WASHINGTON — The Obama administration is scrambling to find an extra $20 billion to keep highway and transit construction projects and the thousands of jobs they represent going for the next year and a half.
Transportation Secretary Ray LaHood told a Senate panel Thursday that the White House’s Office of Management and Budget estimates that is how much money will be needed to keep federal transportation aid flowing to states through March 2011.
The problem is that the administration doesn’t want to borrow the money from the federal treasury, but hasn’t yet found another source for the funds, LaHood said.
The federal Highway Trust Fund is expected to go broke by Aug. 21 due to declines in revenue from gas and truck sales taxes.
“There are a lot of people putting their heads together right now on how to get $20 billion and how to pay for it,” LaHood told the Senate Environment and Public Works Committee. He said he met with Lawrence Summers, Obama’s top economic adviser, about the matter this week.
The Transportation Department sent a letter Wednesday night to state transportation agencies warning them that the federal government may begin slowing down its reimbursements to states for highway and transit projects sometime in the next 60 days, possibly as soon as early August.
Currently, if a state submits a reimbursement request in the morning, the funds are usually transferred by that evening. The DOT letter said that as the trust fund’s balance drops, payments may be slowed to a weekly or biweekly basis.
An estimated $5 billion to $7 billion extra is needed to keep construction projects going through Oct. 1, which is when the current transportation aid program expires. LaHood has said the administration wants a total of $20 billion to keep projects going for about 18 months to give Congress time to pass what is expected to be a half-trillion dollar bill to fund transportation aid for the next five to six years.
Sen. Barbara Boxer, the public works committee chairman, said she expects her committee to approve an 18-month extension bill by late July.
“There is no reason to frighten people that in the short term anything bad is going to happen,” said the California Democrat.
The situation is not as clear in the House, where James Oberstar, chairman of the House Transportation and Infrastructure Committee, is pressing lawmakers to approve a six-year, $500 billion bill he has crafted that would fundamentally reshape transportation programs with a greater emphasis on mass transit and getting people out of their cars by providing more transportation options.
And even as LaHood was making the administration’s case in the Senate, a House Transportation committee hearing on the American Recovery and Reinvestment Act turned into a debate — albeit a rather one-sided one — of the competing funding proposals.
The gist of the committee’s discussion: if the stimulus spending on infrastructure was so good for the economy, how can the administration not immediately support a fully funded, long-term transportation program?
The “key element to keep in mind,” Oberstar explained, is that as recovery act spending winds down at the end of summer, the highway trust fund will be “at its lowest ebb.” Even with the proposed interim budget fix, spending will be curtailed, he suggested.
“The economy will suffer very severe job loss,” Oberstar said. “As well as not enjoying the benefit of the 6 million jobs that will be created over the six years of our committee bill.”
Federal Transit Administration Administrator Peter Rogoff tried to explain the White House’s program as one “to get us over the crisis in August” and with subsequent increases in spending for highways and transit, only to be dismissed by Oberstar as “a good soldier.”
The coming shortfall is the reason the committee is moving quickly with the full reauthorization legislation, Oberstar noted.
“We’ve had no outreach from the administration, no participation, no discussion,” Oberstar said. “And I’m personally offended by that.”
Some of Washington’s powerful transportation lobbies are leaning in Oberstar’s direction.
“Our position is we are going to need interim funding because the (trust fund) is going to run dry in August. We need that done, period,” said Peter J. Basso, program finance and management director of the American Association of State Highway and Transportation Officials.
“We have not come out in support of an 18-month extension, or 9-month extension or any period of time. We have said we support strongly Chairman Oberstar’s efforts to get a multi-year bill,” Basso said.
Oberstar has been hoping to use the looming Oct. 1 deadline for expiration of current programs to prod Congress to make tough decisions on how to make up trust fund shortfalls. Earlier this year a congressionally mandated transportation commission recommended a 10-cent a gallon gas tax and 15-cent a gallon diesel tax increase as the most practical short-term solution. Their longer term recommendation was to move to a new transportation tax based on the number miles motorists drive rather than the fuel they burn.
LaHood has rejected raising the gas tax in the current recession.
Highway and transit programs funded through the trust fund are separate from the billions of dollars in transportation funding contained in an economic stimulus law enacted earlier this year.
Kevin Jones of The Trucker staff contributed to this report. He can be reached for comment at kevinj@thetrucker.com.
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