Modifications Sought by Oberstar Added to Tax Extenders Bill (AASHTO)
The House of Representatives could vote as early as Tuesday on a package of tax extensions that will include language altering how nearly $1 billion in federal highway funds is distributed among states.
House Transportation & Infrastructure Committee James Oberstar, D-Minnesota, told the media this week that the tax package will contain two highway formula redistributions he has sought. These changes would redistribute $932 million in federal highway funds among states based upon their share of overall federal highway spending rather than earmarks received under two programs as part of the 2005 federal surface transportation authorization law known as “SAFETEA-LU.”
A bill summary released by the Senate Finance Committee notes the highway funding changes are included in the legislation. The bill, HR 4213, would make two changes to the surface transportation extension title of the Hiring Incentives to Restore Employment Act, according to the bill summary:
1. Distribute the Projects of National & Regional Significance and National Corridor Infrastructure Improvement program funding among all states based on each state’s share of Fiscal Year 2009 highway apportioned funds rather than to only 29 states and the District of Columbia that had PNRS and National Corridor projects under SAFETEA-LU.
2. Distribute “additional” highway formula funds (which the bill makes available in lieu of additional congressionally designated projects) among all of the highway formula programs rather than among just six formula programs.
These two changes were agreed to by Oberstar; House Speaker Nancy Pelosi, D-California; and Senate Majority Leader Harry Reid, D-Nevada, back in March. (see March 26 AASHTO Journal story) Although the House has voted twice to approve the highway formula modifications, the Senate has so far failed to go along.
Senate Majority Whip Richard Durbin, D-Illinois, is among those senators who have objected to changing the formulas. Illinois is among four states receiving nearly 60% of the funding under these two programs. The other major beneficiaries of the current formulas are California, Louisiana, and Washington state.
Durbin contends the Oberstar/Pelosi/Reid changes would cost the Prairie State $119 million in highway funds.
“Your proposed changes would drastically reduce funding Illinois is expecting under the current formula and it plans to use on important projects across my state,” Durbin wrote in an April 7 letter to Oberstar. “This would be an unfair rescission of funding and inconsistent with the Obama administration and Congress’
Build America Bonds Extension Included in Tax Bill
HR 4213 also includes an expansion of Build America Bonds for two years (through 2012). For direct-pay Build America Bonds issued in 2011, the amount of the direct payment would be reduced from 35% to 32% of the coupon interest, according to the Finance Committee’s bill summary. For such bonds issued in 2012, the amount of the direct payment would be reduced to 30% of the coupon interest. The bill would also allow issuers to refinance Build America Bonds to save money should interest rates fall in the future.
This bonds extension is estimated to cost the federal government $4 billion in interest subsidies over 10 years. For more information about Build America Bonds, see April 9 AASHTO Journal story.
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