January 8, 2009
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ECONOMIC STIMULUS
AGC Welcomes New Congress; Continues Call for Economic Recovery Package
TRANSPORTATION INFRASTRUCTURE
Congressional Budget Office Releases Highway Trust Fund Estimate
TAX & FISCAL AFFAIRS
IRS Published Proposed Regulations to Implement Three Percent Withholding Law
President Signs Pension Relief Bill
LABOR & EMPLOYMENT
House of Representatives Acts Quickly on Labor Issues in 2009
CONGRESS
111th Congress Organizes; Senate Drama Continues

  AGC Welcomes New Congress; Continues Call for Economic Recovery Package
President-elect Obama Calls for “Dramatic Action”
In a press conference held January 8, President-elect Barack Obama reiterated his concern over the state of the economy and called for “dramatic action” on movement of an economic stimulus package. He said that his plan will save or create 3 million jobs by repairing crumbling roads and bridges; eliminating the backlog of well-planned, worthy and needed infrastructure projects; doubling the production of alternative energy; weatherizing 75% of federal buildings and two million American homes; computerizing America’s medical records; updating thousands of schools, community colleges, and public universities; expanding broadband; and investing in science, research, and technology.

President-elect Obama Calls for “Dramatic Action”
In a press conference held January 8, President-elect Barack Obama reiterated his concern over the state of the economy and called for “dramatic action” on movement of an economic stimulus package. He said that his plan will save or create 3 million jobs by repairing crumbling roads and bridges; eliminating the backlog of well-planned, worthy and needed infrastructure projects; doubling the production of alternative energy; weatherizing 75% of federal buildings and two million American homes; computerizing America’s medical records; updating thousands of schools, community colleges, and public universities; expanding broadband; and investing in science, research, and technology.

AGC Submits Stimulus Testimony to House Democratic Steering & Policy Committee
On January 7, the House Democratic Steering and Policy Committee held a forum on the economic outlook and the components of an economic recovery plan to spur job creation and create long-term growth. Speaker Nancy Pelosi (D-Calif.), Steering and Policy Committee co-chairs Congressman George Miller (D-Calif.) and Congresswoman Rosa DeLauro (D-Conn.) chaired the forum featuring a panel of economists and experts in infrastructure investment.

AGC recommended to the Committee a full range of economic stimulus activities, including infrastructure investment and tax policies that would have an immediate positive impact on economic activity.
Click here to view AGC’s testimony.

AGC Holds Media Conference Call on Economic Stimulus
On January 8, AGC hosted a media conference call with approximately 60 reporters to announce its first-ever construction employment and business forecast.  President-elect Doug Pruitt (Sundt Construction, Tucson, Ariz.), CEO Steve Sandherr, chief economist Ken Simonson and members Brian Burgett (Kokosing Construction, Fredericktown, Ohio), Tracy Hart (Tarlton Corporation, St. Louis, Mo.), Steve Kimball (Kimball Construction Co, Baltimore, Md.) and Don Weaver (Weaver Bailey Construction Company, El Paso, Ark.) outlined how under current market conditions almost two-thirds of commercial construction companies are planning to lay off workers this year.  All told, those layoffs could lead to a 30 percent reduction in the commercial construction workforce.  They emphasized that market conditions could change rapidly with new stimulus funding and could actually lead to a 25 percent increase in commercial construction jobs this year. 
To see the forecast results, click here

Transportation Coalition Launches Ad Campaign
AGC, as a co-chair of the Transportation Construction Coalition, has launched a series of new print and online advertisements designed to encourage support for investing in new transportation construction projects as part of the stimulus.

To view the ads, click here and here.

AGC Releases New National and State-by-State Economic Jobs Report
Personal earnings will increase by $1.1 billion and the national gross domestic product will increase by $3.4 billion for every billion dollars invested in new infrastructure projects according to new national and state-by-state data released by AGC on December 16, 2008. The comprehensive new data, which is based on new economic research conducted for the association as well as federal data and economic impact estimations, demonstrates the unmistakable benefit of including infrastructure investments as part of the stimulus package.
According to the new data, for every billion dollars invested in projects designed to improve highways, water systems, educational and health facilities and energy systems, more than 28,500 jobs will be created or saved nationwide. 9,700 of those jobs would be for construction-related work. Another 4,600 would be for associated work, such as suppliers, while another 14,300 of those jobs would be added to the broader economy.
To view the national and state-by-state data, go to http://www.agc.org/stimulus.

AGC continues to press Congress to enact an economic recovery package with infrastructure investment as soon as possible to prevent further job losses in the industry and to create additional job opportunities for contractors and their workers.

For more information, please contact Marco Giamberardino at (703) 837-5325 or giamberm@agc.org. [ return to top ]

  Congressional Budget Office Releases Highway Trust Fund Estimate
According to the Congressional Budget Office (CBO), the Highway Account will have $3.3 billion left at the end of FY 2009.  However, a default is possible due to the fact that tax collections in the latter half of September will not appear until FY 2010 and construction activity increases in the summer and early fall.  Should FHWA run out of cash on a day-to-day basis in late August or early September, it would be necessary to go back to once-a-week reimbursements to states.

In the long-term, at the 2009 inflation spending levels and current tax law, CBO projects that over the six year 2010-2015 period, the Highway Account is $64.7 billion in the red and the Mass Transit Account is $14.3 billion in the red. Under those estimates, a hypothetical six-year highway bill would have to increase taxes by $79 billion over the life of the bill just to keep 2009 spending levels in pace with inflation.  In addition, any real spending increases will have to be matched by tax increases, dollar for dollar.

