We have learned that the House Transportation and Infrastructure Committee plans to introduce a draft of their six year highway and transit reauthorization bill on November 19th. The draft bill will include placeholder amendments, allowing members to add high priority projects and other funding related measures at a later date.

The bill is expected to contain $375 billion in funding for surface transportation programs over the next six years. In May, the Bush Administration introduced SAFETEA, which only proposed $247 billion in funding over the same period. The Senate is likely to approve $311 billion in funding for highway and transit programs over the next six years.

The House bill will provide highway programs with roughly $300 billion over six years, while transit programs receive about $75 billion. Committee Chairman Don Young (R-Alaska) and ranking member James Oberstar (D-Minnesota) are counting on revenue enhancements to finance the exponential increase in highway and transit funding over the next six years. Both Young and Oberstar, along with most committee members support raising and indexing the federal gas tax. However, the House Ways and Means Committee, which will be charged with writing the tax provisions of the reauthorization bill opposes raising or indexing the gas tax. Ways and Means Chairman Bill Thomas (R-California) has yet to relent in his fierce opposition to raising the gas tax to generate additional revenue for the highway trust fund. Also, the White House and House GOP leadership have expressed their opposition to hiking the gas tax, much to the chagrin of Chairman Young. Young will need a revenue enhancement to finance the level of funding his bill is proposing. If Thomas does not capitulate and Young does not back away from his proposed $375 billion funding level, the bill may stall on the House floor.

On the Senate side, the Senate Banking, Housing and Urban Affairs was expected to move the transit portion of the reauthorization bill soon after the Senate EPW Committee completed work on the highway bill. However, in a press release sent out on Wednesday, Committee Chairman Richard Shelby (R-Alabama) and ranking member Paul Sarbanes (D-Maryland) said their committee would not markup the transit portion of reauthorization until “an appropriate source of resources is identified to pay” for it. Committee aides have recently commented that a bill is ready to go, but first the Senate Finance Committee must approve a funding package totaling $56.5 billion without authorizing the use of bonds, which the administration vehemently opposes. The Finance Committee will have to establish a funding mechanism that results in additional revenue for the highway trust fund. The committee will not approve a funding proposal that raises or indexes the gas tax, which limits their options. Staff members on the Finance Committee acknowledge the difficulty that lies ahead and say they are not close to producing a financing mechanism.

The conference report on the Transportation-Treasury Appropriations bill has hit a snag. Although conferees met on November 12 and completed their work just before midnight, the administration has come to Capitol Hill with an objection to a key provision in the bill. The provision deals with potential outsourcing of government work. The administration had supported a provision in the House bill calling for outsourcing opportunities to made available. The Senate bill contained a much weaker provision. The compromise worked out in conference is apparently judged by the administration to be insufficient. As a result, the conference report is being held pending possible additional discussions. This delay will prevent final project earmark numbers from coming out today (Friday).

We have been advised that during the staff-level review of the details of the conference report (the "read-out"), some project numbers have been changed. Therefore, any numbers which may have leaked out in recent days should be viewed as subject to change.

We will supply reliable information to you as soon as we have them.

Late in the evening of November 12, Senate-House conferees reached an agreement on the FY 2004 Transportation-Treasury Appropriations bill. The final work on project earmarks is not completed as of this writing (4:30 pm on the 13). We will have that information as soon as it is available.

On other key matters,

• The conference dropped a provision in both bills easing travel restrictions to Cuba after the President threatened a veto if the provision remained if the conference report.
• The conference agreed to partially block an administration plan to privatize hundreds of thousands of government jobs. The White House had threatened a veto if their plan was excluded from the bill. It is unknown if they will find the final product to be sufficient to avoid a veto.
• The conferees agreed to give Amtrak $1.23 billion for FY 2004, which was fall well short of what Amtrak President and CEO David Gunn says Amtrak needs in FY 2004 to get back to a state of good repair . In recent weeks Gunn has indicated however, that a figure like this would be adequate to avoid a shutdown during fiscal 2004.
• Highway programs will be funded at $33.8 billion, which is the amount contained in the Senate bill and $400 million more than the House approved.
• Transit programs will receive $7.3 billion, which is also similar to the Senate figure.

