A highway bill passed by the U.S. Congress will fund road improvements in Iowa and encourage the use of ethanol, state officials said.

U.S. Rep. Leonard Boswell of Iowa’s third district said the bill’s effects would boost job opportunities in both ethanol production and the transportation industry.

“It means a lot of jobs and has a high dollar value on it,” Boswell said.

The Transportation Efficiency Act for the 21st Century (TEA-21), as the legislation is titled, extends the ethanol tax credit to the year 2007. Eric Witte, press secretary for Boswell, said there is a 5.4 cent per gallon tax exemption on fuel containing ethanol.

TEA-21 also provides additional federal funding to the states for highway construction and maintenance. Dale VanderShaaf, policy analyst for the Iowa Department of Transportation, said the state will receive an average of $94 million per year in addition to federal highway funding for the six-year life of the bill.

“We’ll complete some projects in a quicker time period because of the overall increase in funding,” VanderShaaf said.

Although Iowa’s overall highway funding will increase, VanderShaaf said the state will actually lose some money in specific programs because of its high use of ethanol.

States receive federal road funding through the National Highway System program in relation to the amount of money they put into their own fund, he said. Because of Iowa’s high use of gasohol, a blend of 90 percent gasoline and 10 percent ethanol, the state has lower tax revenue on fuel. Consequently, Iowa is not able to contribute as much money to the state highway fund.

“In actuality, the tax reduction that ethanol enjoys will cost us a small amount of money in federal dollars, which is new [with the TEA-21 legislation],” VanderSchaaf said.

State agencies in Iowa use gasohol in their vehicles, VanderSchaaf said. The Department of Transportation and some other agencies have also acquired vehicles that are equipped to use fuel with up to 85 percent ethanol.

Boswell said the support for ethanol is good for the state and nation.

“It makes us less dependent on the foreign oil, and our usage of foreign oil has been going up,” he said. “We’ve definitely done the right thing, in my mind.”

Boswell said a plant in Eddyville, Iowa, is a major local producer of ethanol.