[Congressional Record Volume 142, Number 125 (Thursday, September 12, 1996)]
[Senate]
[Pages S10403-S10404]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page S10403]]



                        CBO STATEMENT ON S. 1994

  Mr. PRESSLER. Madam President, I rise to submit for the Record an 
intergovernmental mandates statement, as prepared by the Congressional 
Budget Office [CBO], for the Federal Aviation Administration 
Reauthorization Act of 1996 (S. 1994). The Committee on Commerce, 
Science, and Transportation ordered S. 1994 reported on June 13, 1996. 
The CBO already has provided a Federal cost estimate and a private 
sector mandates statement for this bill on July 16, 1996, and both are 
included in Senate Report 104-333 on S. 1994.
  Madam President, I now ask unanimous consent that the CBO statement 
be printed in the Record at this point.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                    Washington, DC, July 26, 1996.
     Hon. Larry Pressler,
     Chairman, Committee on Commerce, Science, and Transportation, 
         U.S. Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed intergovernmental mandates statement 
     for the Federal Aviation Reauthorization Act of 1996. CBO 
     provided a federal cost estimate and a private-sector 
     mandates statement for this bill on July 16, 1996.
       The bill would impose mandates on state, local, and tribal 
     governments as defined in Public Law 104-4.
       If you wish further details on this estimate, we will be 
     pleased to provide them.
           Sincerely,
                                                  June E. O'Neill,
                                                         Director.
       Enclosure.


    congressional budget office estimated cost of intergovernmental 
                                mandates

       1. Bill number: Not yet assigned.
       2. Bill title: Federal Aviation Reauthorization Act of 
     1996.
       3. Bill status: As ordered reported by the Senate Committee 
     on Commerce, Science, and Transportation on June 13, 1996.
       4. Bill purpose: The bill would authorize 1997 
     appropriations or provide contract authority for a number of 
     Federal Aviation Administration (FAA) programs, including the 
     state block grant, research and development, and airport 
     improvement programs. The bill would modify the funding for 
     essential air service and the apportionment of airport 
     improvement funds. In addition, it would make it more 
     difficult for the FAA Administrator to issue regulations that 
     result in substantial economic burdens to state, local, or 
     tribal governments. The bill would also establish new 
     requirements pertaining to pilot records and hiring.
       5. Intergovernmental mandates contained in the bill: The 
     bill contains one mandate on state, local, and tribal 
     governments, and one provision that could be a mandate.
       Pilot Records. The bill would increase the amount of 
     background information an air carrier must obtain before 
     hiring an individual as a pilot. In doing so, it would impose 
     a mandate on employers, including state, local, and tribal 
     governments, that have employed the prospective pilot within 
     the previous five years. The bill would require that 
     employers provide to air carriers, upon their request and 
     within 30 days, information on the work record of these 
     individuals. Employers would have to obtain written consent 
     from such individuals prior to releasing the information as 
     well as notify them of the request and of their right to 
     receive a copy of the records.
       State Taxing Authority. The bill contains a provision 
     intended as a technical correction to the section of Title 49 
     of the U.S. Code establishing the authority of states to levy 
     certain aviation-related taxes. When that section of the code 
     was recodified in 1994, it appeared to broaden the power of 
     states to tax airlines. The correction is intended to return 
     state taxing authority to the status quo as it existed before 
     the recodification.
       The impact of this provision, however, is unclear. A simple 
     correction would impose no new mandates. There is concern 
     among some tax experts, however, that the proposed change 
     goes beyond the intended fix and would impose new preemptions 
     on states' taxing authority. A number of state tax officials 
     assert that the proposed correction would increase the 
     ambiguities in the statute and could lead to an 
     interpretation of the law that would prohibit states from 
     imposing certain aviation-related property, income, and other 
     taxes. This issue is unlikely to be resolved without 
     litigation. If the provision is interpreted as the states 
     fear it will be, it would constitute a mandate on state 
     governments as defined by Public Law 104-4 because it would 
     prohibit states from raising certain revenues.
       6. Estimated direct costs to State, local, and tribal 
     governments: (a) Is the $50 Million Annual Threshold 
     Exceeded? Because of the uncertainty surrounding the 
     interpretation of section 402, dealing with state taxing 
     authority, CBO is uncertain whether the threshold established 
     in Public Law 104-4 would be exceeded.
       (b) Total Direct Costs of Mandates. Depending upon the 
     interpretation of section 402, the bill's mandate costs could 
     exceed the $50 million annual threshold established in Public 
     Law 104-4. The state tax provision alone, if interpreted 
     broadly, would have a potentially significant revenue impact 
     that could approach or exceed the $50 million threshold. CBO 
     cannot estimate its exact magnitude at this time. CBO 
     estimates that the costs to state, local, and tribal 
     governments of the requirement to provide background records 
     on prospective pilots would be negligible.
       (c) Estimate of Necessary Budget Authority: Not applicable.
       7. Basis of estimate: Pilot Records. Based on information 
     from industry representatives and the Departments of 
     Transportation and Labor, CBO estimates that state, local, 
     and tribal governments, in aggregate, would have to respond 
     to fewer than 5,000 requests for work records of prospective 
     pilots every year. This assumes that many of the 10,000 
     pilots hired annually have held four or more jobs within the 
     previous five years (because seasonal and part-time work is 
     common) and that fewer than 10 percent of those positions 
     were with state, local, or tribal governments.
       CBO estimates that the costs of this mandate on state, 
     local, and tribal employers would be insignificant. Such 
     requests for work records would be spread across numerous 
     state, local, and tribal government offices; thus, the 
     additional administrative burden on any individual entity 
     would be negligible. The bill would also allow employers to 
     charge air carriers and prospective pilots a fee for the cost 
     of processing the request and furnishing the records.
       State Taxing Authority. Based on information from several 
     states, CBO believes that, if amended by this bill, certain 
     subsections of 49 U.S.C. 40116 could be read together to 
     limit states to taxing only those aviation-related goods and 
     services for which a direct nexus to flights taking off or 
     landing in the state could be established. Current law does 
     not require that states show such a flight connection when 
     levying property, income, sales, use, and other taxes on air 
     carriers or other providers of aviation services. Many states 
     use apportionment formulas to calculate these taxes, and it 
     is possible that the proposed change could preclude this 
     practice.
       Based on a survey of state tax officials and information 
     from the Multistate Tax Commission, CBO estimates that the 
     bill could result in tax preemptions in as many as half of 
     the states. Depending upon the interpretation of the proposed 
     change, some states could face annual revenue losses in the 
     millions of dollars. Ambiguities in both the existing 
     recodified statute and the proposed change, however, make it 
     difficult to predict the extent of the possible preemption, 
     if any, and to quantify the revenue losses that might result 
     from it. CBO estimates that, if interpreted broadly, the 
     provision would have a potentially significant revenue impact 
     that could approach or exceed the $50 million threshold.
       8. Appropriation or other Federal financial assistance 
     provided in bill to cover mandate costs: None.
       9. Other impacts on State, local, and tribal governments: 
     Pilot Records and State Department of Motor Vehicles. The 
     bill would require air carriers to obtain information on a 
     prospective pilot's motor vehicle driving record. State 
     departments of motor vehicles (DMVs) would have to provide 
     information from the National Driver Register within 30 days 
     of receiving such a request from an air carrier. The bill 
     would require DMV officials to obtain written consent from 
     individuals prior to releasing such information and to notify 
     them of the request and of their right to receive a copy of 
     records.
       Because the National Driver Register program is a voluntary 
     federal program, these requirements would not constitute 
     mandates as defined by Public Law 104-4. They would, however, 
     result in some costs to states. The bill would allow states 
     to charge the air carriers and prospective pilots a fee for 
     the cost of processing the request and furnishing the 
     records. Based on information from the Department of 
     Transportation, state DMVs, and airline industry 
     representatives, CBO estimates that the administrative costs 
     to states of complying with this requirement would be 
     insignificant.
       Essential Air Service. The bill would benefit approximately 
     100 rural communities across the United States that are 
     served by the essential air service program. The bill would 
     replace the provision in current law that requires 
     reauthorization of funding for the program after 1998 with a 
     new and increased source of funding. The bill would raise the 
     authorization to $50 million annually for the program (almost 
     twice the fiscal year 1996 authorization) to be paid out of 
     new fees on foreign air service. Spending on the program 
     would, however, continue to be subject to appropriation. The 
     bill would also allow the Secretary, not earlier than two 
     years and 30 days after enactment of the bill, to require 
     that state and local governments provide matching funds of up 
     to 10 percent for payments they receive under the program.
       FAA Regulations. The bill would prohibit the FAA 
     Administration from issuing regulations that would cost 
     state, local, and tribal governments, in aggregate, more than 
     $50 million a year without the approval of the Secretary of 
     Transportation. In addition, the bill would require periodic 
     reviews of all regulations issued after enactment of the bill 
     that result in aggregate costs of state, local,