Other details of the final product are still being worked-out. The House and Senate staffs are anticipating a "read-out" of the bills provisions (a session where they go over every item in detail) late on November 13.

We will have a more detailed report on the bill's provisions as soon at the information is available.

We've managed to throw together a list of all the amendments during the TEA-21 reauthorization markup in the Senate Environmental and Public Works Committee today. Head over to the analysis side of the site to check it out.

On Wednesday, after a relatively short three hour debate, the Senate Environment and Public Works Committee approved the highway portion of the Senate's six-year surface transportation bill (S. 1072) by a vote of 17 to 2. The most contentious issues surrounding the bill involve environmental questions and the non-inclusion of a funding formula to guarantee all states a minimum amount of funding each year. These topics will be mostly dealt with on the floor, though some environmental amendments were passed by the committee. Please check back with us for a list of amendments that were approved.

Funding levels in the bill total $221.5 billion, but about $40 billion in additional highway funding to states is expected to be added during floor debate. Chairman Inhofe (R-Oklahoma) maintains that he has a commitment from Senate Majority Leader Bill Frist (R-Tennessee) to bring the measure to the floor as one of the first items of business when the second session begins in January.

The Senate Banking Committee is now expected to move the transit portion of TEA-21 reauthorization, though, the committee has yet to release a draft bill.

On the House side, the House Transportation and Infrastructure Committee is due to release a draft of the committee's bi-partisan $375 billion reauthorization package in the coming weeks. The House committee will likely markup their bill in January when Congress returns from adjournment.

On Wednesday afternoon, Senate and House Conferees will meet in the hopes of adoting a conference report on the FY 2004 Transportation-Treasury spending bill.

There continues to be a few contentious issues standing in the way of conferees expeditiously approving a report. Funding for Amtrak and plans by the Bush Administration to privatize some government jobs have caused great disagreement among lawmakers. In the bill that passed the House, Amtrak was funded at $900 million, which is what the Bush Administration had orginally requested. The Senate approved $1.346 billion in funding for the railroad. Amtrak President and CEO David Gunn continues to maintain that the railroad needs $1.8 billion in FY 2004. While Amtrak enjoys great bipartisan support in the Senate, many Republican House members not located in the Northeast have been traditionally iminical to the plight of Amtrak.

With regard to the amendment in both bills which would lift the travel ban to Cuba, the administration has threatened a veto, meaning that conferees are likely to drop the amendment from the conference report.

Most important for the transit community is langauge inserted by House Transportation and Treasury Appropriations Subcommittee Chairman Ernest Istook (R-Oklahoma) in the House report on the bill. Transit advocates are generally pleased with the Senate bill, but have concerns with language in the House Report on the Transportation-Treasury bill which would increase the burden on transit projects vying for Full Funding Grant Agreements (FFGA). The House language, inserted by Rep. Istook would make the following changes to the New Starts process:

• Mandate that only the lowest cost project emerge from the alternative analysis stage
• Eliminate New Starts funding for alternative analysis, which applicants must perform to be considered for an FFGA
• Direct New Starts project sponsors to submit station-station information and to determine the cost-effectiveness of each segment
• Add congestion relief to the list of New Starts criteria

Supporters of transit are hoping the provision will not be made part of the Conference Report. The FTA opposes the Istook language, but would be forced to implement the changes if the language is included in the final bill. Transit representatives have sent letters to Senate and House appropriators expressing concern about the Istook language.

Most important, the conferees must reconcile the difference in the total spending levels of both bills. The Senate bill calls for $91 billion in spending, while the House weighs in with $89.3 billion.

On Friday, during floor debate, the Senate could not wrap up debate on a bill (S.150), sponsored by Senators Ron Wyden (D-Oregon) and George Allen (R-Virginia) that would make permanent a ban on taxing internet access. Senators of both parties expressed concern that the definition of internet access in the bill may preclude localities and states from collecting access fees on traditional telecommunities services. Senators Wyden and Allen are working on compromise language with senators that expressed concern about the loss of state and local tax revenue.

