WASHINGTON -- The House Public Works Committee is likely to propose easing curbs on infrastructure bonds in its highway bill and recommend paying for the expanded tax exemption, as well as a new $6.6 billion a year highway spending program, with a gas tax increase, committee aides said last week.
In drafting the House highway bill, "we're looking at all sorts of ways to maximize infrastructure spending by giving more flexibility to the states, leveraging, and doing things on the tax side," such as expanding infrastructure bond exemptions, said one of the aides, who asked not to be identified.
Public Works and Transportation Committee Chairman Robert Roe, D-N.J., next month will unveil the bill, which overall is expected to propose about $153 billion of direct spending and tax breaks for transportation infrastructure over the next five years, the aides said.
After acting on it, the panel must refer it for action on any gas tax increase and other tax components to the House Ways and Means Committee, where the bond provisions under discussion most likely would provoke a stormy debate and could be shot down, said a tax committee aide.
The highway program is scheduled to expire on Sept. 30, so action by the committees and the full Congress is expected to be swift this summer. House Democratic leaders have made passage of the highway bill their top priority, and have said they strongly support Rep. Roe's overall highway plan.
In the bond area, the public works committee is exploring proposals such as those advocated by Rep. Beryl Anthony's public finance commission to recategorize private activity bonds used to build infrastructure projects as public activity bonds, removing them from state volume caps, the aides said.
The recategorization proposal drafted by the Arkansas Democrat is highly controversial because it would partially roll back such monumental reforms in the Tax Reform Act of 1986 as the 10% private use restriction and the $50 per capita private-activity volume caps. Rep. Anthony has said he did not expect to see action on the commission's more radical proposals for several years.
But at least one member of the Public Works Committee wants to fold something like the Anthony proposals, applying to infrastructure bonds, into the highway bill, the aides said. Short of incorporating legislative language on bonds into the bill, the committee may simply recommend that the Ways and Means Committee act in the bond area when it receives referral, they said.
With such an explicit recommendation or proposal coming out of the Public Works Committee, bond proponents on the Ways and Means panel could be expected to take up the baton and run with it, sources said.
However, at least one major obstacle -- Ways and Means Chairman Dan Rostenkowski, D-Ill. -- stands in the way, all sides acknowledged. The author of many of the 1986 bond curbs, while mouthing support for passing an infrastructure bill this year and raising the gas tax, has made no secret of his distaste for even minor bond reforms and extensions of expiring provisions.
"Rostenkowski will not let them do anything in the tax area without his consent," said Sonia Daugherty, legislative director for Rep. Bob Wise, D-W. Va., co-chairman of the House Democratic Caucus's infrastructure task force. "I would be surprised if Ways and Means made the major changes in the tax code" being suggested by the public works panel, she said.
Rep. Rostenkowski has been under pressure from the House Democratic leadership, however, to cooperate with the Public Works panel in drafting the highway bill. One Public Works aide said that while the chairman has not seen the details of the bill, in discussions with Rep. Roe he has shown "an open mind" and "in principle, seems to be on board."
James Jaffe, Ways and Means press secretary, said Rep. Rostenkowski will "wait and see" what is in the Public Works panel's bill before reacting. "The Ways and Means Committee, institutionally, hasn't been real big on expanding the use of bonds in recent years. Public Works would be asking the committee to reverse itself," he said.
The success of the Public Works panel's bond proposals would hinge not only on overcoming opposition on the tax committee, but on Rep. Roe winning a gamble that Congress and President Bush will accept another gas tax increase to pay for such tax exemptions and a new mandatory highway spending program.
Rep. Roe has been trying to drum up support in the House Democratic Caucus for a 5-cents-a-gallon increase -- which, coming after last year's 10 cents increase, would raise about $6.6 billion a year. He has been encouraged by the response, the public works aides said. However, Ms. Daugherty said she thought that in the end Congress would approve only half the increase he is seeking.
Many Republicans are opposed to Rep. Roe's plan, not only because it would raise taxes, but because it cleverly circumvents last year's budget agreement and sets the wrong precedent, Rep. Willis Gradison, R-Ohio, ranking minority member of the House Budget Committee, said last week.
The highway program right now is treated in the budget as a "discretionary" spending program subject to the agreement's discretionary spending caps. But Rep. Roe's plan would largely convert it into a so-called entitlement program, which means Congress could increase spending on highways as long as it follows the agreement's pay-as-you-go rules.
So far, the House Budget Committee and the White House Office of Management and Budget have not raised any significant objections to Rep. Roe's plan. But Rep. Gradison questioned whether in the end they will agree to "open a Pandora's box" by helping highway proponents be the first to escape the much-hated spending caps through the creation of a new entitlement program.