Congress returns today and for those in the transportation community, the uncertainty over the fate of TEA-21 reauthorization continues. We have been reporting to our clients and friends for many weeks that prospects for significant action on the legislation this year are slim. We stick by that analysis of the situation. However, rhetorical flourishes from leaders of key committees on Capitol Hill will continue to suggest that action IS forthcoming and soon. This report will look ahead over the next two-to-three months in an effort to give our readers an idea of what to expect.

On the House side, there is a chance the bipartisan leadership of the Committee on Transportation & Infrastructure will pull together in September a six-year reauthorization plan – at least in outline form – and give House Members the opportunity to review it. In particular, the committee appears anxious to show Members how the $ 375 billion package would affect funding for highways and transit in their districts and states. Staff worked hard to put together such a plan before recess but was unable to complete work. Work has continued over the recess and some significant issues are apparently being resolved. However, many remain unresolved. Significant work remains at the staff and Member level before a bipartisan product is ready for release.

If the committee leadership does release a draft bill, it will be very difficult for meaningful action to take place on it this fall. House leadership is nowhere near an agreement to allow a bill to come to the floor which would require a user fee increase. The House Committee on Ways and Means is occupied with Medicare prescription drugs and welfare reform and is unlikely to turn any attention to a controversial highway/transit revenue title.

On the Senate side, Committee on Environment and Public Works Chairman James Inhofe (R-Oklahoma) continues to talk about marking-up a six-year bill in September. We have been hard-pressed to find any staff of committee members who believe this can happen. In large part, the reason is that there is not enough money on the table to allow Chairman Inhofe to achieve is goal of ensuring “donor states” receive a 95% return on the user fees they send to Washington. The Committee on Finance has been reviewing for months a proposal from Chairman Charles Grassley (R-Iowa) and Ranking Member Max Baucus (D-Montana) to increase resources for transportation through bonding. The current version of the proposal would call for the Treasury Department to sell General Obligation bonds and dedicate the proceeds to transportation. This would circumvent some of the budgetary controls under which Congress operates. The Senate Banking Committee, with jurisdiction over the transit program, has objected strongly to the bonding idea. Leadership has said unless agreement is reached by the relevant committees on how to move forward, the bill will not reach the Senate floor. There is no sign of agreement yet.

So, if a six-year reauthorization is not in the cards, what can we expect? At present, there appears to be consensus building on the House side for a six-month extension to TEA-21. It is thought this short time period will keep the pressure on to get a bill done. On the Senate side, three options are being discussed – six months, one year and two years. The two year option is being discussed mostly by Senate Environment and Public Works Committee staff. It is viewed as a way spare Congress and the President from having to discuss a possible user fee increase during the election season. With all of these options on the table, it may well come down to whether or not the Administration weighs-in on their preference. At this juncture, we say a one-year extension as being likely as a compromise.

In summary then, there is some hope that we will see this Fall a further fleshing-out of “TEA 3” plans by the key committees in the House and Senate. There is almost no hope a six-year bill will be completed or even the subject of significant action.

As always, we will be keeping our fingers on the pulse on Capitol Hill and will keep you informed of the ebb and flow of discussions.