WASHINGTON - The nation's airports need to spend at least $50 billion over the next five years on projects to improve and enlarge their facilities, James Wilding, a representative of the Airports Council International and the American Association of Airport Executives, told Congress yesterday.

However, the nation's airports are currently spending about 40% less than they should on infrastructure projects, said Wilding, who is general manager of the Metropolitan Washington Airports Authority.

At the same time, a representative of the nation's airlines urged lawmakers to prohibit local governments from diverting airport revenues to other city projects.

Congress should pass legislation imposing "sanctions on the diversion of revenues out of the aviation system" to ensure money for airport improvements be used for just that, said Edward A. Merlis, senior vice president of the Airport Transport Association of America, which represents many of the nation's airlines.

In testimony before the House Public Works and Transportation subcommittee on investigations and oversight, Merlis claimed that "federal aviation financing programs are subject to being thwarted by the unceasing attempts of local governments to raid the self-sustaining national aviation system to fund non-aviation budgetary shortfalls."

Merlis' testimony came less than a week after Robert Wigington, senior vice president of the Airports Council International, commented on possible congressional intervention in airports' abilities to collect fees, saying, "If the bond rating agencies and the financial community see that Congress might step in in that way, that could be very disturbing" to them and to investors.

Many airport projects are currently being help up by congressional delays in approving a multiyear funding reauthorization of the Airport Improvement Program. Last week, the Senate approved a stop-gap measure releasing $800 million for projects through June 30. That legislation also gives Transportation Secretary Federico Pena temporary authority to freeze airport fees, prompting fears from a senator and municipal lobbyists that some airport bond ratings could be in jeopardy.

Of the $10 billion needed for annual airport development funding, $6 billion is in projects eligible for grants, Wilding said. Those projects consists of back-logged projects that are "eligible and deserving of federal assistance." he said.

The fiscal 1994 funding level for the grants was $1.69 billion, "far short of the level of funding that is actually required," he said. At least a $2.1 billion authorization level with annual increases is needed to meet the airports' infrastructure needs, he said.

Along with grants, other airport funding sources include an annual average of $3.5 billion of airport bonds and an estimated $800 million in passenger facility charges, Wilding said. "Unless funding levels are increased, any funding airports might receive to recover federally mandated costs will continue to come at the expense of other important airport infrastructure and capacity projects," he said.

Increasingly, airports must comply with mandates such as the Americans with Disabilities Act, which are costing airports up to $1 billion a year, Wilding said.

Since the Airport Improvement Program reauthorization bill has been stalled in Congress, many airport development projects have stopped, he said. The Airports Council International recently conducted a survey of 86 airports, and 43% of those indicated they would seek out financing alternatives to federal grants, primarily bonds, in order to proceed with more than $600 million in ongoing and new projects, Wilding said.

Several of the representatives of various aviation organizations testifying argued that fees charged for airport improvements, such as the passenger facility charge and landing fees, should be regulated to ensure that the funds are only used for those airports. Michael King, chairman of the National Industrial Transportation League's Air and Business Committee, which represents shippers, said the reauthorization legislation should include language on the use of airport fees and "what constitutes a reasonable rate."

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