Congress last week passed stopgap legislation that would extend through Sept. 30 funding for the Federal Aviation Administration that includes grants to airports for improvement projects. The bill was approved after lawmakers removed provisions that would have added $8 billion to the Highway Trust Fund.

The three-month FAA extension continues funding at current levels for the Airport Improvement Program, which was authorized to provide about $3.7 billion in grants this fiscal year to about 3,400 airports for modernization projects. Grants from the AIP are sometimes used to back tax-exempt bonds, but more often supplement other funding sources such as bond proceeds and state and local grants.

The House on Tuesday passed the extension with the highway fund provision removed; the Senate signed off on the modified bill yesterday. The President is expected to sign the bill into law before the current extension expires on June 30.

The FAA has been running on stopgap measures since September 2007 as lawmakers struggle to reach compromise on a multi-year reauthorization.

The proposed highway funding was jettisoned from the House bill before it was voted on by lawmakers on Tuesday. The bill sponsored by House Ways and Means Committee chairman Charles B. Rangel, D-N.Y., would have restored $8 billion that the federal government had borrowed from the trust fund in 1998.

Rangel and other lawmakers had hoped the infusion of funds would offset a $3.7 billion deficit projected for the trust fund in fiscal 2009. Governors have said the shortfall would force states to make transportation cuts in an amount that is quadruple the size of the trust fund deficit.

Rep. Richard E. Neal, D-Mass., said during the debate on the House floor that additional highway funds "would prevent cuts in highway programs next year" and that enacting the FAA extension quickly was "imperative." But Republicans were resolute in opposing the additional highway funds.

All states face a 34% cut in federal highway and bridge funding on Oct. 1 unless lawmakers find a way to shore up the trust fund, warned Matt Jeanneret of the American Road and Transportation Builders Association.

"That's going to prevent a lot of projects going forward," Jeanneret said. "Really tough decisions have to be made. [Congress] can't kick the can down the street anymore."

Public-private partnerships, indexing the user fee to the rate of inflation, or a user fee-financed national freight plan are other options for obtaining highway funds, Jeanneret said, adding that he expects a "battle royale" next year over financing options.

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