More than $7 billion in accumulated federal highway money cannot be spent by the states because House-Senate conferees yesterday were unable to resolve vast differences on highway and transit legislation laden with special projects.
"If the states don't get the money, interstate work does not proceed," said Francis B. Francois, executive director of the American Association of State Highway and Transportation Officials. "If Congress does not resolve this, it is going to leave in the trust fund $3 million to $4 million of highway user revenues being collected every day at the gasoline pump."
One of the projects complicating congressional action was the planned reconstruction of 1.8 miles of the Center Artery, an elevated Boston freeway. The plan would enclose most of the freeway in a tunnel at a cost of $2.2. billion, more than $1 billion a mile. The Reagan administration and many senators objected.
One House member who did not object, however, was Speaker Thomas P. (Tip) O'Neill (D-Mass.). He was insistent that any highway bill include the Center Artery as part of a technical document called the interstate cost estimate. If that happened, 90 percent of construction money for the Center Artery would be federal. Otherwise, federal funds could be as low as 75 percent, if the project were built at all.
"Tip wants it, and that's been the big hangup," a Transportation Department source said. O'Neill, however, was by no means alone in seeking a project for his district.
In fact, about 70 of the nation's roads and bridges were mentioned in widely divergent House and Senate versions of the highway bill. They were to be "demonstration projects." The Federal Highway Administration (FHWA) estimated the cost of completing those projects at about $6 billion.
In a major irreconcilable difference, the House wanted the demonstrations to be financed entirely by the federal government while the Senate proposed a 50-50, federal-state split with a $25 million ceiling on the cost of each project. Transportation Secretary Elizabeth Hanford Dole Monday sent a strong letter to Capitol Hill threatening a presidential veto if the demonstration projects were approved.
Further, the House sought several changes to the national transit aid program, including a $400 million increase in an already approved $1 billion program for new buses and rail systems. The Senate refused to consider such changes, partly with the written encouragement of Budget Director David A. Stockman. Jockeying over transit issues delayed work in the conference until yesterday, when the House agreed to remove the transit program from the legislation.
All the federal money in question would come from the highway trust fund, not the deficit-ridden general fund. The trust fund annually collects about $14 billion, primarily from a 9-cents-per-gallon federal gasoline and diesel tax, plus other road-use taxes.
Of that $14 billion, about $5 billion in fiscal year 1985 was earmarked for interstate projects or other highway projects that were substituted for cancelled interstate freeways.
Another $2 billion represents the federal interstate and substitute project funds for the second half of the last fiscal year. Those funds have been frozen while Congress has dithered. The rest of the highway trust fund -- designated for noninterstate and transit projects -- has been flowing to the states on schedule.
Congress in 1982 increased the gasoline tax from 4 cents to 9 cents a gallon partially to finance the completion of the 42,500-mile interstate highway system and transit programs. About 40,800 miles of interstate highway now are open to traffic. More than 30 states increased gasoline taxes to raise matching money for the federal kitty.
The conference broke down yesterday when Senate members offered to compromise on two-thirds of the federal aid for demonstration projects and a single project cost ceiling of $30 million. The Senate did not offer to include the Center Artery in the interstate cost estimate. Rep. Glenn M. Anderson (D-Calif.), a House conferee, said: "We can't take those kinds of things. We might as well go home." And the House conferees did.
To free the $7 billion, Congress had only to approve the interstate cost estimate. The estimate is computed by the Federal Highway Administration. In the past it took effect automatically if the appropriate congressional committees did not object.
When the Supreme Court outlawed single-house vetoes in 1983, it became necessary for the interstate cost estimate to be passed as legislation by both houses and signed by the president. Since then, interstate cost estimate legislation has taken on the character of a congressional Christmas tree.
Federal highway officials said yesterday that several southern and southwestern states could obligate their money now, but that more northern states are nearing the end of the construction season. However, if Congress balks early in the next session, state construction programs will dry up.