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WASHINGTON (Reuters) - A multibillion-dollar gasoline tax to maintain U.S. highways and mass transit will be in jeopardy when Congress resumes in early September in the wake of bruising budget and aviation funding battles.
An 18.4-cents-per-gallon gasoline tax paid by consumers at the pump is set to expire on September 30, but Democrats and Republicans have been unable to advance legislation ensuring a fix.
While chances are good for a temporary extension of the tax, according to congressional aides, conservative Republicans aim to use the debate to open another front in their battle to shrink the size and scope of the federal government.
"Instead of burdening states and micromanaging local transportation decisions from Washington, states like Oklahoma should be free to choose how their transportation dollars are spent," Republican U.S. Senator Tom Coburn said.
Coburn and some of his fellow conservatives want to let states opt out of the federal highway program, giving them more control over how the tax revenue is spent on transportation projects.
According to a spokeswoman, Coburn intends to offer up such legislation as an amendment to the gasoline tax extension when it is considered in the Senate.
While it's not likely to succeed, the Senate votes will "set markers" for building support for the initiative, said anti-tax, conservative advocate Grover Norquist, head of Americans for Tax Reform.
Besides giving states more control of transportation projects, Norquist wants to choke off federal funds that he says go to "unionized guys in New York and Boston" for work on mass transit projects and the "ridiculous pensions" he said those retired workers are paid.
His argument echoes the ongoing dispute between the two major political parties on aviation funding, with Republicans trying to roll back a federal rule making it easier to organize labor unions at airlines.
In the meantime, Norquist said that an extension of the current gasoline tax would not necessarily draw fire from his group. "As long as it's not a tax increase ... it doesn't break the pledge" Republican lawmakers have signed against new taxes, Norquist told Reuters.
Lawmakers also will have to solve another problem that could push the gasoline tax to the brink of failure: the tax no longer covers the government's transportation maintenance and construction costs.
Although the tax is expected to generate approximately $245 billion over the next six years, Americans are driving less due to the 2008 economic downturn and the cars they own use less gasoline -- which means that revenues aren't keeping up with construction costs for the first time in the program's 55-year history.
With lawmakers loathe to add to U.S. budget deficits hovering around $1.5 trillion a year, they are struggling to find savings in other programs to plug the funding gap and keep highway and subway construction projects -- and the jobs that go with them -- running.
Meanwhile, Democrats like U.S. Senator John Kerry and U.S. Representative Peter DeFazio are hoping to beef up Washington's investment in infrastructure projects.
"We know that every $1 billion invested in just transportation infrastructure, creates or sustains over 34,000 jobs and produces $6.2 billion in economic activity," DeFazio wrote President Barack Obama in June.
Kerry is hoping to find a way to expand investment in highways and other infrastructure, but to do so with minimal use of taxpayer dollars. He hopes to be able to attach to the gasoline tax bill legislation creating an infrastructure bank using revolving funds to spur investment.
But even that would require some new domestic spending -- an idea that could find tough opposition from members of Congress aligned with the conservative Tea Party movement.
Editing by Howard Goller and Paul Simao