House Transportation Committee chairman James L. Oberstar is lighting a fire under lawmakers to approve a multi-year transportation funding authorization bill by Sept. 30, vowing he will not sponsor or approve any short-term extension to the current law.

But the announcement has caused industry groups to become concerned that allowing the current law to expire without an extension would jeopardize the ability of states to carry out their transportation plans.

The Minnesota Democrat is committed to quashing any short-term bill before the deadline to pass the new law, which sets the rules for how the federal government spends surface transportation dollars, committee spokesman Jim Berard said last week.

Sen. Barbara Boxer, D-Calif., who chairs the Senate Environment and Public Works Committee, has not said whether she would support a short-term extension if a new, multi-year bill is not approved by the deadline. A spokeswoman for the senator could not comment on the issue.

The bill to replace the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users, or SAFETEA-LU, is expected to pass only after lawmakers vigorously debate various methods of funding highway infrastructure.

In addition, market participants warn that members of Congress probably will be forced this summer to approve a quick-fix general fund transfer or find another way to restore the struggling highway trust fund - which relies mostly on fuel taxes but is expected to soon run out of money.

Lawmakers delayed approving an $8 billion general fund transfer into the trust fund account last year, causing it to run out of money. The Department of Transportation subsequently announced it would ration funding to states, which delayed bond deals and bond-related transportation projects due to the uncertainty about the trust fund.

Oberstar's challenge would require lawmakers to buck the overwhelming trend in recent history of Congress passing short-term fixes for transportation bills while hammering out the details.

The current law was not enacted until after about two years of debate and a dozen short-term extensions. The law before that was not enacted until nine months after its predecessor expired.

When SAFETEA-LU expires this fiscal year, Congress will have to rescind about $8.7 billion of federal transportation dollars that otherwise would have been available to states, said Jack Basso, director of management and business development for the American Association of State Highway and Transportation Officials. The loss of those funds will aversely affect states, he said.

Failing to pass a reauthorization or extension "will result in states having to cut back" on transportation programs, Basso said. "That seems to be counter-intuitive after we passed a stimulus bill."

Rep. Michael McMahon, D-N.Y., who sits on the transportation committee, said Oberstar was "absolutely correct" to refuse to extend the bill and call for timely passage of new legislation.

"We need an agenda of action, not delay," he said in a brief interview following his speech at the Securities Industry and Financial Markets Association's Municipal Bond Summit in New York yesterday. "We've had delay for too long."

Peter Schroeder contributed to this story.

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