Congress over the weekend approved and delivered to President Bush a continuing resolution that would fund the federal government at current levels for more than five months and authorize $6.5 billion of bond-related community development funds. But a multibillion-dollar economic stimulus package that was approved in the House Friday seemed unlikely to get full congressional approval as of yesterday.

The Senate approved the continuing resolution, which was attached to a homeland security appropriations bill, by a roll call vote of 78 to 12 on Saturday. The measure had passed in the House by a 370 to 58 vote on Wednesday.

The bill is expected to be signed into law by the president.

The resolution continues appropriations for all agencies and activities that would be covered by regular fiscal year 2009 appropriations until enactment of such appropriations or March 6, whichever occurs first. The measure is necessary because Congress has failed to pass any of the 12 individual appropriations bills for the next fiscal year.

The bill also extends funding for the airport improvement program that allocates construction grants to states that are used to back tax-exempt bonds or to supplement other funding sources such as bond proceeds and state and local grants. A separate extension of the Federal Aviation Administration and its programs authorized $1.95 billion in AIP grants through the end of March.

The extension continues funding for bond-related community development block grants at the current level, plus adds $6.5 billion in grants for states that are recovering from federally declared disasters, including hurricanes Gustav and Ike, flooding in the Midwest, and forest fires in Western states.

The CDBGs could be used to help refinance or rehabilitate owner-occupied houses or rental housing, said John Murphy, executive director of the National Association of Local Housing Finance Agencies.

The block grants may also be used to repay bonds, although the repayment schedule is usually limited to about two years, according to the U.S. Department of Housing and Urban Development. The grants can be used as a debt service reserve or in conjunction with bonds, but the project for which grant funding is used must be eligible for CDBG finance, even if the grants play a minor role in the project's financing.

Meanwhile, a stimulus package won passage in the House but its companion in the Senate failed, mostly due to Republican opposition.

The second economic stimulus package of the year- introduced by Democrats as a means to jump-start jobs through federal investment in such areas as infrastructure - needed support from at least 60 senators for cloture in order to limit debate and prevent a filibuster. Only 54 voted in favor of considering it, with the vote broken down mostly along party lines.

"There are consequences for failing to invest in America. Bridges fall into rivers. Roads and subways are congested to the breaking point," said Sen. Robert C. Byrd, D-W.Va. "This stimulus bill includes major investments in promoting energy independence and a clean environment, including funds for advanced battery research, for local governments to improve energy efficiency, for environmental clean up, and weatherizing homes."

Senate Finance Committee chairman Max Baucus, D-Mont., said that if states face dropping revenue at a time when costs grow, they "may have to raise taxes or cut other spending in order to keep their budgets balanced. Unfortunately, that's precisely the wrong fiscal policy."

The White House is threatening to veto the legislation if it is passed by both chambers.

It seemed unlikely yesterday that the Senate would be able to pass a version of the stimulus package, which had been percolating for months before its introduction last week. A spokesman for Senate Majority Leader Harry Reid, D-Nev., said the stimulus would be brought up again on the Senate floor only if there was an indication from those who blocked it that it would not be blocked a second time.

The version passed by the House would authorize a much higher funding level than the version that was introduced in the Senate. Highway infrastructure would receive an additional $12.8 billion cash infusion, nearly $5 billion more than provided in the Senate version. Airport construction would benefit from $600 million in extra federal funding according to the House bill. The bill would also authorize $6.5 billion for the Clean Water State Revolving Fund and $1 billion for the Drinking Water State Revolving Fund. Under the revolving fund programs, states are able to provide low-cost loans for local wastewater and infrastructure projects.

House Republican Leader John Boehner of Ohio called the package a "monstrosity" filled with "unscrutinized spending."

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.