WASHINGTON, July 31 (Reuters) - The U.S. House of Representatives on Thursday was poised to reject a Senate-passed $8.1 billion measure to fund transportation projects through 2014 in a bid to force through Republicans' plans that would extend funding until May.
The House's vote to send its $10.9 billion plan back to the Senate, scheduled for Thursday afternoon, would raise the risk that Congress fails to meet a Friday deadline to avert federal funding cutbacks for road, bridge and rail transit construction projects.
Congress is set to begin a five-week summer recess on Friday, the day that the Department of Transportation has said it will start reducing payments to states by as much as 30 percent from the dwindling Highway Trust Fund.
Lawmakers and transportation officials say that failure to approve new funding would cause work slowdowns at the height of summer road construction season and halt planning for new projects, putting thousands of construction jobs at risk.
The House vote was engineered to "jam" the Senate, Democratic aides said. With no legislative time left, senators would be faced with a difficult choice: Accept the House plan as is or face criticism for allowing the Highway Trust Fund to run dry in August.
A temporary $10.9 billion transportation funding extension through May 2015 seemed on a drama-free path toward approval until Tuesday, when a Senate amendment cut the amount to $8.1 billion. Senate Democrats wanted the shorter extension to try to force Congress to act on a long-term funding plan during the post-election, "lame duck" session of Congress in November.
They argued that the House plan would put off action until next year, creating a funding crisis at the start of a new construction season and leaving decisions to the next Congress.
State transportation directors and business groups have been clamoring for a long-term solution that would eliminate uncertainty over the funding of road and rail transit projects that benefit the heavy construction industry and its suppliers, including Fluor Corp, Vulcan Materials, LaFarge SA and Caterpillar Inc.
The Highway Trust Fund has suffered chronic shortfalls in recent years as revenue from fuel taxes, unchanged since 1993, have failed to keep pace with rising construction costs and been hit by improved vehicle fuel economy. Some lawmakers have advocated a fuel tax increase and believe this may be easier to achieve after November's congressional elections.
The House funding plan relies heavily on a controversial revenue source known as "pension smoothing" - an accounting maneuver that allows companies to reduce near-term contributions to employee pensions, thus increasing taxable profits.
It also would extend customs fees for another year, a measure in common with the Senate bill.
But the Senate measure stripped out the pension smoothing and substituted some other provisions to raise revenue by improving tax compliance, such as increased reporting requirements for mortgage interest deductions. (Reporting by David Lawder; Editing by Cynthia Osterman)