In the last temporary tax moratorium bill, which expired on November 1, there was language that specifically preserved a city or state’s ability to collect access or right-of-way fees on telecommunications services. The Senate bill preserves this same right by excluding telecommunication services from the internet access exemption, but there is a caveat, which is disconcerting to many cities. In the Senate bill and the recently passed House bill (H.R. 49), Internet access would not include telecommunications services, much like the last bill. However, the following language was inserted to both bills: Internet access does not include telecommunication services except to the extent that such service is used for Internet access. This new language was added at the behest of many phone companies, who felt that cable companies that provided Internet service by means of a cable modem (as opposed to high speed Digital Subscriber Line (DSL) service, which the phone companies have rolled out) had an unfair advantage because such a service was not subject to access or right-of-way fees. The distinction between DSL and cable modems service is currently being fought in the courts as well, with the Ninth Circuit Court overuling a FCC decision on October 6. According to the latest court ruling, both DSL and cable modem service can be classified as a "telecommunications" service.

Some Senators are concerned that telephone companies may interpret the new definition of Internet access too broadly and refuse to pay traditional telecommunications fees, citing a change in law. If there is not specific language in the bill that preserves a locality’s right to collect fees on traditional telephone services, some lawmakers feel that cities would lose an important source of revenue.

On Friday, Senator Wyden said he and Senator Allen were willing to accept a new tax moratorium, even thought they both are still seeking a permanent ban. Both Senators are still working with other senators on language that will keep consumers' Internet bills tax free, but still allow states and localities the ability to collect fees on traditional telecommunication services. Allen still wants to keep the definition of Internet access broad to keep new technologies like DSL, satellite and wireless tax free. Many localities are currently taxing DSL because the services runs on the same lines as telephones. Wyden feels that cable companies who provide Internet access currently have an unfair advantage over telecommunications companies that provide DSL service, because Internet access via a cable modem is not subject to taxation. (Prior to the latest court ruling, cable modems were not classified as telecommunications services.)

Debate on S.150 has not been overly partisan, as many Senate Democrats support the bill and many Senate Republicans oppose it. Senate Appropriations Chairman Ted Stevens (R-Arkansas) only supports a scaled down version of the bill and a two year extension of the moratorium. Senators Lamar Alexander (R-Tennessee) and Tom Carper (D-Delaware), both former governors, have expressed serious misgivings about the bill, most saliently, the likely loss of revenue for state and local governments. Senator Diane Feinstein (D-California) on Friday mentioned that 104 California cities wrote her opposing the bill because of the broad definition of Internet access.

Senate majority leader Bill Frist (R-Tennessee), a supporter of the bill, was doubtful as to whether the bill would make it back onto the floor this week.

On November 12, the Senate Committee on Environment and Public Works will markup legislation that reauthorizes highway programs for the next six years. The committee bill will ultimately provide $255 billion in funding for highway programs, which is in accord with the FY 2004 budget resolution. Currently, funding levels in the draft bill only total $221.5 billion, but about $40 billion in additional highway funding to states is expected to be added during floor debate. The Bush Administration proposal only called for $192.5 billion in highway funding over the next six years.

In the draft bill released by the committee two weeks ago, there was no provision providing for a formula that would guarantees states a certain amount of highway funding per year. Over the past year, as debate on TEA-21 reauthorization intensified, funding inequities among states became a hot topic. Current highway and transit law mandates that each state receive at least a 90.5% return on gas tax revenue they provide to the highway trust fund. States are labeled as “donor” states if their return on gas tax revenue contributed to the trust fund is less than 100%. States that receive a return greater 100% are referred to as “donee” states. The donor/donee discussion has been a contentious issue since debate on the reauthorization of highway and transit programs commenced. States such as Michigan, Florida, Texas, Ohio, and Wisconsin belong to the SHARE (States’ Highway Alliance for Real Equity) Coalition, a group that strongly advocates for a more equitable distribution of federal highway money. The SHARE Coalition wants the minimum return on revenue contributed to the highway trust fund to be 95% instead of 90.5%. States such as Alaska, Pennsylvania, and West Virginia are considered donee states, but in a House Subcommittee hearing in May, Pennsylvania Governor Ed Rendell (D) called the donor/donee debate “a zero-sum game.” Rendell feels that a highway and transit bill totaling $375 billion, which is the number the House Transportation and Infrastructure Committee is proposing, would put to rest any debate over inequities in the distribution of highway money.

