The Highway Trust Fund is facing a cash shortfall as soon as next month due to tax revenue coming in below levels projected in the 2005 transportation law known as "SAFETEA-LU" as a result of Americans driving less during the economic recession and thus paying less in gasoline, diesel, and heavy-truck taxes.

Senators rejected four amendments proposed by Republicans, instead approving the same bill cleared Wednesday by the House of Representatives on a vote of 363-68. The bill, HR 3357, heads to President Barack Obama's desk. The president is expected to sign the bill despite the administration's prior request to obtain $20 billion for the Highway Trust Fund in combination with an 18-month temporary extension of authorization for federal surface transportation programs.

House Transportation and Infrastructure Committee Chairman James Oberstar, D-MN, met with U.S. Transportation Department officials Monday to gain their support for the House bill. Oberstar originally proposed a $3 billion infusion for the Highway Trust Fund but the number was later upped to $5 billion and then to $7 billion to ensure the fund remains solvent through the end of this fiscal year.

"We're looking forward to President Obama adding his signature to this critical piece of legislation," said John Horsley, executive director of the American Association of State Highway and Transportation Officials. "It gives our member states some breathing room as they continue to deliver jobs to revive our economy."

As approved by the House and Senate, the legislation contains no extension of authority for federal surface transportation programs, which is scheduled to lapse Sept. 30 at the end of this fiscal year. While House leaders have been pushing a full six-year authorization measure worth $500 billion sponsored by Oberstar, the Obama administration and the Senate have favored a temporary extension of current funding levels for 18 months. Thursday's Senate vote means Congress will have to face the authorization question in September.

"While we are pleased that Congress acted before its August recess on a short-term fix, we must get serious about finding a long-term funding solution or the nation's highway and transit programs will continue to face crises," Horsley said.

Oberstar and Rep. Peter DeFazio, D-OR and chairman of the House Highways and Transit Subcommittee, issued a statement praising congressional action on the Highway Trust Fund crisis and urging support for enacting a six-year authorization bill soon.

"Though these funds were necessary to get us to the end of September, we must next pass our comprehensive surface transportation authorization bill this year so that we can permanently address the solvency of the Highway Trust Fund, build a transportation system for the 21st century, and provide an additional 1 million jobs per year," DeFazio said.

FHWA Had Warned States That Highway Payments Would Be Rationed

Prior to congressional action, Federal Highway Administrator Victor Mendez held a conference call Tuesday with state transportation officials to brief them on what to expect if the Highway Trust Fund were to run short on cash next month. Mendez warned that states would be paid less frequently for highway and bridge repairs. Daily payments to states would be changed to weekly or semimonthly, Mendez said, depending on the availability of funds. Assuming Obama signs the $7 billion transfer bill, such measures will not be necessary through the end of this fiscal year. The trust fund also faces a projected deficit for Fiscal Year 2010, however.

During House and Senate debate Wednesday and Thursday, supporters of the $7 billion transfer to shore up the Highway Trust Fund argued the fund needs additional money immediately to prevent a payment slowdown to states, which could cause states to then curtail their road construction activity. Opponents contended the transfer is not paid for by any new revenue source and that Congress needs to stop using general tax revenue to support the Highway Trust Fund. Congress transferred to the trust fund $8 billion of general revenue last September when a similar funding crisis developed.

The bill Congress approved this week also includes two provisions unrelated to transportation. It would add money to the Unemployment Trust Fund and the Federal Housing Administration capital fund as well as increase the amount that Ginnie Mae may guarantee on mortgage-backed securities.

Senate Debate Centered on Effectiveness of Economic Recovery Act

Debate on the Senate floor stretched for several hours Thursday, with much of the time consumed by Republicans urging approval for three amendments that would have paid for the bill by taking unobligated money from the $787 billion American Recovery and Reinvestment Act. Republicans, led by amendment sponsors Sen. David Vitter of Louisiana and Sen. John Ensign of Nevada, decried the slow spending pace of the recovery act and argued its unused funds would be better spent on infrastructure such as highways and bridges as well as to help states who have run short on funds to pay unemployment benefits.