[[Page S10404]]

     and tribal governments of $25 million or more a year.
       Alaskan Aviation. The bill would provide FAA a new, one-
     year authorization of $10 million to be spend on improving 
     aviation safety in Alaska. The bill would also direct the 
     Administrator to take Alaska's unique transportation needs 
     into consideration when amending aviation regulations.
       10. Previous CBO estimates: CBO provided a preliminary 
     analysis of the bill's mandates on state, local, and tribal 
     governments as part of the federal cost estimate dated July 
     16, 1996. The initial conclusions presented in that estimate 
     have not changed.
       On July 22, 1996, CBO transmitted an intergovernmental 
     mandates statement on H.R. 3539, the Federal Aviation 
     Authorization Act of 1996, as ordered reported by the House 
     Committee on Transportation and Infrastructure on June 6, 
     1996. Both bills would reauthorize major FAA programs and 
     amend the section of Title 49 of the U.S. Code dealing with 
     state taxation, but they differ in several other respects. 
     The two estimates reflect those differences.
       On July 11, 1996, CBO transmitted a cost estimate and 
     mandates statement on H.R. 3536, the Airline Pilot Hiring and 
     Safety Act of 1996, as ordered reported by the House 
     Committee on Transportation and Infrastructure on June 6, 
     1996. H.R. 3536 is similar to the title in this bill 
     pertaining to background information on prospective pilots. 
     H.R. 3536 would not, however, require state, local, and 
     tribal government employers to provide information on the 
     work records of prospective pilots.
       11. Estimate prepared by: Karen McVey.
       12. Estimate approved by: Robert A. Sunshine (for Paul N. 
     Van de Water, Assistant Director for Budget Analysis).

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