Obama signs short-term highway bill, feds' retirement changes stalled

Thursday - 3/29/2012, 2:51pm EDT

Updated: March 30, 12:20 p.m.)

President Barack Obama has signed a three-month extension of a transportation bill to keep federal highway and transit aid flowing. The move prevents a widespread shutdown of construction projects.

Congress passed the short-term transportation bill Thursday.

However, the stop-gap measure delays a vote in Congress on more comprehensive transportation bills — in both the House and Senate — that included changes to federal retirement benefits.

The short-term bill first passed the House Thursday largely along party lines. The Senate approved the House's extension by a voice vote a few hours later despite objections from some Democrats.

Federal retirement changes in both House, Senate plans

Provisions affecting federal employees' retirement structure crept into both chambers' transportation funding bills.

The House's five-year transportation bill — H.R.7 — would increase federal employees' pension contributions by 1.5 percent phased in over three years. Currently, federal workers contribute 0.8 percent of their paychecks toward their pensions and their agency contributes 11.7 percent. This change would apply to current employees.

H.R. 7 also would introduce a new pension formula for employees hired after Dec. 31, 2012 if they have less than five years of federal service. The formula would calculate annuities based on the highest five years of salary instead of the highest three years. Also, the contribution for these new employees is 4 percent.

The House has not yet voted on H.R. 7. The vote on the stopgap measure came Thursday as representatives planned to begin a two-week recess Thursday.

Without action, Democrats estimate that as many as 1.8 million construction-related jobs would be at risk just as states are preparing for the spring and summer construction season. The government could also lose about $110 million a day in uncollected gas and diesel taxes.

Earlier this month, the Senate passed its version of a highway funding bill in a rare show of bipartisanship.

An amendment to that bill would allow retirement-eligible federal workers to work part-time while beginning to draw on their annuity. However, a proposed amendment to freeze federal pay through 2013 was struck down by the Senate.

The Senate's version also included a provision to extend, back to Jan. 1, a tax break that allows commuters to deduct as much as $240 a month for mass transit.

Federal News Radio's Jack Moore and the Associated Press contributed to this story.

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