The Senate just approved the omnibus spending bill by a vote of 65-28. Rules that irked Democrats on issues such as overtime pay regulations, food labeling and media ownership, were still included in the bill after a vote for cloture passed 61-32, ending Democratic delays.

The Senate Banking, Housing and Urban Affairs Committee has tentatively scheduled a markup of the transit portion of the TEA-21 reauthorization bill for January 28 or January 29, according to Senate sources. The committee is charged with the task of approving up to $56 billion in transit programs over the next six years.

Senate leaders are still negotiating the details of a financing mechanism plan that will offset the cost discrepancy between the Bush Administration’s reauthorization plan and the Senate proposal. The administration proposed $247 billion for transit and highway programs over six years, while the Senate plan calls for $311 billion in funding, as prescribed by the FY 2004 Budget Resolution. The Senate plan is said to call for shifting the cost burden of ethanol and methanol subsidies and fuel tax exemptions from the highway trust fund to the general fund. Currently, the highway trust fund bears the cost of 5.3 cents per gallon ethanol exemption and the 6 cents per gallon methanol exemption. Additionally, public entities such as state and local governments, public transit agencies and public school systems are currently exempt from paying the gas tax. Senate leaders are proposing that such public entities begin paying gas taxes into the trust fund and then receive reimbursements from the general fund. The proposal would also return ethanol and methanol subsidy losses to the highway trust fund.

If the Senate financing mechanism currently being vetted is taken up by the Finance Committee, Senate GOP leaders will avoid having to propose a gas tax increase or bonding as a way to finance increases in highway and transit programs. The Bush Administration and Republican leaders in Congress have long been inimical to raising the gas tax. Though bonding was considered as a possible financing mechanism, there was widespread opposition to bonding in both parties.

Senate leaders has set aside floor time beginning February 2nd for consideration of the reauthorization bill. On the House side, Speaker Dennis Hastert (R-Illinois) is pressing for floor action on the House Transportation and Infrastructure Committee bi-partisan bill by mid-February. The $375 billion reauthorization bill (H.R. 3550) is set to be marked up by the House T&I Committee before the President’s Day Recess, though an exact date has not yet been mentioned. Also, The House Ways and Means Committee, which has jurisdiction over the revenue title in the reauthorization bill has not scheduled a markup session. House T&I Chairman Don Young (R-Alaska) still favors a gas tax increase to finance proposed increases in highway and transit funding. Since the current short-term TEA-21 extension elapses on February 29, lawmakers will need to pass a second extension, as lawmakers will not wrap up work on a long-term reauthorization bill by the end of February. A second extension would have to last until at least the end of April. Lawmakers are hesitant about passing a long second extension because of the immense pressure that will be exerted by state DOTs during the impasse. With short-term extensions, states and state transportation contractors lose the ability to plan for the long-term and are wary about investing in new equipment and additional workers.

Senate Democrats won't block a spending bill despite criticizing their colleagues across the aisle over issues including food labeling and overtime pay. The last attempt to defeat cloture on Tuesday died 12 votes short, 48-45, but Dems expect a prolonged battle isn't in the works.

The Senate Committee on Environment and Public Works on January 9 filed its committee report (S. Rep. 108-222) to accompany "SAFETEA," its version of reauthorization of TEA-21. You will find a copy of the committee report attached for your perusal.

Several key details remain to be worked-out. Foremost among these is the highway funding allocation among the states.

The Senate Finance Committee staff has reportedly reached agreement on a method for financing the $255 billion price tag of the highway programs in the EPW legislation. The Finance Committee plan reportedly contains no bonding and relies solely on spending down trust fund balances, adding revenue currently lost to the trust fund due to the ethanol tax break and some other minor "fixes."

Concerning the transit program, the Finance Committee would apparently leave the current 2.86 cents of the Federal Motor Fuels tax devoted to transit untouched. In the absence of any other provisions for transit funding in the Finance Committee portion of the bill, the Banking Committee would need to included an authorization for General Fund money to bring the transit program to the full $56 billion/6-year authorization contemplated in the Senate. This would mean the transit program would be funded approximately 50% out of the General Fund.

The Senate does not at present have a plan for dealing with the question of budget firewalls. According to Senate staffers "that's up to the Budget Committee." The Budget Committee has announced no plans to deal with that issue.

The latest we are hearing on action in the House and Senate is that the Banking Committee is contemplating a late-January mark-up of the transit title in preparation for Senate floor consideration beginning on February 2. The House T&I Comnittee is looking at an early-February mark-up and floor action in late February if the Ways and Means Committee acts on the tax title of the bill. That is a big if.

We will be forwarding more news as it becomes available.