Congressional committees are now grappling with the contents of a huge new six year transportation bill, intended to replace the "TEA-21" legislation that expired last fall.

However, even if the policy language for the bill is agreed to, many observers believe the problem of how to pay for a bigger transportation program will stall its passage this year. TEA-21’s extension for the bill lasts until Feb. 29, when another extension must be passed if a full bill, complete with hundreds of billions in spending, is not agreed upon.

Big questions remain over how the bill will be funded. The House version of the bill proposes a $375 billion funding level, presumably to be reaped by hiking the federal gas tax. The Senate calls for $311 billion, while the Bush administration called for a more modest $247 billion. For comparison, the 1998-2003 TEA-21 program was about $218 billion. According to many estimates, the Bush funding level would barely provide enough to fund current repair and maintenance needs, and will greatly limit funding for sorely-needed new projects.

The Senate is looking to raise $30 billion by clamping down on gas tax evasion and another $7 billion by eliminating certain gas tax credits. It is also considering transferring resources from the general fund. But it’s not clear where it will get the rest of the money it wants.

The biggest divide is between the House transportation committee on one side and the House leadership and White House on the other, over raising the U.S. gas tax. No one expects President Bush to hike the tax this year, or perhaps ever, but the House committee has not backed off its big spending plan.

Congress is considering a watered down version of an earlier plan to raise the percentage states are guaranteed to receive back from their federal gas tax contributions. Today, each state is guaranteed to get 90.5% of gas taxes back in the form of transportation spending. The new plan would raise the quota to 95% over several years. Increasing the minimum guarantee will hurt transit-rich states like New York that contribute less gas taxes than Texas and other sprawling sunbelt states. Transportation is one of only a few areas where New York State gets back more than it sends to the federal budget. 

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