Construction Legislative Week in Review
www.agc.orgFebruary 11, 2010
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On the Inside
CONGRESS
Senators Release Draft Hiring Incentives to Restore Employment (HIRE) Act
Legislative Agenda Hit by Blizzard
Action Needed to Fund Highway Programs
Vote to Approve Pro-Card Check Nominee to NLRB Fails, AGC Members Take Action
ECONOMY
New Survey Shows Possible Upswing in 2011
CONGRESS
Senators Release Draft Hiring Incentives to Restore Employment (HIRE) Act
 

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Chuck Grassley (R-Iowa) today released a draft bill to address current economic conditions.  The draft Hiring Incentives to Restore Employment (HIRE) Act includes tax, pension, unemployment insurance and health care provisions.  

Hours later, Senate Majority Leader Harry Reid (D-Nev.) offered a scaled-down version on the Senate floor the Senate will consider on February 22, following the week-long President’s Day recess. 

Senators Baucus and Grassley announced the Hiring Incentives to Restore Employment (HIRE) Act on Thursday, which includes a variety of tax, pension, unemployment insurance and health care provisions aimed to create economic activity.  However, the downsized version Senator Reid put forth would only include four elements of the HIRE Act: (1) the Highway Trust Fund extension; (2) the Build America Bonds extension; (3) The Schumer-Hatch payroll tax exemption; and (4) the section 179 expensing extension.  The Reid proposal would not include the collection of expired tax provisions, pension funding relief, unemployment insurance, or heath care provisions, although Senator Reid said that these provisions may be moved at a later date. 

Provisions in the Reid proposal taken from HIRE Act include the following:

Highway Trust Fund.  The provision would extend highway and transit programs through calendar year 2010, and transfers from the General Fund to the Highway Trust Fund $19.5 billion in interest foregone since 1998. Read more on the implications to the Highway Trust Fund in Action Needed to Fund Highway Programs.

Election to Convert Tax Credit Bonds to Build America Bonds.  Under current law, Congress provided tax credit bonds to qualifying issuers for certain school and energy projects.  Tax credit bonds provide the bond holder a federal tax credit in lieu of interest.  Build America Bonds provide qualifying issuers a direct payment from the Treasury for a portion of the interest paid on the bond for government works projects.  The provision would allow qualifying issuers of tax credit bonds the option of issuing tax credits bonds under current law, or utilizing the direct subsidy Build America Bond structure for bonds issued after the date of enactment.  The federal subsidy would equal 45 percent of the borrowing cost (65 percent for qualifying small issuers).

Schumer-Hatch Jobs Payroll Tax Exemption.  The provision would offer an exemption from Social Security payroll taxes for every worker hired in 2010 that has been unemployed for at least 60 days.  The maximum value would be equal to 6.2 percent of wages up to the FICA wage cap ($106,800).  There would also be an additional $1,000 income tax credit for every new employee retained for 52 weeks to be taken on the employer's 2011 income tax return.

Extension of Section 179 Expensing.  The provision would extend 2008 and 2009 section 179 expensing thresholds so that taxpayers may elect to write-off up to $250,000 of certain capital expenditures (subject to a phase-out once expenditures exceed $800,000) in 2010 in lieu of depreciating those costs over time.

HIRE Act provisions not included in the pending Reid proposal are as follows:

Expiring Tax Provisions.  The draft HIRE Act would extend several tax provisions that expired at the end of 2009.  Included in these provisions is the 15-year shortened recovery period for leasehold, restaurant and retail improvements, and new restaurant construction. 

Pension Funding Relief.  The provision would provide funding relief for single- and multi-employer pension plans that experienced significant losses in asset value due to the market declines beginning in 2008.  For multi-employer pension plans, the provision would allow plans to amortize 2008 loses over a 30-year period.

For more information, contact Karen Lapsevic at lapsevick@agc.org. Return to Top

Legislative Agenda Hit by Blizzard
 

Unfinished business will need to be addressed when legislators return to Capitol Hill after the Presidents Day recess, following a week of record snowfall in Washington, D.C.  

The Senate held votes on Tuesday, but failed to move forward on the controversial nominee, Craig Becker, to the National Labor Relations Board. AGC had opposed this nomination due to his support of the so-called Employee Free Choice Act. Prior to the snowfall, Senate leaders had proposed an outline of a “jobs” bill that is based on tax incentives to stimulate additional economic growth. However, the week of inaction has put the tax package and infrastructure component of a jobs bill in peril.

