Senate struggles over long-term transportation funding

WASHINGTON (Reuters) - U.S. lawmakers on Tuesday unveiled an ambitious bipartisan Senate bill containing three years of funding for America's highways, bridges and rail systems but quickly ran into a roadblock that could force Congress to settle for shorter term fix.

The legislation would provide nearly more $130 billion for surface transportation investments through 2018 and, if passed, would be the first multi-year highway bill in more than decade. It is expected to dominate Senate deliberations into next week as Republicans and Democrats work against a July 31 deadline to keep the national Highway Trust Fund from running out of money.

“Both parties know that a long-term highway bill is in the best interest of our country. So we’ll continue working together to get a good one passed," said Senate Republican leader Mitch McConnell. "I’m hopeful we will."

But McConnell's counterpart in the Senate, Minority Leader Harry Reid, said: "Based on my conversations with the Democrats in the House (of Representatives) and their conversations with Republican leaders, I don't think there's a chance in the world they're going to take up this bill."

A similar effort last week in the House instead produced an $8.1 billion plan to fund infrastructure projects, but only through the end of 2015.

But Senate Democrats on Tuesday shot down an initial push to begin debate on the bipartisan legislation, saying Republican leaders had not provided enough time to review the 1,030-page bill.

Senators have 10 days to approve the legislation and send it to the House of Representatives and the White House for President Barack Obama's signature. If the plan fails, senators would have to opt for a version of the short-term measure already approved by the House.

House Majority Leader Kevin McCarthy, the chamber's No. 2 Republican, criticized the Senate for finding only three years of funding. He said senators should pursue another short-term bill now and work toward six-year legislation "that you actually pay for."

The Senate legislation authorizes surface transportation spending for six years but provides money only through 2018.

Lawmakers avoided an increase in the national gasoline tax and instead cobbled together more than a dozen "pay fors" totaling $47 billion. Funding sources include $9 billion in oil sales from the Strategic Petroleum Reserve and $16.3 billion from a cut in Federal Reserve dividends to large banks.

Aides said the bill's future could be clouded by floor amendments including potential Republican measures to end federal funding for Planned Parenthood and to do away with Obamacare. Democrats, meanwhile, could try to add in auto-safety provisions rejected by the Senate Commerce Committee.

McConnell said he expected an amendment to reopen the U.S. Export-Import Bank, which has been closed to new business since its charter expired on June 30.

(Reporting by David Lawder, Richard Cowan, Patricia Zengerle, Susan Heavey and David Morgan; Editing by Tom Brown and Steve Orlofsky)