Testimony: Mr. Plavin made the following four points: 1) infrastructure investment at the local government level is not enough; 2) we should carefully define what constitutes capital, because if intangible assets, such as human capital, are included, the definition becomes a funding artifice that is not healthy; 3) the need for capital investment in airport facilities is extraordinary due to high-growing level of activity; and 4) investment in airport facilities is not a high priority, because they are assets of local or State independent public authorities, not the Federal government.

Mr. Plavin believes only physical assets should be defined as capital. He also believes the increased need for airport facilities and the corresponding need for more infrastructure investments are significant. Lastly, he pointed out airport facilities may not be part of a capital budget, because the Federal government does not own these assets.

Questions from the Commissioners: Questions focused primarily on whether there is any bias against investment spending for airports.

Q.    What's the source of your Federal dollars? Is it the airport tax?
A.    The ultimate source is the tax on fares, which goes into the aviation trust fund. The smallest portion of this trust fund is grants to airports.

Q.    Would a capital budget change the funding available for airports?
A.    No, I don't think the funding is a matter of capital budgeting. It depends on whether funds earmarked for aviation are going to be used for aviation or for balancing the budget.

Q.    Outlays for the airport investment have fallen consistently short of authorizations due to budget caps. Do you have a sense of how much these gaps are?
A.    Since 1991, the authorization has grown modestly from $2.0 billion, while the appropriation dropped from $1.7 billion to $1.4 billion. Last year the Congress increased the appropriation to $1.7 billion when the authorization was $2.3 billion.

Q.    Is there a bias against capital investment due to the current Federal budgeting process?
A.    In case of larger airports, I don't think there's a bias against capital investments, only bias against spending that their carriers don't want. But smaller airports do suffer from anti-investment sentiments, because they have difficulty competing with the level of investment made by global governments in their airports.

Q.    Isn't the anti-investment bias caused by the discretionary spending cap, because investment spending is struggling against the operating component of the aviation part of the transportation budget?
A.    I think you are absolutely right that investment needs for airports clearly take second place to the first priority of funding operating expenses of the Federal Aviation Administration.

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