House OKs $8 billion relief package for highway trust fund

Friday, September 12, 2008

WASHINGTON -- Congress on Thursday sent President Bush an $8 billion rescue package for the federal highway trust fund. The infusion comes as the trust fund, which relies on declining revenues from the federal gas tax, verges on going broke, threatening road and bridge projects in every state.

The House passed the measure on a 376-29 vote Thursday, a day after the Senate overcame objections from conservative senators and passed it on a voice vote. The legislation transfers $8 billion from the Treasury's general fund to the highway fund, ensuring that ongoing construction projects won't be interrupted.

The White House had previously threatened to veto the measure, calling it "both a gimmick and a dangerous precedent that shifts costs form users to taxpayers at large."

But the administration shifted positions after Transportation Secretary Mary Peters revealed last week that the trust fund would run out of money this month, which would delay payments to states for infrastructure projects and threaten the jobs of hundreds of thousands of construction workers.

"We must act," said Rep. John Lewis, D-Ga. "The trust fund is broke, out of money. Our state and local governments, drivers, construction workers and many others suffer when highway projects are delayed." He and others pointed out that in 1998 the government moved $8 billion from the trust fund, then enjoying a large surplus, to the general fund for deficit reduction, and that this measure returned borrowed money.

It has long been anticipated that the 52-year-old trust fund would move into the red next year, a result of the reluctance of Congress to raise the gas tax, unchanged since 1993 despite inflation and soaring construction costs. The federal fuel tax is 18.4 cents a gallon, or 24.3 cents for diesel.

But the fund, which had a $10 billion surplus just three years ago, has had a rapid change in fiscal fortune as drivers, responding to higher gas prices, have curtailed their driving and switched to more fuel-efficient vehicles.

Peters on Wednesday commended the Senate for its swift action to address the immediate crisis but added in a statement that "Congress must eliminate the billions in wasted spending, thousands of unneeded earmarks and hundreds of conflicting and contradictory special interest programs in order to make sure states don't face this situation again."

Stephen E. Sandherr, chief executive director of the Associated General Contractors of America, expressed relief that Congress had finally acted. "We knew this shortfall was coming and we have made this a priority for the last two years," he said. "The money was set to run out, states were going to be left holding the bag and contractors would have been forced to lay people off."

The few opponents of the bill blamed the current crisis on the 6,300 earmarks -- lawmakers' pet projects -- worth some $24 billion, included in the $286 billion highway bill Congress passed in 2005. That bill expires next year.

"Part of the reason we are having to steal money from the general fund," said Rep. Jeff Flake, R-Ariz., is "we just went hog wild in 2005. We've got to stop this earmarking process."

Democrats in turn thanked the White House and Republicans for letting the stalled bill move forward. "I'm glad the Republicans came to their senses -- you can't play politics with 300,000 jobs when we're in a recession," said Sen. Barbara Boxer, D-Calf., chairwoman of the Senate Committee on Environment and Public Works.

The American Road and Transportation Builders Association, using Transportation Department figures, said that without the fix federal highway aid to the states would drop from $35 billion in the fiscal year ending on Sept. 30 to $24 billion in the next fiscal year 2009. It estimated that 379,000 jobs would be lost without congressional action.

According to the estimate, California would lose 32,000 jobs, Texas almost 30,000, New York and Florida 20,000 each and Pennsylvania 19,000.

The House first passed the $8 billion relief bill in July, but Senate Republicans have thwarted several Democratic efforts to move the legislation in the Senate, demanding they first get votes on issues such as the proliferation of earmarks in highway spending bills.

"Much of this bill is not about roads and bridges," said Sen. Jim DeMint, R-S.C. "It's numerous wasteful earmarks that I'm afraid could end up as part of this $8 billion."

Because highway money is paid out over a number of years, postponement or delay in starting a project can have long-term ramifications. "The urgency of this bill is very critical. We cannot delay it," said Sen. Patty Murray, D-Wash. Without the money, she said, next week federal reimbursements for state projects could drop to as little as 64 percent of promised funds.

The bill is H.R. 6532.

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