Senate passes highway bill, including 'phased retirements,' transit subsidy

Wednesday - 3/14/2012, 3:32pm EDT

The Senate voted Wednesday to overhaul transportation programs and keep aid flowing to thousands of construction projects while strengthening highway and auto safety.

The $109 billion measure, approved in a 74-22 vote, included a number of amendments affecting federal pay and benefits.

Bill includes phased retirements, transit subsidy

The Senate approved an amendment that would allow "phased retirements" for federal employees. The amendment, introduced by Sen. Max Baucus last week, allows retirement-eligible federal workers to work part-time while beginning to draw on their annuity.

That plan, which is similar to a proposal advanced by the Office of Personnel Management, would save $465 million by reducing outlays by the federal retirement fund, Baucus said.

However, the measure was greeted by disapproval by federal unions, which objected to using the savings for projects that wouldn't directly benefit federal employees.

For transit commuters, the bill would extend, back to Jan. 1, a tax break that allows the deduction of up to $240 a month tax-free from their paychecks for expenses incurred traveling to work. That tax break expired at the end of 2011, reducing the mass-transit subsidy to $125. The subsidy for parking benefits, meanwhile, remained unchanged.

"Improving transit benefits will prove incredibly important to all working people that use or would like to use public transportation and are seeking critical relief for commuting costs," National Treasury Employees Union President Colleen M. Kelley said in a statement.

NTEU had been a vocal critic of reducing the mass transit benefit below the level afforded for parking.

Pay freeze extension rejected

Senate lawmakers, however, rejected an amendment, introduced by Sen. Pat Roberts (R-Kan.) that would have extended the current two-year pay freeze for an additional year.

Overall, the transportation bill would reduce the number of federal transportation programs by roughly two-thirds in an effort to eliminate duplication. Senators preserved bicycle, pedestrian, safe routes to schools and rails-to-trails programs, targeted for elimination by Republicans, under a compromise that means they would have to compete with other programs for money.

One thing the bill would not do is resolve how to keep the federal Highway Trust Fund solvent beyond next year.

The largest sources of money for the fund, which pays for highway and transit programs, are federal fuel taxes: 18.4 cents a gallon for gasoline and 24.4 cents a gallon for diesel. Revenue from those taxes has declined since the economic downturn in 2008 and because the fuel efficiency of cars and trucks is increasing.

The bill would pay for highway programs through a combination of fuel taxes, cuts to other federal programs and tax changes, but also would drain the trust fund. Some senators have criticized provisions that are supposed to pay for transportation programs since they would raise about $10 billion over 10 years, but spend it in the first two years

Pressure on House increases

The Senate passage steps up pressure for quick action by House. If a final bill isn't on the president's desk by a March 31 deadline, Congress would have to approve a temporary extension to avoid a shutdown of the programs, including the furlough of Federal Highway Administration employees and the layoff of construction workers.

Efforts by House Republican leaders to pass their own, five-year bill without concessions to Democrats have fallen apart in recent weeks. The House returns next week from a weeklong recess.

"The plan as it stands right now is to let the Senate pass a bill, and take up something that looks like it unless the House coalesces around a better alternative, which we are actively pursuing," said Michael Steel, a spokesman for House Speaker John Boehner, R-Ohio.

(The Associated Press contributed to this report.)

RELATED STORIES:

Senate amendment lets retiring feds go part-time

Senate rejects pay freeze amendment to transportation bill

NTEU calls on Congress to boost mass-transit tax benefit

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)