WASHINGTON -- The House Public Works Committee's surface transportation subcommittee yesterday approved the $153.5 billion highway bill after fending off amendments that would have reduced the bill's proposed new funding and management flexibility for state and local governments.

The subcommittee, which passed the bill in a 36-to-3 vote, also left intact the bill's proposal to raise the federal gasoline tax by five cents a gallon to finance a new "pay-as-you-go" program for highways and mass transit comprising $33 billion of the bill's five-year funding.

Both subcommittee Republicans and Democrats expressed support for the gas tax increase because it is tied to essential infrastructure projects.

The only congressman who spoke out against the increase was Rep. Christopher Cox, R-Calif., a former Reagan White House official, who said the bill is in danger of being labeled a "tax and quota" bill by the Bush White House." Besides the tax increase, the bill contains a 10% minority set-aside program for highway contracts that was hotly debated during the markup.

The subcommittee easily rejected an amendment proposed by Rep. Dick Swett, D-N.H., which would have required state and local governments to use the funding provided in the bill to achieve environmental and energy conservation goals, as well as other federal social mandates, each time they plan a new transportation project.

"This is an intrusion on localities," said Rep. Bud Shuster, R.Pa., one of the bill's chief authors of the amendment. The bill already goes a long way to "force" localities to consider environmental and other social factors in planning transportation projects, but the amendment would have created yet another "unfunded mandate" to do so, he said.

Subcommittee Chairman Norm Mineta, D-Calif., called the bill's flexibility provisions among its most important features, giving state and local authorities for the first time the latitude to use limited federal highway funds to achieve diverse goals without requiring them to do so. "We ought to resist" tampering with the flexibility provisions and enacting more unfunded mandates, he said.

The subcommittee also defeated an amendment by Rep. Swett to require the planting of trees in highway rights of way, also because it would limit states' flexibility to use such land for other purposes.

Another amendment that would have prevented the diversion of rural transit funding into highway projects was also defeated.

In other action, the subcommittee clarified that on both past and future highway projects, states can continue charging tolls that originally were dedicated to the repayment of highway bond issues even after the bonds have been retired. That frees some states, most notably New York and New Jersey, from past agreements with the Transportation Department requiring them to stop charging tolls once their bonds are paid off.

Rep. Cox raised an amendment which, while soundly defeated by the subcommittee, could foreshadow a fight likely to develop with the White House over the proposed tax increase. White House Chief of Staff John Sununu last week said President Bush would veto the tax increase because it would "jeopardize the economic recovery."

Rep. Cox's amendment would have inserted language in the bill stating that the tax increase "threatens economic recovery." While committee members did not argue with the content of the amendment, they said it was inappropriate because it could start an argument with the House Ways and Means Committee over the bill's proposed tax increase. The tax committee is expected to get a brief referral of the bill for action on the gasoline tax proposal and other tax matters before it goes to the House floor.

Committee Chairman Robert Roe, D-N.J., said the committee will mark up the bill on Thursday and said he hoped the tax committee and full House will complete action on the bill next week before Congress adjourns for its Labor Day recess.

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