WASHINGTON -- Ignoring a White House veto threat, the bipartisan leaders of the House Public Works and Transportation Comittee yesterday unveiled a $153 billion highway bill that would be financed in part with a 5-cents-a-gallon federal gasoline tax increase.
The bill, as expected, did not include any tax-exempt bond provisions, but Rep. Norman Mineta, D-Calif., its principal author, said he had considered including a mjor provision in that area suggested by Felix Rohatyn, partner with Lazrd Freres & Co.
Mr. Rohatyn said yesterday that he had proposed to Rep. Mineta and other House leaders that they put the $5 billion or so a year raised by the gas tax increase into a trust fund that could be used to back the issuance of between $40 billion and $50 billion of state and local bonds.
Rep. Mineta said he discarded the idea, however, because he determined that most of the federal money would be used to pay off interest on the bonds, rather than principal, and thus would not be justified. But Mr. Rohatyn said yesterday that other House Democratic leaders have continued to express interest in the proposal.
Mr. Rohatyn acknowledged that the proposal would generate considerable controversy on the congressional tax committees for, among other things, using federal funds to pay off tax-exempt bonds, but said, "we left it open whether the interest would be taxable or tax-free."
With the introduction of the bill yesterday, the principal controversy was not the would-be bond proposal, but the proposed gas tax increase.
John Sununu, the Whited House chief of staff, told House Minority Leader Bob Michel, R-I11., in a letter sent Tuesday that an increase would be vetoed.
It was Mr. Sununu's first such open statement on the issue and appeared to put an end to rumors that the White House, in signaling only muted opposition, was leaving the door open to eventually accept the gas tax proposal.
"Let there be no misunderstanding," Mr. Sununu said in the letter. He asserted that the President "will veto any legislation that includes a gas tax increase" because " it would jeopardize the economic recovery that is now under way and would undermine our continued efforts to adhere to the principles of last year's budget agreement."
Richard Darman, director of the Office of Management and Budget, also said Wednesday tht the administration would oppose a provision in the bill that is tied to the tax increase. That provision would exempt part of the highway program from the agreement's domesic spending caps and finance it on a "pay as you go basis" with the tax increase.
But despite these strong, top-level statements, Republican co-sponsors of the committee bill insisted that the President is still willing to be persuaded to sign the bill with its tax increase.
Brushing aside Mr. Sununu's "communique," Rep. Jean Paul Hammerschmidt, R-Ark., contended that no veto threat is final until it is stated by the President himself.
"We expect to get strong bipartisan support" for the proposal in Congress, said Rep. Bud Shuster, R-Pa., ranking minority member of the committee's transportation subcommittee. "And we expect the President to look at the bill carefully and ultimately sign it into law," he said.
Mr. Shuster was Mr Bush's senior transportation adviser during the 1988 presidential campaign and a chief drafter of the Republican campaign platform's transportation policies. He said the bill "keeps faith" with those policies.
Committee Chairman TRobert Roe, D-N.J., sought to downplay the controversy, saying he did not "want to get into that kind of war" with the President. He said the House and Senate should "work their will" on the bill and demonstrate that there is popular support for a gas tax increase tied to additional highwa spending, before the President makes up his mind.
Mr. Roe said the subcommittee and full committed will hold markup sessions on the bill next week, with the goal of completing referral of the bill to the House Ways and Means Committee and House floor action before Congress adjourns for its Labor Day recess on Aug. 2.
In other features, the bill as expected contained generous funding provisions for state and local governments. It would provide a minimum of 80% federal funding for all highway and mass transit projects that quality for federal aid, with interstate highway projects continuing to receive 90% funding. Many secondary road projects and mass transit projects currently receive 75% or less federal funding.
The bill also would give municipal governments much greater flexibility to plan and finance projects that not only address traffic needs and congestion problems, but may be needed to comply with federal Clean Air Act requirements.
