February 3, 2015|ENO CENTER FOR TRANSPORTATION
February 3, 2015
The ETW staff is hard at work putting together a mammoth summary of the President’s new transportation budget and the updated GROW AMERICA Act, which will be published tomorrow. To help tide you over, this week’s ETW Document of the Week is budget-oriented. Before a change in law in 1990, when a President was leaving office, he still was required by law to submit a budget in early January as he was preparing to go. The next President then usually submitted a huge package of budget amendments shortly after taking office, and sometimes these amendments were comprehensive.
Few budget amendments have been broader in their scope than the ones submitted by Ronald Reagan in March and April 1981 for the fiscal year 1982 budget. Reagan proposed sweeping cuts at most non-defense agencies, including a reduction in budget authority at the Department of Transportation from the Carter request of $23.4 billion down to $19.2 billion, a cut of 18 percent.
Of particular note are the proposed aviation excise tax reforms mentioned in the document, which prove that from the outset President Reagan was not averse to increasing some kinds of excise taxes if they were dedicated to a trust fund whose programs benefit the taxpayers and if the tax increases, “would eliminate general fund subsidy of the costs put on the system.”
In this instance, Reagan proposed increasing the excise tax on general aviation gasoline from four cents per gallon (the tax had reverted from seven cents to four cents after the expiration of the last FAA reauthorization law in September 1980) all the way up to 36 cents per gallon over five years, and increasing the excise tax on general aviation jet fuel from four cents per gallon all the way up to 65 cents per gallon over the same period.
The Reagan budget documents said that, “Subsidizing users leads to economic inefficiencies, encourages higher use of the aviation system, and thus results in continual pressure to expand the system’s capacity. To help break this cycle, air carriers and general aviation should be held responsible for their fair share of operating as well as maintaining and improving the airways system.”