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FAA shutdown hits home for Bemidji Regional Airport

Had Congress not reached a compromise to end the partial shutdown of the Federal Aviation Administration Thursday, the Bemidji Regional Airport would have lost roughly $8,000 in airline ticket taxes for every month the shutdown occurred.

Funding for the FAA expired July 23 when federal lawmakers could not agree on a bill to extend its funding until September. This resulted in a partial shutdown of the agency.

The federal government reportedly lost more than $200 million since airlines are unable to collect taxes on ticket sales because the FAA's operating authority had expired.

In a phone interview Thursday, Bemidji Regional Airport Manager Harold Van Leeuwen said taxes are integrated into ticket fees at the regional airport. Some of the tax money is used to fund the local share of construction projects, such as the terminal project.

Construction on a new terminal at the Bemidji Regional Airport is currently underway and expected to be completed by September.

Van Leeuwen said the Bemidji airport was losing $8,000 or $9,000 a month it would have to make up out of local money to pay for services paid for by a debt bond on its terminal project.

If the FAA's operating authority was not extended by the federal government, the airport would have had to dip into its operating budget, Van Leeuwen said. If a partial shutdown continued into October, he added, the airport would have had to shut down all together because it would have exceeded its 12-month window for receiving an annual inspection.

Around the start of the FAA partial shutdown, some airlines reportedly raised their fares by amounts equivalent to the taxes that disappeared, but Van Leeuwen said he had not heard any announcement that fares went up in Bemidji.

"Our planes are full," he said in a phone interview Thursday. "People are booking at the premium price."

The deal announced Thursday included a provision that cuts $16.5 million in air service subsidies to rural communities.

"(The federal government is) losing more in uncollected ticket taxes in the first week of the shutdown than the entire air service subsidy program," Van Leeuwen said.

The subsidies program was created after airlines were deregulated in 1978 to ensure continued service on less profitable routes to remote communities.

"The cuts are not an issue," Van Leeuwen said. "The issue is essential air service program needs to be revised and modernized. It needs to be updated."

Van Leeuwen said he felt frustrated by the "childish behavior" of federal legislators.

"But I do think Al Franken and Amy Klobuchar (Minnesota's two Democratic senators) have been very active in trying to resolve this issue," he added. "They have done everything they can possibly do. They are the adult leadership up there."

State shutdown

While Minnesota's government shutdown has been over for two weeks now, the Bemidji Regional Airport is still feeling the impact.

When Minnesota entered the government shutdown, Bemidji airport officials made the decision to proceed with the airport terminal project, Van Leeuwen said.

"We assumed we would be paid once the state got back up and running for this project," he said. "What we found out is they want to pay us, but they can't because the state went ahead and implemented new software system but they are not able to execute payments."

The state of Minnesota, led by an interagency team from the Minnesota Management and Budget, determined its finance software system, MAPS, was deemed to be at a high risk of failure because of its age and lack of vendor software updates.

In January 2009, funding to replace MAPS with a software called SWITF was included in the Governor's budget and on July 1, 2011, the state officially switched over to the new software. The program was intended to accelerate the development of electronic government services.

But Van Leeuwen said the state is backed up on repaying airports, which has left the Bemidji airport in the red.

"We have used up some of our reserves," Van Leeuwen said. "If they don't get that resolved in two weeks, I have to stop the (terminal) project. I will have no more reserves left to pay contractors."

On average, Van Leeuwen said between 15 and 20 contractors are on site daily working on the airport terminal. He estimated around 80 workers are involved in the project.

"Since the state government reopened, the SWIFT software has only processed 10 payments per agency and there are 91 agencies," Van Leeuwen said. "They've got to get this resolved. Airports like us, Duluth and Brainerd, we're going to run of out of money. We may end up losing contractors. It's frustrating. We get through the state shutdown, then the feds. Now we're hung up because of state software. It was poorly thought out."