FAA Shutdown Could Cost $1.2 Billion

Originally published on August 2, 2011 2:24 pm

After last night's vote on the debt ceiling compromise, the House adjourned for the summer but left nearly 4,000 Federal Aviation Administration employees, who have been furloughed because of a funding impasse, in limbo.

Reuters reports that because of the House recess and the fact that a compromise in the Senate faltered last night, it is now near certain that the FAA could be shut down through August.

That's bad news for furloughed employees but it also means the FAA can't collect taxes on airline tickets.

And therein lies the curious part: The political impasses is about Republican demands to cut $16.5 million from rural air service subsidies. But The Associated Press reports that during the 10-day shutdown, the government has lost more than $250 million and it stands to lose more than $1 billion in revenue from uncollected airfare taxes.

The AP reports:

"I'm a fiscal conservative," Sen. Kay Bailey Hutchison, R-Texas, told the Senate on Monday. "I'm trying to make the cuts that are necessary, trying to do the things that are right, but ... that just doesn't add up."

The Senate, with the federal debt crisis resolved, is expected to leave by the end of the week for its August recess. The House has already left. Unless the Senate accepts the House bill, lost revenue from uncollected airline ticket taxes could exceed $1.2 billion before lawmakers return to work a month later, senators said.

...

The latest extension expired at midnight on July 22 after Senate Democrats rejected a temporary extension bill passed by the House that contained the subsidy cuts. Senate Republicans blocked a Democratic extension that didn't include cuts.

One glimmer of good news for fliers in all of this is that Delta said on Monday that it would refund taxes paid on tickets bought on or before July 22 for flights taken after the FAA shutdown. USA Today reports:

Several aviation ticket taxes expired July 23 when Congress didn't reauthorize the Federal Aviation Administration, which collects the revenue.

Congress has not yet reauthorized the agency, so the taxes are still not being collected.

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