Key compromise in highway bill addresses equity in state funding

| 3/11/2005

Even though President Bush is threatening a veto of the highway bill, the U.S. House overwhelming supported the $284 billion measure this week, partly because of a provision designed to keep some states from being shortchanged.

The House passed the highway bill 417-9.

Concerns about what some lawmakers said were inequities in the funding formula were among the top reasons the massive bill stalled during last year’s legislative session. The concerns center on what are referred to as donor and donee states.

Under previous highway funding legislation, some states actually sent more money to the federal government for gasoline taxes than they receive back. Others received more than they sent to Washington. The manager’s amendment to the six-year highway-funding bill addressed that concern.

The manager’s amendment, sponsored by Rep. Don Young, R-AK, who is chairman of the House Transportation Committee, included language that helped win over the lawmakers from the donor states by tagging about $11 billion in “high-priority projects” earmarked by individual lawmakers in the total funds allocated by formula to the states. Including the earmarks means formula funds would be drawn from 92.6 percent of the available highway funding.

Last year’s bill left the earmarks out of the formula allocation, which made it virtually impossible to meet the donor states’ demands for a 95 percent return on their contributions to the trust fund without penalizing states that get more money back than they put in.

The new language means “Vermont’s earmarks won’t come out of Arizona’s highway money,” Rep. Jeff Flake, R-AZ, told CQ.

With those assurances, Flake withdrew an amendment that would have deducted money received for earmarked projects from a state’s formula allocation.

“I’ve told the leadership we are going to get where you want to go,” Young told Flake on the House floor, encouraging him to withdraw his amendment. “I ’d like to make a suggestion,” Young added, when Flake seemed to hesitate. “Discretion is the better part of valor.”

The rate of return, set at 90.5 cents on the dollar in current law, is unchanged in the House bill, but is expected to be raised in conference.

The bill has been sent to the Senate, where the Environment and Public Works Committee is expected to begin markup of the highway-related portions in late March.

Even with the provision to appease the lawmakers from the donor states, President Bush continues to threaten a veto of the entire bill. Part of that threat relates to the total amount of money involved – Bush has said repeatedly he will not approve anything more than $284 billion.

But now, with the addition of the provision to delay the fiscal 2006 funding unless Congress enacts legislation to guarantee all states receive at least 95 cents for every dollar they pay into the Highway Trust Fund, the White House has renewed the veto threat. That’s because the 95-cent guarantee would mean the total cost of the bill would be more than the $284 billion level.

The administration also announced it would oppose the highway bill if it set the contract authority higher than the annual ceiling on the money that transportation agencies can commit the government to spend, which is called the obligation limit.

Contract authority is commonly set higher than the obligation limit in multi-year legislation to cover expenditures on construction programs that won’t be finished until after the legislation expires.

Rep. James L. Oberstar, D-MN, who is the ranking Democrat on the Transportation Committee, said on the House floor that the White House is being unrealistic with that demand.

“That number is picked out of thin air,” said Oberstar. “There is no justification for this number.”