Breaking through a deadlock that had stalled action for months, the Senate Wednesday night by voice vote approved the immediate transfer of $8.017 billion from the federal government's General Fund to the Highway Trust Fund to restore its solvency.
"State departments of transportation are breathing a collective sigh of relief across the country today," said AASHTO Executive Director John Horsley. "The Highway Trust Fund supports transportation projects that keep America working, relieve congestion and save lives. This was the right thing to do, and the states are grateful."
States have put on hold hundreds of millions of dollars of construction projects this week as a result of Friday's announcement by U.S. Transportation Secretary Mary Peters that federal-aid payments would be rationed because of a shortage of federal funds. Peters said that distribution of federal highway funds to the states would be weekly, rather than twice daily. She also indicated that after the first weekly payment this Thursday, states would likely receive a reduced percentage of their claims, depending on the amount of revenue flowing into the trust fund.
The bill returns $8.017 billion to the Highway Trust Fund, money that was removed and sent to the General Fund as part of a 1998 budget deal.
During debate, several senators expressed the urgency of acting to resolve the crisis, noting the hundreds of thousands of construction jobs that are dependent on federal highway funds flowing to the states.
"What we are doing is simply restoring the revenue that was shifted out of the trust fund 10 years ago," Boxer said during floor debate. "What we are saying to many working people out there is that we are not going to let them run the risk of being laid off, being fired, having to come home and tell their family that they just can't work."
Sen. James Inhofe (R-Okla.), ranking minority member of the Senate Environment & Public Works Committee, said removing money from the Highway Trust Fund for general government spending in 1998 was "morally wrong" and urged his Republican colleagues to support the bill.
"The uncertainty over the federal government's ability to fulfill promises made in law substantially disrupts states' highway programs," Inhofe said.
Reversing the administration's previous opposition to a bill (HR 6532) already passed overwhelmingly by the House, Peters urged the Congress to enact a "clean bill" to resolve the crisis by Friday. She said the trust fund faces a zero balance sooner than originally expected because Americans have sharply reduced driving and gas purchases this year because of high prices at the pump. That in turn has led to a drop in gas-tax collections because the fee is assessed per gallon purchased.
Despite the administration's urging, efforts to move the legislation by unanimous consent were thwarted Monday when several Republican senators continued their objections to increasing the nation's budget deficit by sending $8 billion of general revenue to the Highway Trust Fund.
After behind-the-scenes negotiations, Senate Environment & Public Works Committee Chairwoman Barbara Boxer (D-Calif.) asked late Wednesday afternoon that the bill be brought up for immediate action with 90 minutes of debate. No objections were made to her request. The Senate proceeded with debate and then took a voice vote approving the bill and returning it to the House for consideration of an amendment by Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, which would make the transfer of funds effective upon enactment. The House bill would make funds available Sept. 30.
Oklahoma Department of Transportation Director Gary Ridley testified to the committee Wednesday morning about the urgency of the Senate’s acting to prevent the Highway Trust Fund from running out of money to pay state reimbursement requests on a daily basis. Ridley told senators how Oklahoma delayed $73.7 million worth of contracts this week over the uncertainty of when it would receive federal payments for the work.
Sens. Jim DeMint (R-S.C.) and Judd Gregg (R-N.H.), who had previously blocked several attempts this year by senators to infuse more money into the Highway Trust Fund, dropped their objection Wednesday and allowed the bill to come up for a vote. But they both spoke at length regarding their opposition to increasing the federal budget deficit by sending general tax revenue to shore up the highway fund.
"Today's votes are creating tomorrow's fiscal disasters and this $8 billion Highway Trust Fund bailout is really just one example," DeMint said. "We're going to have to borrow this money from China or who knows where. We don't have that money."
The Congressional Budget Office released an estimate yesterday that this year's federal budget deficit will reach $407 billion--very close to the record $413 billion deficit recorded in fiscal year 2004.
Gregg said the 2005 highway bill, known as SAFETEA-LU, contained more than 6,000 earmarked projects at a cost of $24 billion. Some of those pet projects should have been eliminated to make up for the coming deficit in the Highway Trust Fund, he argued, or the shortfall could be made up by borrowing from the trust fund's Mass Transit Account.
But supporters countered that the money should have never been taken out of the trust fund a decade ago or this problem wouldn't have happened.
"This is not a bailout," said Sen. Patty Murray (D-Wash.), chairwoman of the Senate's transportation appropriations subcommittee. "That $8 billion was collected in gas taxes for the purposes of being deposited in the Highway Trust Fund. At the time, the trust fund was flush with money. People didn't think we needed it. Clearly we need it back now."
The House is expected to act as soon as Thursday on concurring with the Senate amendment.
"We particularly thank the leaders of the Senate Finance Committee, the Senate Environment & Public Works Committee, the Senate Appropriations Committee and the Senate leadership for their bipartisan cooperation in working to avert this crisis," Horsley said. "We encourage the House to act swiftly so that the president can sign this bill as soon as possible."
In a statement issued Wednesday night, Peters commended the Senate for "acting swiftly to address the immediate needs of the trust fund" while continuing to emphasize the need to reform federal transportation taxing and spending in the future.
"The lesson is clear: It's time to embrace a new approach to transportation that does not rely on high fuel consumption and instead directs funds where they are actually needed," she said. "Congress must eliminate the billions in wasted spending, thousands of unneeded earmarks and hundreds of conflicting and contradictory special-interest programs in order to make sure states don't face this situation again."
