January 24, 2008
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ECONOMY
AGC CEO Meets with the Secretary of Commerce on Stimulus
AGC Weighs in on Economic Stimulus Package; House and President Fail to Include Infrastructure
TRANSPORTATION
Congressional Budget Office Projects Improved Highway Trust Fund Balance
FHWA Administrator Capka to Resign

  AGC CEO Meets with the Secretary of Commerce on Stimulus
AGC CEO Stephen Sandherr and Chief Economist Ken Simonson were among a handful of trade associations invited to meet with Commerce Secretary Carlos Gutierrez this week to discuss the Bush Administration’s objectives in attempts to stimulate the economy.  During the discussion, AGC’s representatives urged the Administration not to discount the impact that a quick infusion of spending would have on the construction economy. 

Sandherr noted that federal agencies and state and local governments have projects on the books that are ready for bid for want of sufficient funding.  In addition it was explained that the $4 billion deficit in the highway trust fund anticipated in 2009 has cast a psychological cloud over state transportation officials and highway contractors who are fearful that it will, unless Congress takes action to fix it, create a $16 billion cut in transportation spending next year.  Sandherr warned that bonus depreciation and more generous expensing rules will have little impact on the construction industry, and the economy in general, if contractors are concerned about a downturn in private and public construction markets.


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  AGC Weighs in on Economic Stimulus Package; House and President Fail to Include Infrastructure
On Friday, AGC wrote the President and Congress to advocate for initiatives that will have an immediate positive impact on economic activity, including immediate infrastructure spending on projects ready in the next 90 days and targeted tax relief.  Thursday, the President and House Leadership announced an agreement in principle which should help stimulate the economy and increase business investment, yet leaves out infrastructure.

Click here to read the letter.

The cornerstone of the plan is a $300 rebate per individual filer which adjusts up to a maximum $600 ($1200 per couple) and begins to phase out at $75,000 ($150,000 per couple).  An additional $300 per child will be included.  The plan also includes 50 percent bonus depreciation for equipment with a depreciation period of 20 years or less, advocated for by AGC so that companies making equipment investment will have more cash on hand.  AGC also insisted on the increased Section 179 expensing up to an overall investment limit of $750,000, also increasing the investment opportunities for contractors.  This will allow small business to fully expense $250,000 in both new and used tangible property in the year it is purchased. 
 
After House members write and vote on the measure, the legislation will move to the Senate, which has not agreed in principle to the entire plan.  AGC has already been working with the Senate pushing for infrastructure investment in the package.  Majority Leader Harry Reid (D-Nev.) has said the Senators would like to add infrastructure investment to the package. AGC will continue to work with Senators Max Baucus (D-Mont.), Ben Nelson (D-Neb.), John Thune (R-S.D.) and Ron Wyden (D-Ore.) who have expressed support for the inclusion of infrastructure spending in the economic growth package.  AGC will also work with Senators to include legislative provisions to prevent the Highway Account of the Highway Trust Fund from going into deficit in the upcoming fiscal year and avert potential cuts to states’ federal highway funding. This is a high priority for AGC in 2008.

For more information, contact either Heidi Blumenthal at (202) 547-8892 or blumenthalh@agc.org, or Karen Bachman at (202) 547-4733 or bachmank@agc.org. [ return to top ]

  Congressional Budget Office Projects Improved Highway Trust Fund Balance
The Congressional Budget Office (CBO) today released its winter "snap shot" estimate of the revenue and balance expectations for the Highway Trust Fund (HTF). CBO estimates that the HTF balance will fall $1.3 billion short of what is necessary to meet projected obligations for Fiscal Year 2009. This estimate is an improvement over the last snap shot released in August 2007, which estimated that the shortfall would be $4.3 billion. CBO reports that, based on historical spending under SAFETEA-LU and information it has received from the states about projected spending, outlay estimates were lowered significantly for the next several years.

While this is an improvement, Federal budget rules would still require a cut in outlays of approximately $5 billon in FY 2009 spending if these numbers do not improve. The shifting estimate point out that the numbers are fluid and the projected shortfall could be higher when the next snap shot is released. The Office of Management and Budget will release its estimate soon and the OMB estimate will be used by the Administration to make its budget request in February for FY 2009 spending.

AGC continues to work with Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking republican Chuck Grassley (R-Iowa) to find the necessary revenue to ensure that no program cuts will be implemented.

For more information, contact Karen Bachman at bachmanK@agc.org or (202) 547-4733. [ return to top ]

  FHWA Administrator Capka to Resign
FHWA Administrator Rick Capka informed AGC and President Bush Wednesday of his intention to resign from that position before the end of February. The decision was based on family considerations.

Administrator Capka did not indicate what his future plans may be. Administrator Capka was a very good friend to AGC. His door was always open, he was willing to listen to our concerns and took appropriate action when necessary. He participated in numerous AGC meetings during his tenure including the 2007 Convention in San Antonio where he addressed the Highway and Transportation Division.

For more information, contact Karen Bachman at bachmanK@agc.org or (202) 547-4733. [ return to top ]