“I think everybody acknowledges things are going to change in November,” and that key House and Senate committees could have new chairmen, noted one industry expert. “The scenario for the next year or two sure looks like a series of extensions.”

If the next Congress fails to agree on a multiyear transportation bill, that could push the issue into 2013, when there is the potential not only for new members of Congress but also for a new presidential administration.

“By 2013, we’re going to be in a very different world,” a lobbyist said. “All bets are off.”

But there are other, more optimistic, schools of thought on the potential for a massive highway bill before 2013.

The anti-tax, anti-deficit atmosphere could be overpowered by a desire to revive the economy, accelerating the push for a large-scale infrastructure bill, according to Jack Schenendorf, counsel at Covington & Burling LLP and vice chairman of a federal commission that was tasked with finding solutions to the transportation funding problem.

“Politicians are going to be under a lot of pressure before 2013 to start taking action to put our fiscal house in order,” he said. “A good, strong infrastructure bill can be very helpful in bringing about economic growth. … That could change the picture between now and 2013.”

But while Congress dithers on transportation, states will continue needing to draw cash from the Highway Trust Fund. The current infusion of Treasury funds to supplement fuel taxes is expected to last through next fall.

When those funds run out, Congress could initiate another general-fund transfer to keep the account solvent until a new authorization can be approved.

That presents another potential problem. Sources said that repeated Treasury transfers have eroded the justification for a “firewall” that protects Highway Trust Fund dollars from going into a pot with other funds that are subject to annual appropriations.

One lobbyist worried that “there’s a very real possibility that the trust fund disappears,” if Congress fails to approve a new transportation bill before the current Treasury fund infusion is exhausted.

“Concrete doesn’t compete well against kids and sick people,” said Pete Rahn, senior vice president at HNTB and former director of the Missouri Department of Transportation, referring to the possibility of transportation being up against health care and education appropriations each year.

The firewall allows states to plan years ahead for projects and issuance of grant anticipation revenue vehicles secured by federal grants.

If the trust fund firewall disappeared and highway grants were decided year-by-year, states could still make their Garvee payments, Rahn said.

“Whether the states would continue to issue debt based on the federal program could go either way. States could either stop issuing Garvee bonds,” Rahn said. Or they could issue more of them to “bridge their programs” until 2013, when highway funds could stabilize.v

Editor’s Note: Bond Buyer is a SourceMedia publication. SourceMedia is owned by Investcorp, which also owns Randall-Reilly, the parent company of Better Roads. www.bondbuyer.com