Democrats may introduce a minimum guarantee formula amendment, along with other amendments designed to address a lack of specifics in the draft bill. Some amendments may also target the provision aimed at streaming the environmental review process for highway projects. Committee Republicans want to complete as much work as possible before the markup to avoid a long drawn-out hearing. However, committee aides still expect a laborious markup hearing, with one saying, "It's going to be a long markup."

For an inside look at the amendments for Wednesday, check out our latest information on the upcoming markup over on the analysis side of the website.

Over on the analysis side of the website we've got a look at HR 3266, introduced by Representative Chris Cox (California), Chairman of the House Select Committee on Homeland Security. Cox is apparently very interested in moving the bill soon. Be sure to check it out.

Medicare conferees continue to work on the Medicare Prescription Drug legislation. However, there are still a number of disputed proposals, including premium support that would put traditional Medicare in direct competition with private plans beginning in 2010.

Conferees are also trying to reach agreement on ways to guarantee that spending on a drug benefit would not go beyond $400 billion set aside for the bill in the fiscal 2004 budget resolution.

The negotiators are also still sharply divided on two other issues. The first is whether consumers should be allowed to import drugs from foreign countries where they are often less expensive. The second is whether to create new health savings accounts, which would permit consumers to put aside money for medical expenses on a tax-free basis. These accounts would be available to all taxpayers, not just Medicare beneficiaries.

Congress has set an adjournment date of Nov. 21.

Several House GOP conservatives continue to repeat their insistence that premium suport and the health savings accounts be included in the final product and have told House Speaker Hastert that they will not support the final bill unless it includes these items.

Leaders in the House and Senate have instructed appropriators to wrap up work on as many spending bills as possible by November 21st. With leaders in both chambers wanting to adjourn by Thanksgiving, any spending bills not completed by November 21st will likely be rolled into an omnibus spending bill. Senate Appropriations Chairman Ted Stevens (R-Alaska), along with ranking member Robert Byrd (D-West Virginia) and Senate minority leader Tom Daschle (D-South Dakota) favor passing each spending bill separately, so lawmakers will have the chance to add amendments.

Senator Stevens has indicated that the Senate will consider the Department of Agriculture appropriations bill (S.1427) and the Veterans Affairs-Housing and Urban Development spending bill (S.1584) later this week. Next week, if debate on the two aforementioned bills proceeds smoothly, the Senate will then move to the appropriations bill for the departments of Commerce, State and Justice (S.1585). Also, the Senate must finish work on the D.C. appropriations bill (H.R. 2765), which was abruptly pulled from the floor a few weeks ago after the Democrats threatened to filibuster the bill over a provision creating a pilot school voucher program in the District of Columbia.

Stevens has developed a timetable for completing all spending bills by November 21st, which was approved by Senate majority leader Bill Frist (R-Tennessee). The timetable calls for the Senate to finish work on all spending bills by November 12th and for such bills to be passed out of conference by November 18th, leaving three days for both chambers to approve bills negotiated in conference.

While the President has only signed three spending bills into law, three more may be ready for his signature by the end of the week. Measures providing funding for the Interior Department, Military Construction and Energy and Water may reach the President's desk by week's end or early next week.

Senator Stevens will have a difficult time expediting passage of the remaining spending bills because of $3 billion in funding commitments promised to lawmakers. Funds needed for election reform, veterans' health care, and AIDS programs may result in an "across the board cut", which many lawmakers will object to. Because each remaining spending bill in the Senate involves contentious issues, Senator Stevens has asked Senators to offer "only relevant and meaningful amendments."

With regard to other spending bills still in conference committee, the Foreign Operations spending bill (H.R. 2800) just passed the Senate and is being worked on in conference. The Transportation-Treasury appropriations bill (H.R. 2989) is also in conference, but is being bogged down by debates over Amtrak funding. The bill to fund the departments of Education, HHS and Labor (H.R. 2660) has been in conference for almost two months, but the conferees have been unable to negotiate a compromise over new overtime rules promulgated by the Labor Department.

Please check back with us for any new developments.