If Congress fails to pass a bill to replace the current surface transportation law by the end of this fiscal year, federal highway aid to states will drop by 50% and transit aid will drop by 40%, Rep. Peter DeFazio warned yesterday.

DeFazio, chairman of the House Transportation and Infrastructure Committee's panel on highways and transit, spoke at the American Public Transportation Association's annual legislative conference here.

The Oregon Democrat noted that current law supports an "arcane system" of funding transportation programs that relies in part on gasoline and diesel fuel taxes. He said the country will be forced to do a "heavy lift" to keep programs afloat if Congress does not authorize additional funds by Sept. 30 when the current surface transportation law expires.

"The Senate's saying, oh, maybe next year," he told the transit group. But a six-month stopgap measure to keep federal transportation funds flowing to states and localities would render them unable to move forward with long-term capital plans, he said.

The possible 50% and 40% cuts in transportation funds cited by DeFazio came from a Congressional Budget Office report that was recently submitted to the committee, a spokeswoman said.

The CBO found that the highway trust fund could support investments of about $20.5 billion in fiscal 2010, but stated that amount would have to be cut in half if new revenues were not dedicated to the fund. Federal transit programs would face a significant, but less severe, cut, the CBO said.

DeFazio has been an outspoken critic of cutting or delaying federal infrastructure funding and was one of few Democrats who voted against the American Recovery and Reinvestment Act in February because he believed it skimped on transportation funds.

"Infrastructure spending doesn't even account for 10% of the funds" in the package, he said.

During the funding crisis last fall, the U.S. Department of Transportation announced it would begin rationing payments to states because of the severely depleted highway trust fund.

The announcement threw states into crisis mode, delaying the issuance of at least one bond deal: $425 million of grant anticipation revenue vehicle bonds by the Maryland Transportation Authority to fund a toll-road project. Federal funding to state DOTs was restored after Congress transferred $8 billion of general funds into the highway trust fund.

Most industry sources have agreed that it is unlikely Congress will pass a bill to replace the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users before it expires Sept. 30.

Nevertheless, members of the House Transportation and Infrastructure Committee yesterday insisted on timely passage the bill, which would authorize close to a half-trillion dollars of transportation funds.

The stimulus bill "was hijacked from us, but we're not going to let the reauthorization be hijacked from us," said Rep. John Mica of Florida, ranking Republican member on the committee. "Half a trillion dollars is what we're looking at," he said, adding that increased funding would allow states and municipalities to issue more bonds to help pay for transportation.

Also at the meeting, Rep. Earl Blumenauer, D-Ore., a member of the House Ways and Means and Budget committees, presented his 10-year plan for transportation reform.

The plan would fund transportation at $100 billion per year. It includes encouraging private investment through freight charges or tax-credit bonds, repealing the gasoline tax, implementing a mileage tax, and dedicating at least 10% of carbon tax revenues to infrastructure projects.

Meanwhile, the Department of Transportation has issued regulations and guidance for use of stimulus money.

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