By David Lawder
WASHINGTON (Reuters) - The top Democratic and Republican tax writers in the U.S. Senate announced on Thursday a $10.8 billion plan to extend federal funding for transportation projects into the summer of 2015, roughly matching legislation moving through the House of Representatives.
Senate Finance Committee Chairman Ron Wyden and Senator Orrin Hatch, the panel's ranking Republican, said their proposed bill would keep the Highway Trust Fund, which pays for highway construction and maintenance, from becoming insolvent next month while they negotiate longer-term transportation funding.
The plan would use some of the funding mechanisms contained in a bill advanced on Thursday by the House Ways and Means Committee, including a previously used revenue-raising move that allows companies to reduce employee pension contributions, thus boosting profits and taxable income.
But the Senate version would extend this provision - often called "pension smoothing" because it allows firms to assume historic rates of return - for only three years. It would raise only $2.7 billion, instead of $6.4 billion in the House version.
Both versions would transfer $1 billion in existing money to construction projects from a fund used to pay for cleanup of leaking underground storage tanks and would extend customs user fees.
The Senate version would add a host of other measures to raise revenues through improved tax compliance, and would lower fuel taxes on liquefied natural gas and propane to equalize them on an energy-content basis with diesel fuel and gasoline, respectively.
The Highway Trust Fund, which has been supported by fuel tax revenues since its inception in 1956, is running out of money. The Department of Transportation on Aug. 1 would begin cutting federal funding for construction projects by nearly a third if Congress fails to pass new funding legislation.
That could delay new construction on roads, bridges and rail transit, causing layoffs of hundreds of thousands of workers.
"With the Highway Trust Fund getting closer to running on fumes, Congress must get beyond the gridlock where each faction says, 'It's my way, or no highway,'" Wyden said in a statement.
But some Democrats in the Senate, including Environment and Public Works Committee Chairwoman Barbara Boxer, have voiced opposition to any measure that extends funding well into next year, when a newly elected Congress takes office.
Boxer said on Wednesday she would prefer a shorter extension that would force the current Congress to pass a six-year highway funding bill after the election in a "lame-duck" session.
(Reporting By David Lawder; Editing by Bill Trott and Will Dunham)