Click here to view the CBO estimate.

For more information, please contact Brian Deery at (703) 837-5319 or deeryb@agc.org. [ return to top ]

  IRS Published Proposed Regulations to Implement Three Percent Withholding Law
On December 5, the IRS published in the Federal Register a notice of proposed rulemaking to implement the 3 percent withholding law enacted in 2005.  Effective January 1, 2011, federal, state and local governments with annual expenditures of $100 million or more are required to withhold 3 percent from payments for goods and services, including payments made under government contracts with construction companies.  The law was intended to reduce the so-called “tax gap” and tax evasion. 

IRS’ proposed rule clarifies that payments for the construction of a building or other public works projects are subject to 3 percent withholding.  Other key points of the proposed rule include:

• Only applies to payments over $10,000
• No flow down to subcontractors
• Political subdivisions: 2 prior fiscal years determine $100 million threshold
• Only impacts contracts entered into after 1/1/2011
• Credit can be taken against estimated income tax withholdings
• No credit against employment taxes (e.g., Medicare, Social Security)
• Government entities are liable even if money is not withheld

AGC has made full repeal of the 3 percent withholding law a top priority for the 111th Congress.  During the 110th Congress (2007-08), a bill to repeal the law enjoyed the bipartisan support of over 260 co-sponsors in the House and 15 co-sponsors in the Senate.  Proponents of the bill are ready to reintroduce the legislation early in 2009, and AGC will urge all members of Congress to support it.

AGC has also made full repeal of the law a top priority for any economic stimulus package Congress may consider in early 2009.  Although the withholding does not go into effect until 2011, companies, as well as federal, state, and local governments are expending funds to prepare for implementation now.  These are needless preparation expenses in rough economic times.

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

  President Signs Pension Relief Bill
On December 23 President Bush signed into law H.R. 7327, the Worker, Retiree, and Employer Recovery Act of 2008, a bill to provide immediate, short-term relief for single- and multi-employer pension plans whose assets have lost value as a result of the recent market contraction. 

The bill provides an optional one-year freeze on changes in zone status (i.e., “green,” “yellow,” “red”) and the addition of three years to the funding improvement and rehabilitation periods for plans in the “yellow” or “red” zone in 2008 and 2009.  Further, the bill addresses many technical corrections to the 2006 Pension Protection Act sought by multi-employer plan stakeholders. 

AGC worked with a broad coalition of single- and multi-pension plan stakeholders to enact emergency relief prior to the end of the year.  AGC will continue to work with its partners to enact further relief in 2009 if economic conditions warrant.

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

  House of Representatives Acts Quickly on Labor Issues in 2009
This week, the House of Representatives is planning on bringing two pieces of legislation to the House floor that would change how pay disparity in the workplace is handled as well as allow for a new influx of frivolous lawsuits against employers.  The first bill, the Ledbetter Fair Pay Act, would restart the filing period for a discriminatory act each time a paycheck is issued and would expand the class of people able to bring claims against employers. The second bill, the Paycheck Fairness Act, would provide for unlimited punitive and compensatory damages while limiting employer defenses, as well as make it easier for class action lawsuits to be filed.  As was the case last year, both bills are expected to easily pass the House. The Senate held hearings on these issues in the 110th Congress but did not hold any votes.  AGC will track these bills as the debate moves to the Senate. 

Normally, the first week of a new Congress is dedicated to procedural actions such as determining the makeup of committee membership.  The choice to bring two labor bills immediately to the floor as well as bypassing any Committee action on the legislation is a strong indication of the approach the House of Representatives is going to take on labor issues the next two years. 

For more information, contact Kelly Knott at (202) 547-4685 or knottk@agc.org. [ return to top ]

  111th Congress Organizes; Senate Drama Continues
While the Presidential election became official after House and Senate ratification of the Electoral College votes on Thursday, the Senate is still far from final.  Sen. Norm Coleman (R-Minn.) confirmed Tuesday that he will challenge the result of the Minnesota Senate recount against Democrat Al Franken, who is 225 votes ahead of the incumbent. Franken's campaign team, as well as Democratic leaders, have called for Coleman to step aside, though they did not attempt to provisionally seat Franken during Tuesday’s swearing in ceremony.

Additionally, Roland Burris (D-Ill.) was not seated on Tuesday after meeting with Senate Majority Leader Reid. Burris was appointed last week by embattled Gov. Rod Blagojevich (D-Ill.), however Illinois Secretary of State Jesse White has refused to sign the certificate of Burris' appointment. Though some Democratic Senators have spoken out against his seating, the leadership seems more ready to seat Burris as Illinois' next senator if he overcomes legal hurdles in his home state as expected.

Several open seats have already been identified thanks to appointments as well as early announcements.  Sen. Mel Martinez (R-Fla.) will vacate his seat in 2010 and Sen. Kit Bond (R-Mo.), a longtime advocate for infrastructure and the construction industry, announced he would not seek reelection in 2010.  In New York, the Governor has sent financial disclosure worksheets to 10 possible candidates to replace Senator Hillary Clinton (D-N.Y.).  Additional openings exist in Colorado and Delaware.  Given the legal battles and the open seats, the full 111th Senate may not be determined for several weeks. 

For more information please contact Elisa Brewer Pratt at (202) 547-5013 or brewere@agc.org. [ return to top ]