Highway-Fund Tug-of-War Seen Sending House Bill to Obama

Lawmakers’ fight over how to fund roads and transit probably will end with legislation from the Republican-led House sent to President Barack Obama, leadership aides in both parties said.

House and Senate leaders have been collaborating on a strategy for preventing the Highway Trust Fund from running dry at the height of the summer road-construction season. While bills approved July 10 by committees in both chambers are similar, the Democratic-led Senate’s version contains tax proposals seen as obstacles in the House.

Passage of a House version would be a victory for Republicans who don’t want to increase road spending by using new tax revenue.

Both chambers’ measures would be financed by higher customs fees and by letting companies delay contributions to employee pension plans. Those provisions were vetted in the House before the measure was approved by the Ways and Means Committee, said the aides who spoke on condition of anonymity to discuss internal deliberations.

The House bill, H.R. 5021, is scheduled for a vote next week. Senate leaders are prepared to try to clear that measure if Senate Finance Committee Chairman Ron Wyden’s version doesn’t gain much support, said the aides.

The main divide in Congress is over how to boost long-term transportation funding, as current methods for financing, namely gasoline and diesel-fuel taxes, haven’t kept up with the pace of new projects. Time is running out and leaders are coalescing around a short-term fix.

Transportation Secretary Anthony Foxx has said that without an agreement in Congress, federal payments to states will begin to slow as soon as Aug. 1.

Tax Provisions

Republicans probably won’t support the Senate proposal because it would raise an additional $3.4 billion in tax revenue over 10 years with tax-compliance measures, according to a Republican aide who spoke on condition of anonymity to discuss the deliberations.

Senate Finance Republicans, including Orrin Hatch of Utah and John Thune of South Dakota, backed the tax provisions during the panel’s consideration of the measure on July 10.

The Senate plan includes two tax-compliance changes projected to generate $3.4 billion over the next decade, according to a summary released this week by the Joint Committee on Taxation.

One would require banks to give the Internal Revenue Service more information about mortgages, including the unpaid balance and property address. Another provision would give the IRS more time to pursue taxpayers who overstate their basis in certain transactions and thus underreport capital gains.

Camp’s Backing

Wyden called the House proposal backed by Michigan Republican Dave Camp, the House Ways and Means Committee chairman, a partisan exercise.

“The House bill doesn’t do anything about tax cheats,” he said, adding that 40 percent of the Senate bill “is about cracking down on tax abuses to pay for transportation.”

Democrats joined Republicans on the Ways and Means Committee in approving Camp’s bill by voice vote on July 10.

If the House passes its bill, anything that slows down consideration of the Senate version would create an opportunity for Majority Leader Harry Reid to call up the House measure and ask the Senate to clear it for Obama’s signature before Congress leaves Washington for its August break.

There already are indications of trouble with the Senate bill. Senate Environment and Public Works Chairman Barbara Boxer wants the bill to end on Dec. 31 rather than extend into 2015. Boxer favors using the deadline to pressure Congress to complete a long-term reauthorization, such as S. 2322, which her committee unanimously approved May 15.

Resolving ‘Crisis’

In a statement after the Senate Finance Committee’s vote on Wyden’s bill, Boxer said she would exercise her committee’s jurisdiction to “pursue a December deadline so this Congress is forced to deal with solving the transportation crisis that we face in the Highway Trust Fund.”

Boxer could propose the expiration date-change as a floor amendment.

The House and Senate proposals both generate almost $11 billion, according to the JCT summaries. They include customs fees, changes to pensions that lower companies’ short-term contributions, and revenue from a leaking underground storage tank fund.

To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net; Katherine Rizzo at krizzo5@bloomberg.net Justin Blum

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