Senators to Move Forward With Highway Bill, Despite Setback

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DALLAS — The Senate will move forward with a compromise six-year transportation funding bill hammered out over the weekend in negotiations between Senate Majority Leader Sen. Mitch McConnell, R-Ky., and Sen. Barbara Boxer, D-Calif., despite a setback on a procedural vote on Tuesday.

McConnell said he would call for another vote on Wednesday allowing the Senate to bring up the bill. The vote to limit debate on the bill failed, 41-56, after Senate Democrats said they wanted more time to review the revised transportation measure before agreeing to consider it.

Sessions over the weekend may be necessary to pass the bill before the current Highway Trust Fund expires July 31, he said.

The measure, a revised version of the multiyear bill, S. 1647, approved in June by the Senate Environment and Public Works Committee, would take more than $40 billion of general and other revenues to cover the shortfall in the Highway Trust Fund for the first three years.

"After months of discussion and a lot of cooperation from chairmen and ranking members, and staffs and members from both sides of the aisle, I'm happy to announce that Sen. Boxer and I have an agreement for a multi-year, bipartisan highway bill," McConnell had said before the vote.

"We have an agreement in principle," Boxer, the ranking Democratic member of the EPW Committee, had said, adding, "I believe it's a breakthrough."

The measure has a trigger mechanism to halt expenditures if Congress cannot agree on how to fund the fourth year, said Sen. James Inhofe, R-Okla., chairman of the Senate EPW Committee.

"If for some reason year four gets here and there is no funding for that, no more expenditures will be made," Inhofe said. "So that's putting the pressure on to make sure that it is going to be done and I can assure you it will be done."

"We'll do a six-year authorization and three years of pay-fors, and hopefully we will have an opportunity to revisit the pay-fors later," said Sen. John Thune, R-S.D., chairman of the Senate Commerce, Science, and Transportation Committee, following Tuesday's Republican caucus luncheon where the transportation bill was outlined.

Boxer said the measure would provide up to $15 billion of additional revenues per year for three years to supplement the federal gasoline tax and other levies dedicated to the HTF.

The revised bill would keep highway funding at fiscal 2015 levels with slight increases. Funding for roads and bridges would begin at $42.4 billion next year and total $48.1 billion in fiscal 2021.

The popular Transportation Infrastructure Finance and Innovation Act grant program would be funded at $500 million per year in the Senate bill, the same level as in fiscal 2015 and $400 million per year more than in the House appropriations bill for fiscal 2016.

Offsets to provide the revenue needed for the three years of additional funding include $16.3 billion realized by changing to 1.5% from 5% the fixed dividend rate paid by the Federal Reserve Bank to its member banks with assets of more than $1 billion, and $9 billion from the sale of 101 million barrels of oil stored in the Strategic Petroleum Reserve.

The current two-month extension of the HTF will expire at the end of the month, which could result in a slowdown or even total cutoff of state reimbursements for highway and bridge projects on Aug. 1 without action by Congress.

The House passed a five-month extension of the HTF that will keep the fund solvent through Dec. 18.

House leaders said the short-term fix would give Congress time to reach consensus on using revenue from corporate tax reform for transportation funding before the end of 2015. However, McConnell said he wants to push the highway funding measure beyond the presidential election in November 2016.

The Senate measure was slammed by the conservative Heritage Foundation, which called it "part of a tax-and-spend agenda" that does not resolve the HTF's structural shortfall.

"Even if Congress beefs up revenues to fund this new deal — that diverts money away for new programs — it will face a shortfall again in two to three years," said Heritage research associate Michael Sargent said in a statement.

Peter Ruane, president of the American Road and Transportation Builders Association, said the three years of guaranteed funding is helpful, while conceding the HTF's solvency problem remains unresolved.

"The measure would also aid states in long-term planning by distributing six years of contract authority, which also provides Congress the additional time some claim is still needed to develop a permanent solution to stabilize and grow HTF revenue," Ruane said.

The environmental group Food & Water Watch said it opposes a proposed provision in the Senate transportation bill that would allow public and private water utilities to use the proceeds of tax-exempt bonds to help fund projects that receive federal loans under the Water Infrastructure Finance and Innovation Act.

"This would result in lost revenue and subsidize a flawed program," said Wenonah Hauter, executive director of the group. Well-funded state revolving loan programs would do more to lower the cost of public water infrastructure than removing the WIFIA ban on tax-exempt debt, Hauter said.

 

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