(Recasts with Senate passage, new lawmaker quote)
By David Lawder
WASHINGTON, July 31 The U.S. Congress on
Thursday approved a $10.9 billion funding extension for
transportation construction projects through May 2015, averting
a cutback in federal payments to states that was due to start on
Senate approval by a vote of 81-13 sent the measure to
President Barack Obama to be signed into law after it bounced
back and forth between the Senate and House of Representatives
this week, raising uncertainty over the dwindling Highway Trust
The Senate on Tuesday had passed a smaller $8.1 billion plan
lasting only through the end of 2014 that aimed to force action
on a long-term highway and mass transit funding plan during the
post-election, "lame duck" session of Congress.
But the House earlier on Thursday rejected the Senate plan
and sent back its longer extension, which Democrats complained
would put off consideration of long-term funding until next
year, when a newly elected Congress takes office.
In the end, senators from both parties were unwilling to
risk blame for allowing the Highway Trust Fund to run dry as
they start a five-week summer recess on Friday.
"We really can't walk away from the Highway Trust Fund, we
can't let it stagger and fall. Millions of jobs and thousands of
businesses depend on it," said Senator Barbara Boxer, a Democrat
who was the chief proponent of the shorter extension.
The Department of Transportation had said that on Friday it
would start reducing payments to states by as much as 30 percent
from the fund, which is financed through fuel taxes.
Lawmakers and transportation officials had warned that such
cutbacks 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.
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 funding plan in the approved legislation 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
It also extends certain customs fees for another year to
2024, and transfers $1 billion from a fund used to pay for the
cleanup of leaking underground fuel storage tanks.
(Reporting by David Lawder; Editing by Cynthia Osterman and Ken