* Accusations fly as June 30 funding deadline approaches
* Streamlining of project reviews a major sticking point
* House, Senate talks haven't yet mulled Keystone pipeline
By David Lawder
WASHINGTON, June 13 (Reuters) - Prospects for Congress to pass a jobs-rich transportation construction bill before a June 30 deadline looked grim on Thursday as Democrats and Republicans blamed each other for divisions that threaten to scuttle the measure and force another stop-gap extension.
Senate Democrats accused fiscally conservative House Republicans of "holding hostage" the $109 billion Senate-passed transportation measure, along with 3 million jobs supported by federally funded road, bridge and rail transit projects.
Failure to pass the bill by June 30 would cut off project funds at the height of the summer road construction season across much of the country, idling workers.
If Congress approves another three- or six-month extension of current funding, states would start to shelve longer-term projects, keeping unemployment in the construction sector high. The gasoline tax-supported Highway Trust Fund also would run the risk of depletion without a new revenue formula.
A news conference by Democratic senators in front of cement mixers and other construction trucks outside the Capitol felt like the start of an election-year campaign to hammer Republicans over the long-delayed jobs measure.
"I have heard from some Republicans that there are people arguing that they shouldn't pass this bill because it might help President Obama because people might go back to work," said Democratic Senator John Kerry. "It is an utter disgrace that a minority in the House of Representatives - extremists - would say they're for the American people at the same time they refuse to put them to work tomorrow."
House and Senate negotiators have been haggling over the Senate's bill for more than four weeks, and have not been able to agree on core transportation provisions. They have not begun to address the controversial Rep ublican pr ovision to fast-track approval of the Canada-to-Texas Keystone XL oil pipeline provi sion in the bill.
Representative John Mica, the top Republican House negotiator, said Democrats were the roadblock to an agreement.
"I remain hopeful that we can reach a bicameral compromise with the Senate," Mica said in a statement. "However, I am disappointed in the fact that Senate negotiators have yet to move significantly on key House reform proposals. In addition, the Senate leadership appears unwilling to compromise at all on the Keystone XL pipeline."
Among core transport provisions where the two sides remain divided are the streamlining of environmental reviews of projects to speed them along and on the use of funds for ancillary "enhancements" such as streetscapes, flower beds and bicycle lanes, according to House and Senate aides.
A senior Republican House aide said Senate Democrats have refused to make compromises on this issue, adding that a more streamlined review process would mean faster hiring of workers.
A Senate Republican aide said House negotiators still want to preclude the use of federal transportation funds for the bike lanes and other enhancements, allowed in the Senate bill.
The top Senate negotiator, California Democrat Barbara Boxer, said she still was hoping for a deal on core transportation issues but blamed House Speaker John Boehner for failing to rally his unruly Republican caucus in support of the Senate bill. She declined to discuss specific areas of disagreement.
"I don't say there's an impasse, I say there's a definite lack of a sense of urgency," Boxer said at a news conference framed by cement mixing trucks in front of the Capitol. "There's a definite lack of leadership in the House, unlike we had in the Senate from Republicans and Democrats and it's very disturbing and disappointing."
Asked why House and Senate negotiators had not yet dealt with Keystone - seen crucial for many House Republican votes - Boxer said: "We may have something with Keystone in it. But what we need to do first, before we take on Keystone, before we decide whether we should put it in, whether we shouldn't put it in, is take care of the transportation bill."