Paying For Potholes? States Fight for Funds

The fierce tug of war between the states over who gets how much federal money for highways, bridges, and transit is about to reach a turning point.

The Senate yesterday was set to begin consideration of a bill to renew the Intermodal Surface Transportation Efficiency Act (ISTEA). House action will begin in the coming weeks.

The nation's governors and mayors, who need funding renewed before the summer construction season begins, are pushing for fast action. When Congress could not pass a new bill after the old one expired last fall, it approved an extension through May 1. After that, the money to fill potholes and pave highways dries up unless Congress acts.

"From the standpoint of spending, ISTEA is the big issue," Gov. George Pataki (R) of New York told the Associated Press this week. "It means billions a year for the state of New York ... we're still concerned where it is ultimately going to come out."

The ISTEA bill faces several hurdles: States that pay more in federal gasoline taxes than they receive from Washington in highway funds - mostly in the South and Midwest - want the formula adjusted so they get a higher proportion.

These so-called donor states aim for 95 percent back; South Carolina, which has the largest disparity, currently receives only 71 percent of what it sends to Washington. Northeastern states, however, which generally get more from the federal government than they pay in road taxes, say they would lose from such a shift. They argue they need the money to repair their aging road system, and for mass transit.

How much to spend

Congress must also agree on how much to spend over the six years the new bill will be in effect. The two issues are linked: Transportation boosters such as Rep. Bud Shuster (R) of Pennsylvania, chairman of the House Transportation and Infrastructure Committee, want to bridge the gap between the states by giving everyone more money while making the formula more equitable. But their proposals to spend more of the highway trust fund would violate the spending caps in last year's balanced-budget agreement.

So both House and Senate are struggling with the question of how much of an increase they can give to highways. Sens. Phil Gramm (R) of Texas and Robert Byrd (D) of West Virginia have 54 co-sponsors for an amendment to the ISTEA bill proposing that all future gas-tax revenues over the next five years be spent on highways.

"We are committed to holding the [spending] caps," says House majority leader Dick Armey (R) of Texas. "We understand the great need across this country for infrastructure ... and we are going to have a tax cut this year.... We also have a large number of our members that think ... we ought to make some effective buy-down of the debt. We have got to find what is the best balance to reconcile in there."

Senate takes lead

The Senate is set to go first. Its ISTEA bill, approved unanimously by the Environment and Public Works Committee, would guarantee a state 90 percent of the federal gas-tax money its drivers pay at the pump. A bipartisan task force is haggling over a proposed $18 billion to $19 billion increase above the $123 billion that the Senate ISTEA bill would spend over five years. The combined total would almost equal the $143 billion in projected gas-tax revenues during that time. (The bill would also spend $35.7 billion over six years on transit systems.)

In the House, chairman Shuster says he'll keep pushing to spend more of what taxpayers pay into the highway trust fund. House leaders must take Shuster's wishes into account: Last summer he lost an effort to exceed the budget agreement by only two votes.

Any increases, however, will still require some cuts in other programs, leading to floor fights on where to trim.

While waiting for an agreement on spending levels to be hammered out, senators will focus on side issues and some of the 200 amendments in the hopper. The bill contains clean-air provisions that some say take money away from needed infrastructure. Sen. Mitch McConnell (R) of Kentucky is pushing a proposal to ban racial and gender preferences in federal highway and transit programs. The Senate Commerce Committee has a series of safety amendments it wants to add to the bill.

Despite the complications, members are aware of the deadline hanging over their heads. "Here you have the majority leader calling up a bill that we haven't even agreed on," says Sen. John Chafee (R) of Rhode Island. "It shows you he's anxious to get started."