I don’t think there’s any question that the threat exists of a hostage-taking situation over the transportation funding bill, which expires September 30. Congress won’t even come back in session until the first week of September, leaving them precious little time for an extension.

In addition, the new fiscal year begins October 1, so we need a federal budget for fiscal year 2012.  Since that’s unlikely, the current budget needs to be extended at the end of September as well, probably with a continuing resolution, because the appropriations bills are nowhere near complete.  Getting that might crowd out the transportation extension. Add in the FAA extension that expires September 16, and you have the seeds of real chaos. Here are some of the implications:

Both the federal authority to collect the 18.4 cents a gallon in federal gas tax and authorization to spend the revenue on transit and highway projects are due to expire.

“When Congress comes back, they’re only going to have 11 days to take action,” said Susan Martinovich, president of the American Association of State Highway and Transportation Officials. “There is a crisis brewing.”

The two houses of Congress are nowhere near close on a surface transportation bill. The House has a six-year plan that would cut funding by about 1/3 on an annual basis. The Senate’s plan would fund surface transportation at current levels. If the House plan went into law, it would force a cut of roughly 500,000 construction and transportation jobs, according to Susan Martinovich of the AASHTO.

However, those are not pieces of legislation yet, but merely aspirations. There is no written bill on surface transportation in the House or the Senate. So the plan is for a short-term extension:

But with neither bill even in written form, the immediate prospect is for twin extensions — one allowing for collection of the gas tax and the other to permit spending — when the current authorizations expire next month.

“We’re facing a far more dire circumstance [than the FAA shutdown], where the entire federal aid program for highways and transit would shut down Oct. 1 unless Congress extends the revenue title,” said John Horsley, executive director of the association of state transportation officials [...]

If the authorizations are allowed to expire, state officials said, they would not be able to put projects out for bid and would have to begin shutting down projects underway. Since states spend money from their own coffers and then file for federal reimbursement, they would be out on a limb if they let work continue when federal funds were no longer guaranteed.

Brad Plumer gets into the history here. He notes that the current level of the gas tax is actually inadequate to fund surface transportation projects. The Highway Trust Fund ran out in 2008, leading to an increased reliance on general revenue funds. But those were one-time solutions that would have to continue virtually indefinitely to cover an estimated $80 billion shortfall by 2018.

Daniel Vock raises the possibility of using a vehicle miles traveled tax on trucks to simplify the tax situation for truckers (this would supplant registration, fuel and excise taxes) and, I presume, encourage efficiency. But we’re not even close to that discussion yet. We still have to avoid the catastrophe of shutting down all transportation related construction projects in the country by the end of next month, before we can figure out a process to sustain transportation funding in a smarter and more environmentally sustainable way.