Another Temporary Extension
  
As we enter the month of July, we hoped to be able to report that the   reauthorization bill has been signed into law - or at least that the House and   the Senate have reached agreement on a bill.
  
Alas, agreement has proved to be far more elusive than anyone had expected.   At the end of June, Congress was obliged to pass yet another temporary   extension- the eighth since TEA-21 expired in October 2003. The latest   extension will provide a relatively short breather - only through July 19.   This will allow conferees barely 8 to 10 working days after the Fourth of July   recess to resolve a large number of differences that still separate the two   sides. While congressional negotiators keep issuing reassuring statements that   they are coming "closer and closer" to an agreement, the fact remains that,   until recently, they were unable to reach definitive closure on several key   issues. These included the minimum rate of return guaranteed to the states on   their payments into the Highway Trust Fund, the percentage of funds to be   included in the formula used to calculate each state's rate of return, the   authority to earmark projects and the share of funds to be allocated to   transit.
  
Why has agreement been so hard to reach? The reasons are complex. Partly   they have to do with the different ways in which the two houses of Congress   operate. The House, with its more solid Republican majority, has been more   responsive to the White House, and its leadership was persuaded early on to   adopt the Administration's funding target of $284 billion over six years.   While House Transportation and Infrastructure Committee chairman Don Young   (R-Alaska) would have preferred a more generous limit (having initially   proposed a $375 billion program), House leadership, unwilling to send the   White House a bill that would likely be vetoed, was able to keep the high   spenders in line.
  
The Senate, with a slimmer margin of Republican votes, and traditionally   more independent-minded, was less willing to toe the White House line. It   initially voted for a program level of $295 billion and only reluctantly,   under strong pressure from Senate Majority Leader Bill Frist (R-TN), agreed to   reduce its demand to $290 billion - still $6 billion over the Administration's   limit.
  
Another point of contention between the House and the Senate has been the   always highly charged issue of the guaranteed rate of return and the related   question of the bill's "scope," i.e., the portion of the total highway funds   in the bill to be included in the calculation of each state's return. The   House, with its parochial focus on projects benefiting the members' own   districts, had initially resisted including the $11 billion worth of earmarks   ("high priority projects" and "projects of regional or national   significance") in this calculation. The Senators, under greater pressure from   the "donor" states to increase the rate of return, argued for the earmarks'   inclusion.
  
As we go to press, most of these issues seem to have been resolved. The   conferees have reportedly reached a compromise on the total cost of the bill,   at $286.5 billion. This would represent a retreat by the Senate from its   earlier offer of $290 billion, but would still be $2.5 billion over the $284   billion mark in the House bill. Negotiators reportedly also have reached   agreement on a "scope" of 90.2 percent. The same as in TEA-21. The share of   funds to be allocated to transit has been reportedly settled at 18.6 percent   of the total. The Senators have been given a stronger voice in selecting "high   priority projects" - 40 percent of the total earmarks versus 20 percent in   previous reauthorizations. Finally, the House has reportedly receded from its   insistence on a "re-opener clause" - another provision threatened with a White   House veto. The re-opener clause would have stopped the flow of federal   highway funds beyond August 2006 unless a subsequent law was enacted   guaranteeing a 95 percent rate of return.
  
These mutual concessions, if indeed they are firm, would represent major   progress in the negotiations. It must be emphasized, however, that this   information comes from unnamed congressional sources. Since no official   announcement has been made and the negotiations are still in progress, the   veracity of the information cannot be confirmed.
  
One remaining unanswered question is the position of the White House. Will   the Administration stick to its oft-repeated threat of vetoing any bill that   exceeds the House adopted ceiling of $284 billion? Or will it accept the $2.5   billion increase as the price of getting a major piece of legislation   enacted-even though retreating from its veto threat may incur the wrath of its   conservative base?
  
Because the Supreme Court nomination to fill Justice Sandra Day   O'Connor's seat will likely dominate the Senate agenda after Labor Day, it   would seem that it is in all the parties' interest to reach an accommodation   and put the reauthorization battle behind them. If the parties remain   deadlocked and the bill is not enacted before the August congressional recess,   the very concept of a multi-year authorization may be in jeopardy.  
  
C. Kenneth Orski
korski@verizon.net
tel:   301.299.1996
fax: 301.299.4425
http://www.innobriefs.com

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