FAA Shutdown Could Cost Taxpayers Over $1 Billion
Policy + Politics

FAA Shutdown Could Cost Taxpayers Over $1 Billion


The debt ceiling debacle may be over for now, but the stalemate in Congress over the partial shutdown of the Federal Aviation Administration is expected to continue into September.

The FAA furloughed nearly 4,000 contract workers and administrative employees in 35 states and issued stop-work orders on more than 200 airport construction projects since July 23 when the agency’s operating budget was not re-funded by the Senate. The entire annual budget of the Essential Air Service Program, which operates rural air routes that were discontinued after deregulation in 1978, is about $200 million.
Only air traffic controllers, mechanics and other employees integral to flight safety remain at work. The Association of General Contractors, the union representing some of the workers, estimates as many as 70,000 contract workers have been laid off, abruptly halting $2.5 billion in construction projects. But workers are not the only victims of political infighting.

The fiscal impact includes lost federal ticket tax revenue -- an estimated $200 million a week or approximately $30 million each day -- due to the inability of the agency to process tax revenue.  The total revenue loss is likely to be a whopping $1.2 billion. 

The quarrel is between Senate Democrats who want to preserve the funding status quo and House Republicans who are demanding a $16.5 million cut in rural air service subsidies. In a reprise of the debt ceiling crisis, some Republicans have blocked a bipartisan Senate plan that would have extended the agency's authority to operate. The bright side of the shutdown for passengers is that fliers will not have to pay ticket taxes.

“I have opposed the Essential Air Service,” said Sen. John McCain R-Arizona. “It’s a significant rip off of the taxpayers. The labor agreement is very harmful. Again it’s the Obama Administration weighing in favor of organized labor.” 

“In the end the taxpayers lose too,” said Brian Turmail, spokesperson for AGC. “Taxpayers take an extra hit because it will drive up the costs of construction projects when contractors have to secure and restart their sites.”  Turmail said some of the furloughed workers are “pissed.” and many have applied for unemployment benefits.

“It’s been a five year nightmare for the construction industry and this only prolongs it,” he said. “They [workers] don’t understand why they have to suffer because of a policy dispute that has nothing to do with their projects.”

The FAA shutdown is a microcosm of the larger budget infighting that has dragged on for months in the nation’s capitol. President Obama urged Congress Tuesday afternoon to settle the dispute before lawmakers leave Washington for the August recess. He said the stalemate is "another Washington-inflicted wound on America."

“This doesn’t say anything good about Congress,” said Sen. Jay Rockefeller, D-N.Y., chair of the Senate Commerce Committee, which deals with FAA funding. “We offered once again this morning to have a clean bill which would get all 4,000 workers back on the payroll. It’s pretty horrible. There is a people price to this.”
"I'm a fiscal conservative," Sen. Kay Bailey Hutchison, R-Texas, said on the Senate floor 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."

Senate Majority Leader Harry Reid, D-N.V. initially told reporters he would be able to support the House Republican bill but then reversed course late Tuesday afternoon. “Republicans are trying to jam through a policy that benefits the CEO of Delta airlines, and laying off thousands of air travel workers just because they are not getting their way,” said Adam Jentleson, spokesperson for Reid. “There is bipartisan agreement that we should keep air travel employees and safety inspectors on the payroll while we work out our policy differences, but we are being blocked by a handful of Republicans.”

Tulsa International Airport in Tulsa, Oklahoma is one airport that has been affected. The runway reconstruction project and six other projects are delayed and as of last week, there were 11 grant reimbursement requests valued at more than $3.5 million waiting FAA funding. On the east coast at La Guardia Airport in New York City, halted construction has been a headache for Luca Toscano, Vice President of Paul J. Seariano, Inc., a contracting company. His company had been working on a $6.3 million tower demolition project that was abruptly halted two weeks ago with only two months left before the completion date. Last week he had to send home 40 workers.

“I’m really upset,” Toscano said. “I’ve been doing this for 28 years and we were never locked down like this. Once in a while there is a union strike but it’s negotiated, not like this. Someone on the Hill better wake up.”