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Bush backs highway fund rescue

He had said he would veto, but the gas-tax revenue is nearly gone.

September 06, 2008|Richard Simon | Times Staff Writer

WASHINGTON — With the nation's highway fund running out of money faster than expected, the Bush administration on Friday pulled a political U-turn and urged Congress to approve an $8-billion rescue plan that the White House had previously opposed.

The fund has been drained as high gasoline prices have led motorists to cut back on their driving and buy more fuel-efficient cars, reducing the gasoline tax revenue that supports highways.

To address the shortfall, the House this summer overwhelmingly voted to transfer money from the government's general fund to bail out the highway account. The White House threatened to veto that measure as a "dangerous precedent" that would shift the costs for road projects from highway users to taxpayers at large.

But in a turnabout, Transportation Secretary Mary E. Peters called on lawmakers Friday to complete legislation to transfer the money and prevent the federal highway trust fund from going into the red, jeopardizing transportation projects nationwide.

"At current spending rates, we will start the new fiscal year on Oct. 1 with a zero balance in the trust fund, and will continue to spend more than we take in," Peters said.

The problem, she said, has become so urgent that lawmakers need to send a bill to the president by the end of next week. The highway fund gets most of its money from the 18.4-cent-per-gallon federal gasoline tax. But the tax is tied to every gallon sold, not every dollar spent, so revenue goes up only if consumption increases.

In California, motorists used 4.8% less gasoline in May than a year earlier, according to the state Board of Equalization.

This month, federal officials expect to take in about $2.7 billion, far short of the $4.4 billion states are expected to seek in reimbursement.

The bailout has bipartisan support in the Senate but could be complicated by a move to combine it with other measures, such as energy legislation or a second economic stimulus package that the Democratic majority is considering.

On Friday, Peters explained the shift on highway funding by saying that the administration essentially had no choice but to support the transfer.

She complained that "taking money from other pressing national priorities to plug a hole caused by poor fiscal discipline sets a dangerous and disturbing precedent."

She cited 6,371 earmarks costing an estimated $24 billion that members of Congress had included in the last big highway bill -- an issue that Sen. John McCain (R-Ariz.) has highlighted in his presidential campaign.

"But the state of the highway trust fund has now moved from a theoretical to a practical problem, and states should not have to suffer the consequences," she said. "Our state partners who are working so hard to keep our bridges and roads in good repair deserve better than IOUs from Congress."

"We anticipated solvency problems with the trust fund, but those problems have materialized much sooner than expected," said Rep. John L. Mica of Florida, the top Republican on the House Transportation Committee.

The administration had earlier proposed borrowing money from mass transit to fund highways, but that idea ran into congressional opposition because high gas prices are pushing commuters to bus and rail lines. A McCain proposal for a "gas-tax holiday" also ran into opposition from members of both parties who said it would put even more strain on the highway fund.

Peters asked that Congress send the president a bill free of any other items -- including earmarks -- that could draw a White House veto.

Sen. Patty Murray (D-Wash.), chairwoman of the Senate transportation appropriations subcommittee, said in a statement, "If we don't pass a solution fast, we'll be forced to cancel critical highway construction and repair projects."

"Failure to resolve this issue will have a significant impact on California and the nation as a whole," Caltrans Directors Will Kempton said in a statement, "and unless resolved, could result in delaying, reducing, or canceling transportation projects."

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richard.simon@latimes.com

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