Tucked away among the accounts at the Treasury is one marked Airport and Airways Trust Fund. It contains almost $3 billion in uncommitted money. Fed by -- among other things -- the 8 percent tax on airline tickets, the surplus keeps growing. So it is not surprising that Congress, the executive branch, and the airlines keep trying to figure out what to do with it.
Last year, the game was to divert some of the money to the airlines to help them pay for new equipment they needed to comply with federal anti-noise requirements. While the administration didn't like that idea, the airlines and the House of Representatives did. The bill the House passed, however, died in the Senate.
This year, Sen. Howard Cannon (D-Nev.) has proposed that the tax simply be reduced to 2 percent. This would keep the fund from growing and make it possible, perhaps, to work off the surplus. While the airlines like that idea (it might stimulate business), the administration isn't excited about it, either. FAA Administrator Langhorne M. Bond told Sen. Cannon that "a tax reduction of this magnitude is contrary to the prevailing public mood concerning balanced budgets."
Instead of cutting the tax, Mr. Bond proposed that $1 billion-plus be transferred each year from the trust fund to the Treasury's general account and used to pay the expenses of his agency. Sen. Cannon rejected that idea out of hand. The money was collected for a specific purpose -- the improvement of airports and airways -- he explained, and it would be unfair to those who paid it to divert the money to something else. Heard it before? Of course you have. It is very like the argument made year in and year out in behalf of the "sacred" nature of the Highway Trust Fund -- before some of that money was diverted to non- road building purposes.
The moral of this tale is quite simple. As a general rule, trust funds are a bad thing for government to create. They tie the revenue from a particular tax to federal spending for particular purposes and, if their "sacred" nature is maintained, little flexibility is left in later years to adjust either the tax to fit economic policy or the spending to match real needs.
The best thing Congress can do now is to let the Airport and Airways Trust Fund die a natural death next year. After that it can appropriate money out of the general fund to pay for whatever airport and airways projects need to be undertaken and set the airline ticket tax at whatever level seems best to stimulate (or discourage) air travel and to help balance (or unbalance) the federal budget. That's not the way Congress has done things in the past -- there are several of these earmarked taxes -- but it is the way to avoid $3 billion surpluses and all the problems that arise when people think of wonderful ways to spend them.