This story has been updated from its original version.

By Vyomika Jairam
Federal News Radio

The Federal Aviation Administration is headed toward a partial shutdown.

The agency’s latest temporary funding bill expires midnight Friday.

Transportation Secretary Ray LaHood told the Federal Drive that the House and Senate are in dispute over funding for small airports and labor provisions.

As many as 4,000 FAA employees will be furloughed. Nearly 1,000 if the employees are in the Washington region, according to the Washington Post.

In addition, the government will lose about $200 million a week in airline ticket taxes and $2.5 billion in airport construction projects will come to a halt.

Air traffic controllers will not be affected, however. “The air traffic system will continue, safety will not be compromised,” LaHood said.

The FAA’s current short-term authority ends tonight at midnight. Long-term authority for the FAA expired in 2007. Unable to agree on long-term funding legislation for the agency, Congress has kept the FAA operating through a series of 20 short-term extension bills.

Previous extensions have been routine. But this time House Republicans added a provision to what would be the 21st extension bill that eliminates government subsidies for airline service to 13 rural communities. Senate Democrats say the provision, which would save about $16 million, is unacceptable. They’ve accused House Republicans of using the extension bill to force them to accept policy changes that should be part of negotiations on a long-term funding bill.

Republicans said Senate Democrats have been unwilling to budge on the labor provision and a handful of other issues of disagreement in the long-term funding bill. Rep. John Mica, R-Fla., House Transportation and Infrastructure Committee, has acknowledged he’s using the rural air service subsidies in part as a means to prod Democrats to cut a deal on those issues.

In an earlier interview with Federal News Radio, former FAA administrator Marion Blakey said the FAA’s authorization process has “historically been a difficult one.”

Blakey said the FAA’s funding is structured differently than other agencies since a significant part of the budget comes from airline taxes and fees. The revenue from those taxes needs to be specifically designated for use by the FAA.

“From the standpoint of what’s called the ‘Aviation Trust Fund’ you will see an immediate hit,” if funding isn’t designated, Blakey said. “You will find that there is going to be a declining amount of money to support the system, and that’s not good by anyone’s standards.”

The 4,000 employees who would be furloughed are those whose salaries are paid by the revenue from taxes. Among those employees are researched working on the NextGen system.

“The NextGen air transportation system is going to make an enormous difference in the lives of all of us,” Blakey said. “We desperately need to see this new satellite-based system come in.”

LaHood also raised the issue of the suspension of funding to construction projects at a time when most major airports around the country have on-going renovation projects.

“This is not the way to run the best aviation system in the world,” LaHood said. “Congress needs to work today, pass a clean bill so our people can come to work Monday.”

— The Associated Press contributed to this story.

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