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UPDATE 1-Obama pushes ahead with transport fund rescue

Wed Jul 1, 2009 7:10pm EDT

* $20 bln proposal seeks to tap general tax revenues

* Gov't would seek to repay taxpayers with new revenues

* Infrastructure bank would be independent entity (Adds figures and proposal on bank)

By John Crawley and Lisa Lambert

WASHINGTON, July 1 (Reuters) - President Barack Obama is pushing ahead with plans to shore up dwindling federal reserves for highway construction and establish a government-run bank to pay for future transportation projects.

Documents obtained by Reuters late on Wednesday detailed Transportation Department proposals for injecting $20 billion of general tax revenue into a government-run trust that funds highway and transit infrastructure projects, and Obama's longer-term plans for ensuring financial backing for new initiatives.

The administration projects the Highway Trust Fund, which is funded by the federal tax on gasoline, will run dry in late August or early September. It is proposing to replenish it over 18 months while Congress develops a six-year blueprint for transportation priorities and funding.

Officials at the Transportation Department said in the documents sent to Congress that lawmakers should approve the stop-gap measure before their next recess in August to avoid further strain on state budgets.

The administration also released details of Obama's vision for a national infrastructure bank, a centerpiece transportation initiative he promised to pursue during his campaign for president that was broadly described in his proposed budget. (Reporting by John Crawley and Lisa Lambert; Editing by Steve Orlofsky)



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