While the White House and Congress continue to wrangle over the debt ceiling, the House and Senate now are so at odds over the latest extension to the FAA reauthorization bill proposed by the House, that the top Senator dealing with transportation issues says the extension may lapse.

The latest stumbling block is over a change to the extension that zeroes in on a provision that is of top importance to U.S. Sen. Jay Rockefeller (D-W.Va.), the chairman of the Senate Commerce, Transportation and Science Committee. The provision adds a $1,000 per-passenger cap on subsidies to the Essential Air Service (EAS) program to rural communities that would effectively eliminate the service at three airports, including one in the home state of Senate Majority Leader Harry Reid (R-Nev.).

If the House sends over the bill as originally written, the Senate would strip out that provision and send it back to the House, according to a top Senate aide. If the House fails to pass that version by the July 22 deadline, then aviation taxes could lapse, and the aviation trust fund could suffer.

“The collateral damage to the airports community will be substantial,” says the aide, who spoke at an American Association of Airport Executives conference Tuesday. “The collateral damage to the trust fund, the long-term viability of the aviation system will be substantial.”

Underlying this recent tiff over the extension are larger divisions over the actual reauthorization bill. The top issue among them are changes to the National Mediation Board’s (NMB) rules that would make it easier for airline and rail employees to unionize.

The House added the EAS policy riders as a way to extract concessions on the NMB provisions, according to Rep. John Mica (R-Fla.), the chairman of the House Transportation and Infrastructure Committee, who also spoke at the conference.

“It’s just a tool to try to motivate some action to get this resolved,” Mica says, adding that the NMB issue is being moved “at the highest leadership levels of the House and Senate and beyond my ability to resolve.”

If the NMB provision were resolved, “the rest can fall into place within 20 minutes,” Mica says. But the NMB provision, which Delta Air Lines has lobbied to overturn, is a non-starter in the Senate, which already voted against the provision. It also faces a veto threat from the president.

“We’re going to risk everything, because the CEO of Delta Air Lines is throwing himself a world-class hissy fit over the NMB provision and having to deal with the fact that his workers might want to unionize,” says the Senate aide.

Along with that controversy, the leaders of the House Transportation and Infrastructure Committee sent a letter to House Majority Leader John Boehner asking him to appoint members of a House conference committee. To date, all negotiations on the bill have taken place outside the formal conference process.

Boehner is prepared to appoint conferees but is waiting for a “pre-conference agreement” on the NMB provision, according to Mica, who spoke later Tuesday during a House Rules Committee hearing.

Despite all the acrimony, if the opposing sides on Capitol Hill can agree on one thing, it’s that the future funding outlook for airports and aviation in general is lousy. They also appear to agree that airports are going to have to look beyond the government going forward.

Realizing the bleak fiscal outlook for the transportation sector, the Senate Commerce, Transportation and Science Committee will hold a hearing tomorrow to bring in officials from Wall Street who can talk about establishing funds with grants, guaranteed loans and private investment.

“It is not a silver bullet, but probably just one more tool in an arsenal,” says the aide.

Mica says he is probably not the right chairman to bring about an increase in passenger facility charges that could assist airports with infrastructure improvements.

“Try it with the next bill and the next chairman,” Mica says.

But he adds that he believes airports should have more flexibility, but that the “political winds have dramatically changed,” that there’s just not going to be enough money and likely less in the future.

In the future, airports are going to have to get creative —work with the airlines, or install pay toilets as a way of raising revenues, Mica says. And he can’t resist going after his perennial whipping post, the Transportation Security Administration, saying that it should look at recouping security costs from “that disaster going on in your airports, TSA.”

That’s just what Gina Marie Lindsey, the executive director of Los Angeles World Airports, has in mind. During a speech at the Aero Club yesterday, Lindsey called on airports, airlines and the FAA to work together to wean the aviation system off the federal budget process.

“We can sit in our respective dark corners and curse the darkness,” Lindsey says, “or we can light a candle.”

Separately, Mica plans to lash out at the European Union on Wednesday, to retaliate against the EU’s emissions trading system, which would fold U.S. carriers into its cap-and-trade scheme to reduce greenhouse gas emissions. Mica, along with the transportation committee’s top Democrat, Rep. Nick Rahall (D-W.Va.), will introduce a bill to challenge the EU’s plans to impose fees or emissions credit on airlines using European airports.

“We want to give them a little shot across the bow,” Mica says. “We will not accept this lying down.”