The Senate Committee on Appropriations yesterday unanimously approved transportation and housing spending for fiscal 2009, including full funding for the federal highway program plus $8 billion to shore up the ailing highway trust fund.

The committee's appropriations would exceed President Bush's total housing and transportation requests by about $6.6 billion.

Bush has threatened to veto any legislation that surpasses his spending recommendations, a threat that is making some lawmakers reluctant to put spending legislation forward, committee chairman Robert C. Byrd, D-W.Va., said during the committee's markup session yesterday afternoon. The bill will now be sent on to the full Senate for consideration.

The legislation continues the full funding of the Department of Transportation's federal-aid highway program. The committee also approved $8 billion to be shifted from the general fund to protect the highway trust fund from an expected shortfall next year. The additional $8 billion would basically make up for an $8 billion transfer from the trust fund to the government's general fund that was made 10 years ago, lawmakers said.

The federal highway trust fund faces a shortfall next year of more than $3 billion and some transportation lobbyists say the cumulative loss to states' infrastructure programs would be four times that amount.

The committee green-lighted $66.8 billion in spending for the Department of Transportation as a whole. About $41 billion would go toward federal aid for highways and $15.5 billion toward the Federal Aviation Administration. The FAA has been operating since last September on a series of extensions due to disagreements over long-term FAA reauthorizations.

The housing provisions voted on yesterday totaled $42.4 billion, more than three-quarters of which went toward public housing and Indian housing. The committee approved a $23 million increase over last year for community development block grants, which support state and local governments' economic development programs.

Meanwhile, the Senate Finance Committee yesterday morning held a hearing to discuss the approach lawmakers should take to fix the nation's highway program, headed for insolvency in 2009.

"This committee has been trying to shore up the Highway Trust Fund's finances for more than a year," Sen. Max Baucus, D-Mont., said in his opening statement.

Baucus said the committee will try again, possibly this month, to push for trust fund money and "strongly disagree[d]" that Congress should wait until reauthorization of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users, or SAFETEA-LU, which expires on Sept. 30, 2009, to address the trust fund shortfall.

The committee called on the Congressional Budget Office and Government Accountability Office for advice on financing mechanisms to shore up the trust fund.

User fees based on miles driven, tolling, public-private partnerships, and congestion pricing were ideas floated during the hearing.

The GAO argued that while bonds can be used to pay for transportation infrastructure projects when taxes and user fees fail to generate enough revenue, they nevertheless must be repaid using those revenue-generating tools.

"Tax credit bonds could be a more efficient way for supporting state and local governments," said Peter R. Orszag, director of the Congressional Budget Office. Federal law currently does not allow the issuance of tax-credit bonds for transportation infrastructure. The highway trust fund currently relies on fuel taxes for 90 percent of its money.

Orszag also criticized a national infrastructure bank as impractical. By issuing debt, states with relatively high credit ratings can borrow at interest rates about one percent lower than would be available through a national infrastructure bank loan, he said.

"I think an important question is what really you accomplish that the existing system doesn't," he said.

Jayetta Z. Hecker, physical infrastructure director for the GAO, argued strongly for a total overhaul of the national transportation infrastructure program, including the possibility of making state transportation fund apportionments more performance-based.

Hecker warned against "the impetus to think that the answer is largely to balloon the federal contribution."

But as the hearing closed, Sen. Olympia J. Snowe, R-Maine, raised the question of whether Congress should scrap the trust fund altogether and eliminate the six-year authorization.

"It would not seem desirable simply to reauthorize," Orszag said, adding that an examination first of "how projects are selected, how the whole system works" would be something "presumably one would want to address" before reauthorizing the highway program.

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