On February 12, the Senate passed a bill (S.1072) that will reauthorize highway and transit programs over the next six years. The $318 billion bill passed by a margin of 76-21. Earlier in the day, the Senate overwhelmingly approved a cloture motion, which limited remaining debate on the bill. Majority Leader Bill Frist had made it clear that he wanted to clear the surface transportation measure before the Senate left for weeklong recess.

Despite a stern warning from the White House that the $318 billion bill would warrant a veto, the Senate was defiant. Senate Minority Leader Tom Daschle (D-South Dakota) said that “despite a veto threat from the president, the Senate passed a good highway bill that will create one million jobs here in America at a time when we desperately need them.” Many Senate Republicans favored the bill because of the possible economic ramifications, despite the widespread concern that the bill would worsen the federal deficit. However, some Senate Republicans were concerned that the bill violated the principles outlined in the FY 2004 budget resolution. The Senate passed a budget resolution last year that would have allowed a ceiling of $255 billion for highway programs, $46 billion for transit programs, and $7 billion for safety programs. However, these numbers were reduced in conference with the House to $231 billion, $46 billion, and $4 billion, respectively. Republican Senator John McCain (R-Arizona) filed a budgetary point of order, maintaining that the Senate should have stayed within the parameters of the lower numbers. However, the Senate voted to waive the budgetary order by a vote of 72-24. Another Republican Senator, John Kyl (R-Arizona) introduced an amendment that would have lowered the total cost of the bill to $256 billion, which is what the President’s FY 2005 Budget had proposed. Senator Kyl’s amendment was defeated handily, 20-78.

The highway funding formula in the bill, co-written by EPW Committee Chairman James Inhofe (R-Oklahoma) and Ranking Member James Jeffords (I-VT) in committee did not change during floor debate. Texas Republican Kay Bailey Hutchison was very unhappy that Texas would have been adversely affected by the new funding formula. Under current law, each state is guaranteed a 90.5% return on gas tax receipts submitted to the highway trust fund. Many Senators had clamored for a more equitable distribution of highway funding in the reauthorization bill. The reauthorization bill would boost the minimum return on gas tax receipts to 95%. However, some states such as Florida, California, and Texas would not reach this threshold until 2009. Senator Hutchison introduced an amendment that would alter the formula, but it failed. The Texas Senator, along with Florida Senator Bob Graham (D-FL) ended up voting against the bill because of the perceived funding inequities. Hutchison commented, “for the first time, the Senate has said Texas, California, and Florida, all high growth states, will get back even less from Washington for their needs. Absent any new changes to move donor states closer to parity and bring Texas more gas dollars for critically-needed new highways and road repairs, I have no choice but to oppose this legislation.”

To finance the $318 billion reauthorization bill, the Senate approved the revenue title marked up by the Senate Finance Committee on February 2. The package contains $22.9 billion in revenue enhancements and other measures designed to replenish the general fund. The measure would increase federal revenues by $31.9 billion over 10 years. Most of the revenue raisers in the bill are additional curbs on corporate tax shelters and limits on tax-motivated expatriation. Other important provisions of the Finance-approved measure include: an extension of excise taxes and expenditure authority for the highway trust fund; a reform of the volumetric ethanol excise tax credit; an implementation of several fuel fraud prevention measures; and a simplification and a reform of several non-transportation related excise taxes, including those relating to sporting equipment and alcohol as well as transportation.

Much to the delight of Amtrak supporters, the Senate did not vote to strip a provision in the safety title that would reauthorize Amtrak at $12 billion over six years. The administration has repeatedly warned the Senate that such a provision could warrant a veto.

The Senate bill now heads to conference with the House. On February 11, the House passed a second short-term extension that will keep surface transportation funds flowing to the states until the end of June. The House Transportation and Infrastructure Committee and Ways and Means never came close to agreeing on a funding level for the reauthorization bill. The House T&I Committee leadership continues to push for a $375 billion bill, with a 5 cents gas tax increase. House Ways and Means Committee Chairman Bill Thomas (R-CA), along with other House leaders and the Bush Administration staunchly oppose the House T&I Committee reauthorization bill.

With House leaders and administration officials unwilling to compromise with the Transportation and Infrastructure Committee, Chairman Don Young (R-Alaska) appears ready to relent in his push for a $375 billion reauthorization bill. According to Young’s spokesman Steve Hansen, “He (Young) would prefer adequately funding the highway and transit system, but he also understands that we need to get a bill passed this year. So he is willing to compromise to an extent.” An aide to another member of the committee commented that Young would opt for a smaller bill, but that the House Ways and Means Committee would decide the exact funding level. Last week, Don Young met with House Speaker Dennis Hastert (R-Illinois), Majority Leader Tom Delay (R-Texas) and the discussion revolved around bringing the funding level of the House bill closer to that of the Senate bill.

After the Senate bill passed, a statement from the White House press office read, “The President's senior advisers will recommend a veto of any highway bill that includes excessive spending and violates these principles, including the bill passed by the Senate. The President's budget proposes a responsible $256 billion in highway and transit spending, which represents a 21 percent increase over the previous six-year period and a responsible approach to improve highway safety and curb congestion.”

For your perusal, we have the full bill as well as the full manager's amendment to the bill, both in rich text format.