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Highway fund deficit could spark gas tax rise

WASHINGTON (AP) — The Obama administration is warning lawmakers that the trust fund that pays for highway construction will go broke in August unless Congress approves an infusion of as much as $7 billion.

Sen. Barbara Boxer, chairman of the Senate Environment and Public Works Committee, said at a hearing the administration has told senators the Federal Highway Trust Fund will need an estimated $5 billion to $7 billion to keep current construction projects going.

The California Democrat said another $8 billion to $10 billion will be needed to keep the fund solvent through the year ending September 30, 2010.

Transportation Department spokeswoman Jill Zuckman confirmed those figures.

"The administration is working closely with Congress to solve this difficult problem and ensure that states have the resources they need to maintain our roads and highways," Zuckman said.

A decline in driving that began in late 2007 has reduced federal gas tax revenue, the primary source of trust fund dollars.

The trust fund is separate from the $48 billion in transportation projects included in the economic recovery law enacted by Congress and signed by President Barack Obama earlier this year.

Congress approved an emergency transfer of $8 billion in general treasury dollars last fall to make up a projected shortfall — the first time in the history of the programme that had happened.