U.S. Senate Committee OKs $20 billion for highway fund

WASHINGTON (Reuters) - A key U.S. Senate committee approved on Wednesday President Barack Obama's plan to move $20 billion into the federal account for highway construction and repairs.

The U.S. Senate Environment and Public Works Committee also voted to extend the current transportation law by 18 months. The law will expire on September 30, and the Department of Transportation has said the Highway Trust Fund will be empty by the end of August.

The full Senate must now vote on the measure.

There is no corresponding bill in the House of Representatives, reflecting both Democrats' and Republicans' opposition to Obama's plan. House members prefer passing a new multi-year transportation bill.

But the Environment and Public Works Committee chairwoman, California's Barbara Boxer, said an extension would give states certainty on funding for projects as Congress works on that bill, which includes a complete reform of how the country organizes its transportation programs.

Boxer said it would also give Congress time to find additional funding sources for highways.

Currently, an 18.4-cent tax levied on each gallon of gas sold in the United States supports the so-called Highway Trust Fund. In order to support the House's plan, the federal government would have to double the gas tax, Boxer said, increasing the burden on drivers during a long recession.

"Let's get real," she said.

Obama said the $20 billion will be transferred from the general fund and he will work with Congress to find sources for repaying the amount.

The bill the committee passed did not include any of the policy changes Obama had attached, such as how projects are selected to receive funding. That will help it pass the Senate quickly, Boxer said.

Traditionally, the U.S. Congress takes a recess in the summer so members can visit their home jurisdictions. Transportation Secretary Ray LaHood said he worried the emergency $20 billion patch will not be in place before the August break, and pressure is mounting for Congress to act soon.

Still, Rep. James Oberstar, the chairman of the House Transportation and Infrastructure Committee, prefers passing a smaller stopgap and then using that pressure to finish the $450 billion multi-year plan.

On Wednesday, the U.S. Chamber of Commerce escorted 100 business leaders to Capitol Hill to lobby members of Congress to pass the House plan without delay.

"The Administration and Congress included vital funds for transportation in the stimulus package, but the job isn't done yet," said the Chamber's president and chief executive, Thomas Donohue, in a statement.

The U.S. stimulus plan passed in February created a surge in transportation funds for "shovel-ready" projects. Combined with the stimulus, the new funding patch will increase transportation funding by 50 percent this year, Boxer said.

(Reporting by Lisa Lambert; Editing by Padraic Cassidy)