. This makes it important for airport managers to convey the airport’s economic benefit, role in emergency and disaster response, and place in the national transportation system to sponsor decision makers. (See Telling the Story<\/a> in the Media Kit<\/a>).<\/p>\n

Airports that are part of port\/airport\/special districts and authorities (hereafter, “entities”) are funded by taxes and fees levied by the entity, and revenues produced by airport activities and other assets (e.g. marine terminals, rail yards, real estate). Such organizations are typically authorized by an act of state legislature, and may not exist in all states.<\/p>\n

Entities with more than one airport (i.e. one commercial service airport and one or more GA<\/span> airports) are able to use revenues from one airport to subsidize another. Reasons for doing this vary. Commercial service airports have significantly more revenue-generating opportunities than do GA<\/span> airports because of the comparative volume of people and goods that pass through the commercial service airports. GA<\/span> airports often cater to smaller, slower aircraft, helping reduce congestion and delay at the commercial service airport. This improves the commercial service airport’s level of service, helping it grow revenue to support the entity’s system of airports. When entities operate a system of airports, it can define the roles of each so that the system as a whole is financially healthy and share revenues amongst system airports for capital and operating costs.<\/p>\n<\/div>\n

Tax exempt bonds<\/a><\/strong> are the most frequent financial tool to borrow money for major capital improvements.<\/p>\n

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GO<\/span> Bonds<\/strong><\/p>\n

General Obligation – or GO<\/span> – bonds may be issued to finance airport capital improvements. GO<\/span> bonds are backed by the full faith and credit of the public-at-large residing within the jurisdiction(s) through general tax authority of the city, county, or state that owns and operates the airport. Specifically, local general tax revenues such as sales, income, or property taxes may be pledged as a source of repayment for GO<\/span> bonds, although the airport operator may actually pay debt service from airport sources, or, in rarer instances, general local taxes may directly pay debt service on proceeds used to fund airport projects. Airport use of GO<\/span> bonds is discussed specifically in ACRP<\/span> Synthesis 1 Innovative Finance and Alternative Sources of Revenue for Airports<\/i><\/a>. General Airport Revenue Bonds (or GARBs) are bonds that are secured by the revenues of the airport and other revenues as defined in the bond indenture.<\/p>\n<\/div>\n

Airport revenue<\/span> is a revenue stream generated through activities or property uses on the airport. Find more information in Airport Generated Revenue or Operating Revenue<\/a>.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Federal, State and Local Funding Sources for Airports There are different revenue structures for airports with scheduled commercial passenger service, airports with freight or cargo activity, and airports with solely GA traffic. Military airports and bases receive funding from the U.S. Department of Defense and are not addressed here. An airport\u2019s degree of reliance on … Continue reading “Federal, State and Local Funding Sources for Airports”<\/span><\/a><\/p>\n","protected":false},"author":26,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"page-resources-template.php","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[],"class_list":["post-844","page","type-page","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/pages\/844","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/users\/26"}],"replies":[{"embeddable":true,"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/comments?post=844"}],"version-history":[{"count":17,"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/pages\/844\/revisions"}],"predecessor-version":[{"id":1913,"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/pages\/844\/revisions\/1913"}],"wp:attachment":[{"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/media?parent=844"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/categories?post=844"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crp.trb.org\/acrpwebresource1\/wp-json\/wp\/v2\/tags?post=844"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}