UPDATE 1-U.S. estimates $20 bln needed for highway funding

Thu Jun 25, 2009 12:18pm EDT

[-] Text [+]

* $20 bln shortfall through 2011 in highway fund

* User fees, partnerships needed to pay for projects (Adds details, quotes from hearing)

WASHINGTON, June 25 (Reuters) - The United States will need up to $20 billion through early 2011 to cover an emergency shortfall in funding for road and transit construction projects, Transportation Secretary Ray LaHood told Congress on Thursday.

The trust that pays for highway and transit construction is nearly broke as its primary funding source -- federal gasoline taxes -- has declined over the years due to higher fuel prices that have prompted less driving and more fuel efficient cars.

"The (Obama) administration has a difficult problem - a system that can no longer pay for itself," LaHood said at a Senate Environment and Public Works hearing. "There is simply not enough money to do what we need to do."

The account could run dry as early as August, transportation officials said.

LaHood has proposed an 18-month extension, through March 2011, of the current law authorizing federal funding of transportation construction projects. The administration and some supporters in Congress believe such an extension would give lawmakers enough time to draft a long-term blueprint with more stable funding sources.

LaHood said he has met with President Barack Obama's top economic adviser, Lawrence Summers, and budget officials on the question of an emergency capital infusion.

"There are a lot of people trying to figure out where to find $20 billion," LaHood said.