Blog First, A Patch-up For Expiring Fed. Transpo Bill

Among the pressing legislative priorities facing Congress this autumn — besides the headline-grabbing health care and climate change bills — is an extension of the federal surface transportation program. The program authority expires on September 30 and its renewal is essential to keep federal transportation money flowing. The House and Senate have been on divergent paths in their approach toward renewing the program. The House Transportation and Infrastructure Committee, under the leadership of Chairman James Oberstar (D-MN), has been intent on passing a six-year $500 billion surface transportation measure ($450 billion for highways and transit, $50 billion for high-speed rail) during this session of Congress. In late July, a bill to this effect was reported out by the House Highways and Transit subcommittee. Chairman Oberstar announced at the time that he would hold a full committee mark-up soon after the House returns from its summer recess.
The Senate, on the other hand, has been working toward an 18-month extension of the existing surface transportation program. Its rationale for doing so was succinctly stated by Sen. Barbara Boxer (D-CA), chairman of the Environment and Public Works Committee, and Sen. James Inhofe (R-OK), ranking minority member. There simply is no way, the two senate transportation leaders concluded, that Congress could pass a multi-year authorization of the surface transportation program before the program’s expiration at the end of September. “There are just too many big questions left unanswered, not the least of which is a lack of a consensus on how to pay for it,” Boxer and Inhofe stated. A better approach, they said, would be to pass an 18-month extension as recommended by the Obama Administration.
Left unsaid were probably two other motives for wanting to postpone enactment of a long-term legislation.

An 18-month extension would allow the Senate to take a more active role in shaping the legislation and influence the nation’s future transportation policy; and by early 2011, a more favorable economic climate might allow a significant boost in federal fuel taxes — a boost that both the Senate and the House leaders have ruled out during the current economic recession.
Three Senate committees have jurisdiction over the surface transportation program: the Environment and Public Works (EPW) Committee; the Commerce, Science and Transportation Committee; and the Banking, Housing and Urban Affairs Committee. Each completed action on their bills to extend the existing program before the recess. Also approved was a measure that would effectively ensure adequate funding for the 18-month extension. The bill in question (S. 1474), sponsored by Finance Committee Chairman Max Baucus (D-MT), would replenish the Highway Trust Fund through a transfer of $26.8 billion from the General Fund. The funds were said to represent reimbursements for lost interest payments owed to the Fund since 1998 and for past disaster emergency expenditures.
House Status
Chairman Oberstar says he has a commitment from the House leadership to bring the bill to the House floor by the third week of September if the Ways and Means Committee can come up with the revenue title to the bill. That’s a big “if”. So far, the W&M Committee has given no indication where the money might come from. According to press reports, a majority of the members of that committee are opposed to any tax increases as a means of funding the proposed $500 billion bill. Significantly, only 15 of the 41 committee members went on record in a July letter to committee Chairman Charles Rangel (D-NY) supporting “prompt action” (i.e. in September) on a revenue package for the bill.
Oberstar Backs Off Near-Term Gas Tax Hike
In the opinion of many observers, hope for the enactment of a long term transportation bill this year all but vanished when Rep. Oberstar himself acknowledged that he does not favor raising the fuel tax at this time to pay for the $500 billion transportation program. He made this admission in testimony before a hearing of a House Ways and Means Subcommittee on July 23. “Although increasing and indexing the gasoline and diesel user fee is a viable financing mechanism,…I do not believe that the user fee should be increased during the current recession,” Oberstar stated in his opening statement, echoing the posture previously taken by the White House and Transportation Secretary Ray LaHood.
Although he suggested other potential sources of supplementary funding, Oberstar deferred to the Ways and Means Committee. “The Committee on Ways and Means,” he said in concluding his testimony, “must undertake the difficult task of identifying the revenue to finance this bill…We’ll take any dollar you can scare up for us for the trust fund.”
By taking the gas tax increase off the table, Rep. Oberstar acknowledged a political reality but also removed from consideration the most logical source of additional revenue. Other funding options appear limited. One solution could be to use general tax revenue to fund a transportation-focused “Stimulus II” bill. Such a measure might conceivably be rationalized as helping to bring down the level of unemployment – should high joblessness persist. A second option could take the form of a major bond issue to be financed by additional revenue generated from indexing the gas tax at some future date. Both options have been hinted at by Rep. Oberstar and Rep. DeFazio (D-OR) in past interviews. But political analysts do not consider either option as plausible, since both lack congressional and Administration support. Neither Congress nor the White House are eager to add to the already sky-high budget deficit.
Several other funding options suggested by the T&I Committee leaders – such as imposing a fee on imported and domestic crude oil; taxing crude oil futures transactions (the subject of a DeFazio-sponsored bill, HR3379); and a flat sales tax on the purchase of gasoline – stand even less chance of congressional approval.
Senate Poised For Action
According to Sen. Inhofe, he and Sen. Boxer have obtained a commitment from Senate Majority leader Harry Reid (D-NV) to schedule the 18-month extension bill for early floor action, possibly as early as the week of September 7. The bill also will serve as a vehicle for repealing the $8.7 billion rescission of federal highway program contract authority required to take effect on September 30. Prompt action on the extension bill is necessary, say Senate sources, before states take irreversible steps to cancel existing contractual commitments to comply with the spending cutback. Pressure to repeal the scheduled rescission has been intense. In late July, American Association of State Highway and Transportation Officials sent a letter to members of Congress noting that failure to promptly repeal the provision would lead to “devastating consequences” for the states. Sen. Kit Bond (R-MO), author of an amendment to repeal the scheduled rescission, has been equally emphatic: All 50 states will face “drastic cuts” to their highway programs, he said, if the highway rescission is not promptly repealed. The cuts could lead to 250,000 jobs lost in the construction industry, Bond noted.
Given an almost certain approval of the extension/rescission measure by the full Senate, the transportation community is rife with speculation as to the ultimate resolution of the Senate-House impasse. Undoubtedly, an 18-month extension would provide more time to develop a broad-based consensus among the stakeholders on the needed program reforms. Such a consensus hardly exists today. Postponing the enactment of a multiyear authorization would also offer the Senate and the Administration a chance to participate more fully in the overhaul of the nation’s transportation policy. This argument, we suspect, while seldom expressed openly, is probably in the back of the minds of many Senators and senior Administration officials.
Extension Of Eight To Twelve Months Likely
Whether a full 18-month extension is needed or appropriate is a matter of judgment. It may be argued that a postponement until the spring of 2011 makes sense because passage of a gas tax increase will be politically more feasible in a post-recession economy. But others argue that getting a gas tax increase enacted in the spring or summer of 2011 is not going to be politically any easier. An 18-month extension would expire a mere three months after the start of a new Congress. With new faces and a possible political realignment in Congress, the extension could easily morph into a two-year or longer delay. This point of view has been emphasized by Rep. Oberstar. “An 18-month extension will just take us into the next presidential election cycle,” he observed, “so it [the extension] will turn into four years.”
Since both houses and both political parties are anxious to keep the transportation money flowing, the current impasse will end up in a compromise. The House will likely drop its insistence on passing a multi-year transportation bill during this session of Congress; in return, the Senate will probably consent to a shorter extension of say, 8 or 12 months – especially as there already is some sentiment for that among certain senators. A resolution of the impasse will come before the end of September when the current transportation program authority expires.