Vitter's amendment proposed to take $7 billion in unspent recovery funds and place them in the Highway Trust Fund to cover the infusion, rather than taking the money from the General Fund.

Taking money from the General Fund and moving it to the Highway Trust Fund "is racking up more debt, pure and simple," Vitter said. He complained that only $27.5 billion, 3.5 percent of the recovery act, was allocated for highway and bridge improvements.

"Americans favor infrastructure spending as the centerpiece of the stimulus," he said. "Let's do real, concrete, shovel-ready projects - roads, highways, and bridges are the best example of a true, concrete, shovel-ready infrastructure project. I strongly support that element of spending as a way ... to help revive our economy."

Democrats countered that it was inappropriate to take the $7 billion for the Highway Trust Fund from unspent recovery act funds given that the act has only been in place for five months and is intended to last for two years.

"This is not the time to throw a dagger into the heart of job creation, which is what this amendment would do," said Senate Environment and Public Works Committee Chairwoman Barbara Boxer, D-CA. "Let's wait until the end of the stimulus program. If there is funding at that time that has not been obligated, that has been left on the table, then we can take those funds and add those funds to the Highway Trust Fund."

Vitter's amendment was rejected 55-42. Ensign's amendment dealt with paying for unemployment funds from unspent recovery dollars; it went down by a vote of 56-41. Sen. Jeff Sessions, R-AL, offered a third amendment that would have paid for the bill's housing programs by taking money from unspent recovery act funds. It failed 57-40.

A fourth amendment, which also failed, sought to repeal an $8.7 billion highway contract authority rescission scheduled for Sept. 30.

House Acted Rapidly to Pass Trust Fund Transfer

Thursday's Senate action came only a day after the House of Representatives approved the legislation sponsored by House Ways and Means Committee Chairman Charles Rangel, D-NY, and House Appropriations Committee Chairman David Obey, D-WI.

Rangel and Obey introduced the measure Tuesday. It was expedited to the House floor the next day using a procedure known as suspension of the rules, whereby noncontroversial measures can be debated without amendment and passed with a two-thirds vote.

During the 40 minutes of House floor debate Wednesday afternoon, Oberstar said he regrets Congress must take action to shore up the Highway Trust Fund. But the drop in vehicle miles traveled experienced over the past year and a half has left the trust fund short of its revenue projections, necessitating an infusion, he said.

Oberstar's six-year, $500 billion authorization measure has been approved by subcommittee but has not been brought up before the full Transportation and Infrastructure Committee yet because there is no agreement with the House Ways and Means Committee on how to raise the extra revenue needed to pay for it. Oberstar vowed he will bring the bill to the House floor in September.

"We are not standing for the wish of the other body or the administration for an extension of time," Oberstar said. "We are not going to let that happen."

Rep. Richard Neal, D-MA and chairman of the House Ways and Means Committee's Subcommittee on Select Revenue Measures, said Congress needs to find a way to pay for highway repairs so the trust fund doesn't need future bailouts. He reiterated his support for coming up with the extra revenue necessary to fund Oberstar's $500 billion authorization bill.

"Whatever politically feasible way we can find, we must find a way forward," Neal said. "Kicking the can down the road on infrastructure needs will not work. Our highways, airports, bridges, and railroads all are in need of an infusion of public support. We all ought to be able to agree on that basic responsibility."

Rep. Earl Blumenauer, D-OR and a member of the Ways and Means Committee, pointed out that the federal gasoline tax of 18.4 cents per gallon hasn't been increased since 1993. Had Congress increased the gas tax to keep up with inflation over the years, a General Fund transfer to support highway programs wouldn't be needed, he pointed out.

"There aren't the resources available to meet the transportation needs we are seeing in every community across the country," Blumenauer said. "What we are going to have to do sometime this decade is increase the gas tax for inflation. ... This is one area where I hope we can get past the partisan bickering."