The U.S. Senate approved legislation that would provide up to $750 million in loans to allow hard hit Gulf Coast local governments to pay their essential employees with federal storm aid already provided by Congress.
The measure now moves to the House, which plans to adjourn for a 10-day recess.
Gulf Coast lawmakers warned that failure by the House to approve the measure before leaving town would force many local governments to begin laying off essential workers next week.
The Senate approved the measure by a voice vote after Democrats dropped their objections. Michigan Senator Carl Levin, a Democrat, had blocked an earlier vote, and Louisiana Senator Mary Landrieu kept the Senate in session through the night insisting on the removal of language in the bill that would bar the federal government from forgiving the loans.
Democrats argued that the language would subject Gulf Coast communities to restrictions never before imposed on local governments who obtained federal loans to keep essential services following a disaster.
Before the final Senate vote, Levin offered an amendment that would have allowed forgiveness of the loans, if approved by Congress. But Majority Leader Bill Frist objected, killing the amendment. Frist then moved to pass the bill with the restrictive loan language and neither Landrieu nor Levin objected.
Earlier, Republicans blocked two efforts by Landrieu to send the aid package to the House. One would have stripped the loan repayment language, which Senator David Vitter said had been insisted on by House GOP leaders. The other would have allowed the loans to be forgiven only by the White House Office of Management and Budget.
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