American Association of State Highway and Transportation Officials

Senate Approval Sends $7 Billion Highway Trust Fund Transfer to President

AASHTO Journal News Alert
July 30, 2009

The Senate voted 79-17 this evening to pass a bill that would deposit $7 billion into the Highway Trust Fund from the federal government's General Fund to ensure state transportation departments will continue receiving full reimbursements for federal-aid highway projects through September, the end of the current federal fiscal year.

The Highway Trust Fund is facing a cash shortfall as soon as next month due to tax revenue coming in less than had been 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 by a vote of 363-68. That means the bill, HR 3357, now heads to President Barack Obama's desk. Though the administration had requested $20 billion for the Highway Trust Fund in combination with an 18-month temporary extension of authorization for federal surface transportation programs, the president is expected to sign the bill.

As approved by the Senate today, 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, the Obama administration and the Senate have favored a temporary extension of 18 months. Today's Senate vote means Congress will have to face the authorization question in September.

Supporters of the measure passed today argued the Highway Trust Fund needs additional funding 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 bailing out the Highway Trust Fund. Congress transferred to the trust fund $8 billion last September when a similar funding crisis developed.

The bill senators approved today 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 Centers on Effectiveness of Economic Recovery Act

Debate on the Senate floor stretched for several hours today, with much of the time consumed as Republicans urged 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; it was rejected by a vote of 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 by a vote of 57-40.

Rescissions Repeal Defeated for Now

A fourth amendment sponsored by Sen. Kit Bond, R-MO, would have repealed an $8.7 billion rescission of federal highway program contract authority scheduled to take effect Sept. 30. The American Association of State Highway and Transportation Officials sent a letter to members of Congress last week noting that failure to repeal the provision would lead to devastating consequences in the states as they reduce highway contracts to comply with the spending cutback. The amendment failed when by a vote of 63-34, the Senate sustained a budget point of order raised by Senate Majority Whip Richard Durbin, D-IL, contending Bond's amendment was not paid for.

Bond said states will "be dealt a heavy blow" if the highway rescission is not repealed. Bond said all 50 states face "drastic cuts" to their highway programs in late September as a result of the "dangerous" rescission, which could lead to 250,000 job losses in the construction industry. He noted the Missouri Department of Transportation stands to lose $200 million in project funding.

"If we fail to repeal the rescission, we will be taking the shovels out of the hands of workers ready to go to work on 'shovel-ready' projects," Bond said. "That's not something I want to go home and explain to the people of my state."

Senate Environment and Public Works Committee Chairwoman Barbara Boxer, D-CA, told Bond she supports his amendment but favors passing it in September as part of legislation to extend authorization for federal surface transportation programs. Boxer said she wanted to fend off any amendments to the House's Highway Trust Fund bill so the Senate could pass it and send it straight to the president. The House is scheduled to begin its summer recess Friday, leaving the chamber little time to act if the Senate were to return an amended bill requiring another vote in the House.

Amending the House bill "would be playing Russian roulette with the Highway Trust Fund," Boxer said.

"We'll take care of this problem, these rescissions, but we don't have to take care of it now. What we must take care of today is the Highway Trust Fund because it is running out of money," she said. Bond "is entirely correct. We must deal with this rescission. We have to repeal it. We are going to repeal it. I will work with him to do it."

Today's Senate action came only a day after the House approved the legislation sponsored by Ways and Means Committee Chairman Charles Rangel, D-NY, and Appropriations Committee Chairman David Obey, D-WI. Rangel and Obey had originally proposed a $5 billion infusion for the Highway Trust Fund but upped the number to $7 billion prior to House approval.

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