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U.S. House OKs Short-Term Highway Fix With Intent to Reform Funding System

The U.S. House of Representatives voted to extend highway and transit funding through Dec. 18, in contrast with Senate Republicans, who want a longer extension.

By Richard Rubin

The U.S. House of Representatives voted to extend highway and transit funding through Dec. 18, in contrast with Senate Republicans, who want a longer extension.

The $8.1 billion House bill, passed 312-119 Wednesday, would prevent federal funds from lapsing July 31. House Republicans favor a short-term extension while they work on an ambitious plan to tie international tax changes to a six-year highway funding bill.

"Why are we here doing this patch?" Ways and Means Committee Chairman Paul Ryan, R-Wis., said on the House floor. "So that we can give ourselves the time to do corporate tax reform."

The Obama administration supports the House measure as a path to a long-term agreement.

The issue now heads to the Senate, where Republican leaders are trying to find money for a multiyear extension and build support among Democrats. They haven't announced a plan yet, and the matter may become more complicated politically because senators plan to attach a renewal of the Export-Import Bank, which is opposed by House conservatives.

The Ex-Im bank's charter expired June 30. The bank has been unable to approve new applications for financing since then, though it can continue work on existing agreements.

Senate Majority Leader Mitch McConnell is trying to extend highway money past the 2016 election.

Sen. Jim Inhofe, an Oklahoma Republican who leads a committee in charge of highway policy, favors a six-year bill that highway advocates say would provide certainty and time to plan projects. The bill approved by his Environment and Public Works Committee is S. 1647.

The House highway bill, H.R. 3038, is funded largely by tax compliance measures. They would give the Internal Revenue Service more information about mortgages, more time to investigate certain tax avoidance and new rules to prevent people from understating income on inherited property.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a Washington watchdog group, said in a statement that the House bill is financed with "real offsets rather than gimmicks, but we just can't keep funding our roads and bridges a few months at a time."

Transportation Secretary Anthony Foxx has said that uncertainty about highway funds has led to canceled projects in Georgia, Tennessee, Vermont, Delaware and Arkansas.

In a letter to states on Tuesday, he said that unless Congress acts to extend funding beyond July 31 deadline, the highway administration "will not have the authority to provide project sponsors with any additional contract authority for new or ongoing projects."

Near the end of July, the balance of the Highway Trust Fund will drop below $4 billion. That's the point at which, without an infusion of cash, the U.S. Transportation Department says it will slow reimbursement payments to the states for highway construction.

A funding lapse may not immediately stop current projects. It depends on whether states have other sources of money to keep them going. The longer a funding impasse lasts, the more construction will halt.

(Jeff Plungis in Washington contributed to this report.)

(c)2015 Bloomberg News

Caroline Cournoyer is GOVERNING's senior web editor.
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