Infra Insight Blog

The House has passed a new bill (H.R. 3617) which extends federal highway and transit programs set to lapse at the end of September, when SAFETEA-LU expires, through the end of the calendar year.

Yesterday, House Transportation and Infrastructure Chairman Jim Oberstar introduced the bill under an expedited process which waives committee approval and prevents amendment.  The bill does not address the $8.7 billion rescission required under SAFETEA-LU, which will force FHWA to cancel program funding apportioned under SAFETEA-LU (as amended by the EISA) on September 30.

The rescission is a vital concern for States, which have relied on transportation projects to prop up soft economies and would face devastating losses if the rescission were enforced. AASHTO has warned, for example, that the rescission would cost Missouri $202 million in contract authority and disproportionately impact local bridges and metropolitan planning organizations.  Colorado would lose $115 million in contract authority.  Michigan's share of the rescission is $263 million; approximately a quarter of what that state received for highway and bridge funding through the recovery act.

Rescissions have been used in all of the recent transportation authorization bills, and are meant to force Congress to enact the next round of authorization. The problem with repealing the rescission is that the extra 8.7 billion cost would be attributed to the extension bill. Oberstar’s spokesman said a repeal of the rescission was excluded from the measure because budgetary scoring rules would require an offset to pay for the repeal through higher taxes or reduced spending elsewhere.

The bill now heads to the Senate, where it will compete with the Senate’s 18-month extension proposal.  The Senate Environment and Public Works committee has approved a different bill (S. 1498) to extend funding until March 2011, which would allow the stimulus transportation funding programs to run their course and delay the funding debate until after the 2010 election cycle has passed. The extension would provide an estimated 50% increase in current funding.

The major obstacle facing any transportation authorization bill is lack of funding. Raising taxes in the wake of the recession may prove difficult politically, though business groups, including the U.S. Chamber of Commerce and a number of blue ribbon panels – including the National Surface Transportation Infrastructure Commission and the National Surface Transportation Policy and Revenue Commission have all advocated increasing the gas tax.

Congress is clearly motivated to avert an October 1 grinding halt to federal transportation funding, so it is likely that the Senate will follow the House’s lead in expediting review of these bills.  The Senate Finance committee has reported Chairman Max Baucus’ bill (S. 1474) would provide $27 billion in revenue to pay for the 18 month extension, and Senators Barbara Boxer, James Inhofe, and Christopher Bond have pledged that the rescission will be repealed before September 30.