Avionics News November 2012 - 15

billion. Based on CBO estimates, the spending savings exceed the amount of the debt increase. It seems to me that most business people can grasp the idea of a balanced budget in their home life, work life or government. But, like your home life, how often do you and your spouse agree on what to cut from the budget; where to tighten the belt? As a function of the compromise, you agree on an across-the-board cut for all discretionary spending like entertainment, golf and dinners. This makes sense until it hits your favorite pastime, or in the case of sequestration, your regulatory agency. As described by Politico.com, “Sequester is the formal term for mandatory cuts to federal programs – the process of cordoning off money that may have been authorized by Congress but is now prohibited from being spent. Literally, the money is being ‘sequestered’ – taken away from the federal agencies affected.” The Office of Management and Budget predicted a drop of $377 million in the FAA’s operations budget if sequestration takes effect in January 2013, and an additional $415 million pulled from the aviation trust fund. If we take a look at the FAA’s fiscal year 2012 budget authority breakdown, of the $16 billion appropriated, $9.6 billion goes to operations. And, if we dissect the operating budget a bit further, 77 percent of the budget goes to Air Traffic, 13 percent covers the operations of the Aviation Safety organizations and slightly less than 10 percent goes to staff offices. The FAA is a people-centric business with a little more than 30,000 employees. Half of them work for the Air Traffic Organization, 5,200 employees are in the Flight Standards workforce and 1,300 in Aircraft Certification. Where the $377 million will come from is anyone’s guess, but we know the primary purpose of the FAA is for the safety of air commerce and the traveling public. This tends to mean that services for air carriers will take priority. This doesn’t leave a very big pot to tighten the belt. Salaries and employment are generally fixed. If history is any teacher, general aviation services will be one of the first cut along with any new certificates. Sequestration poses another hurdle. The Aerospace Industries Association estimated sequestration could cut up to 50 percent of NextGen funding. The entire

navigation system will cost at least $40 billion, and approximately $9 billion is already invested. Congress granted $11 billion in the FAA authorization bill, which is now optioned by the Budget Control Act. So, the future and timeline for NextGen is once again in question. I hope I’m wrong, but I don’t think this is a question of if sequestration takes effect, but rather when sequestration takes effect; and the date is Jan. 1, 2013. These types of funding issues tend to disrupt operations for a minimum of six months, if they get resolved early. If not, it could be much longer. What does all this mean, and how can we help? First, take a good look at your business and see where you rely on FAA services, such as field approvals. These may not be available after the first of the year, and I suggest you find an alternative source of alteration data for the first half of next year. In addition, I would get as much accomplished before the end of 2012 as possible. The FAA already has some real problems managing all the applications for new or changed certificates. This will only get worse. Look at managing your certificate in an efficient manner; try to combine applications and any applications for changes to your certificate before the end of the year. I fully expect a moratorium on the issuance of any new certificates for both air carriers and repair stations. If the tea leaves are accurate, this will affect both Flight Standards and Aircraft Certification equally. The FAA likely will not have the resources to manage applications for STCs early next year, and leveraging commercial sources, such as designated engineering representatives and organization designation authorizations, will be essential. There likely will be little to no travel funds for the agency’s personnel – it’s usually the first thing to go. Don’t plan projects that rely on travel; it may be difficult, if not impossible, to achieve. Finally, don’t shoot the messenger. Your inspectors or engineers are as frustrated as you. Be understanding, and try to leverage nongovernment resources. We know the end of 2012 and the beginning of 2013 are going to be bumpy, and we should be prepared for a rough road ahead. q
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Avionics News November 2012

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