WASHINGTON - The Senate yesterday cleared most of the remaining obstacles to the approval of a $123 billion highway and mass transit bill after it rejected an amendment sought by state transportation officials that would have maintained the federal share of interstate highway repair funding at 90%.

After 10 days of debate, however, the five-year reauthorization measure was still under the lingering threat of a filibuster by Sen. Bob Graham, D-Fla., who continued to object to its formula for funds distribution. Most of the lengthy and cantankerous debate over the bill has centered on the state allocation issue. The debate appeared to culminate yesterday with an unexpectedly popular amendment to return to the current state matching requirement that was being pushed at the last minute by state highway officials.

The amendment fell only narrowly, by a 53-to-43 vote, under strident opposition from the Bush administration and sponsors of the highway bill, who had proposed to reduce the federal share for interstate and bridge maintenance costs to 75% and 80%, respectively.

Since introducing its highway bill in February, the administration has insisted on lowering the federal matching share as a way of forcing states to leverage federal highway funds with higher spending and borrowing by state and local governments.

While the Senate bill "does not go as far as the administration wanted," it nevertheless adopts the administration's philosophy and "brings better leverage of federal money" than the current system, said Sen. Steven Symms, R-Idaho, co-sponsor of the bill.

While the White House has expressed reservations about the bill's somewhat higher federal contributions, it regards any return to the current matching share formula as "anathema" that would almost certainly provoke a veto of the bill, he said.

Sen. Daniel Patrick Moynihan, D-N.Y., the bill's chief sponsor, called the state-sponsored amendment "a return to free money" and said that a veto would have been justified if it had survived.

Adoption of the amendment would have forced the Senate to send the bill back to the public works committee to be redrafted, he said, since it was structured to provide states with greater flexibility in selecting highway and mass transit projects in return for receiving somewhat less federal funding for each project.

"By the narrowest of margins we have rejected an amendment that was absolutely at odds with the spirit of the legislation," Mr. Moynihan said, adding that the "free money' mentality embodied in the amendment is "the disease that produced the current situation of crumbling highways, low productivity," and other economic ills.

An earlier debate over allocation of the funding appeared settled Tuesday when the Senate approved an amendment by Sen. Robert Byrd, D-W.Va., providing $4.2 billion in "bonuses" to low-income states with higher than average gas taxes, and another $4.2 billion of funding to donor states that contribute more in federal gas tax revenues than they receive in federal grants.

A lingering criticism raised last week by Senate Minority Leader Bob Dole, R-Kan., which claimed the Byrd amendment does not equitably reward states' efforts to build highways, was put to rest yesterday with the approval of language instructing the bill's House and Senate conferees to consider measures of a state's effort in addition to the level of gas taxes it raises.

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