House Backs $11 Billion Plan for Highway Construction

The U.S. House approved an $11 billion plan to replenish the federal fund for highway and mass-transit projects through May 2015.

On a 367-55 vote, the House backed legislation that will probably also pass the Senate and arrive on President Barack Obama’s desk before payments from the fund to states begin to slow Aug. 1. Senate Majority Leader Harry Reid said today that his chamber will vote on the House bill this month, alongside a competing version that doesn’t have as much support.

Passage of the bill only puts off a larger debate over raising taxes to pay for long-term infrastructure financing, with business groups including the U.S. Chamber of Commerce and companies like Caterpillar Inc. aiming for a six-year bill. Lawmakers said they have no choice but to rush a short-term fix to address looming work stoppages during the peak of the summer roadwork season.

“It’s time to act now,” House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, said during debate before the vote. “State transportation departments have already started delaying some projects.”

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. Also, the existing two-year law authorizing about $50 billion in highway and transit funding annually expires on Sept. 30 -- and with it the ability of the government to levy the 18.4-cent-per-gallon gas tax that finances the work.

The White House yesterday urged support for the Republican-drafted House bill.

Tax Compliance

The House’s short-term measure, like the Senate version, is financed by higher customs fees, by letting companies delay contributions to employee pension plans, and by transferring money from a leaking underground storage tank fund.

The biggest difference between the two chambers is the Senate plan’s inclusion of two tax-compliance changes projected to generate $3.4 billion over the next decade. Many Republicans in both chambers are objecting to including those, though Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, continued to defend their importance this week.

“If you don’t go after tax compliance issues now that ought to be pretty low-hanging fruit, how do you show that you have the strength and the kind of fortitude to go after these bigger ones?” the Oregon Democrat said July 14 in an interview with editors and reporters at Bloomberg’s headquarters in New York.

100,000 Projects

As the debate has taken shape in the last week, tax-writers ignored calls by Democrats, business groups and state governments to simply boost the trust fund until the end of the year. Their lobbying goal was to force lawmakers to return to the table in a lame duck session of Congress to negotiate a longer-term highway bill in order to provide certainty for infrastructure projects.

Yet in a letter today, 62 groups including the National Association of Manufacturers, the U.S. Chamber, and the National Retail Federation called on lawmakers to complete the short-term “patch” to prevent an immediate crisis.

“Shortchanging the Highway Trust Fund is not the path to future economic growth, jobs and increased competitiveness,” they wrote. “The possibility of a deficient Highway Trust Fund that shutters 100,000 construction projects that support 700,000 jobs and puts all new highway, bridge and public transportation investments on hold will further harm an already fragile economy.”

Obama Proposal

In the House debate today, many lawmakers took to the floor to lament their inability to complete a longer-term bill.

“It gives a temporary, inadequate response to what is a long-term problem,” said House Minority Whip Steny Hoyer, a Maryland Democrat. “It is better than nothing, but it does not do what we need to do.”

Lawmakers haven’t acted on Obama’s proposed a four-year, $302 billion plan, where about half the funding would come from an increase in the federal excise tax on motor fuels and the rest from revenue obtained by closing tax breaks for corporations, including taxing overseas earnings.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editors responsible for this story: Romaine Bostick at rbostick@bloomberg.net Elizabeth Wasserman

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