Additionally, Congress must take action on spending bills and extending the highway program before the end of February. AGC is advocating crediting the Highway Trust Fund with interest owed to the program prior to 1998. Congress is also considering addressing immigration reform and comprehensive financial regulatory reform legislation, which could impact the availability and cost of credit to contractors and owners.

For more information, contact Jeff Shoaf at shoafj@agc.org. Return to Top

Action Needed to Fund Highway Programs
 

Senate leadership released a draft “jobs” bill this week (see Senators Release Draft Hiring Incentives to Restore Employment (HIRE) Act) that would, among other things, help to keep highway and transit programs operating at current funding levels through December 31, 2010, and transfers funds to keep the Highway Trust Fund (HTF) solvent. The intent was to pass the legislation before the Senate adjourned for the President’s Day recess next week, but due to extreme snow conditions in Washington the Senate will have no further votes until after the recess.

The current extension of highway and transit program authorization expires on February 28, and because of federal budget rules it is important that the extension and transfer of funds happen before that deadline. Meeting this deadline will be difficult because the Senate jobs bill, including the trust fund fix, differs in several important ways from the House-passed bill. In addition, Senate Budget Committee Ranking Republican Judd Gregg (N.H.) opposes the highway program extension on budgetary grounds and will attempt to prevent the bill from moving forward.

Click here to view the impact by state if an extension is not adopted.  If you have not yet done so, please contact your senators, particularly Republican senators, and tell them to support an extension of the highway and transit program with additional revenue through the end of the year. Inform them that failure to pass the extension and the additional program revenue will have a direct impact on FHWA’s ability to reimburse your state DOT for ongoing construction projects and could cause your DOT to cancel scheduled lettings.  You can send a message by calling the Capitol Hill switch board at 1-800-828-0498 and ask for your Senators’ offices, or by following this link to AGC’s Legislative Action Center.

 The Senate “jobs” legislation has a number of provisions that impact the highway program as follows:

 - Extends authorization for the highway and transit programs at FY 2009 funding levels though December 31, 2010;

- Provides $19.5 billion in revenue to the Highway Trust Fund to keep the program solvent into 2011. This transfer would reimburse the HTF for $19.5 billion in lost interest payments since 1998;

- Shifts the cost of motor fuel tax exemptions for state and local governments from the HTF to the general fund.  This would provide ongoing HTF revenue of approximately $1.5 billion each year;

- Restores spending authority lost from an $8.7 billion rescission of contract authority contained SAFETEA-LU.

In addition, the draft legislation extends the Build America Bond program, which was created in the American Reinvestment and Recovery Act (ARRA) and has successfully channeled funding to highway, transit and other infrastructure investment.

For more information, contact Brian Deery atdeeryb@agc.org. Return to Top

Vote to Approve Pro-Card Check Nominee to NLRB Fails, AGC Members Take Action
 

On Tuesday, the Senate defeated a motion to continue debating the nomination of Craig Becker, the Associate General Counsel of the SEIU and the AFL-CIO, to a five-year term on the National Labor Relations Board (NLRB), effectively blocking his confirmation. The vote fell eight votes short of the 60 required to move the nomination to the next step. Two Democrats opposed the motion, Blanche Lincoln (D-Ark.) and Ben Nelson (D-Neb.). The newly-elected Senator from Massachusetts, Scott Brown (R) joined his Republican colleagues in opposing Becker. 

AGC has opposed Becker’s nomination because he has been a strong advocate of the so-called Employee Free Choice Act and is certain to push the Board to effect changes to employee rights like those attempted by the bill, even in the absence of statutory enactment. Mr. Becker has made it clear that he believes that national labor policy can and should be changed through Board decisions and he does not intend to wait for action by Congress.

The Democratic leadership and President Obama must decide how to move forward. One controversial possibility is a recess appointment, but Becker could only serve on the Board for a limited time without unanimous Senate support.

AGC members across the country responded to the call to action. AGC will update the membership on future developments.

For more information, contact Kelly Knott atknottk@agc.org. Return to Top

ECONOMY
New Survey Shows Possible Upswing in 2011
 

The results of the Blue Chip Economic Indicators survey of private economists showed U.S. economic growth will accelerate this quarter from the prior three months as business investment rises and tax refunds spur consumer spending, reported Bloomberg.

This improvement in the outlook for 2010 should help nonresidential investment in 2011, according to AGC’s chief economist Ken Simonson.  Most survey respondents expect investment in structures to contract again this year, BNA reported, while fixed investment will grow due to spending on equipment and software.

AGC reported last week that federal employment figures showed that, excluding construction job losses, nonfarm payroll employment rose for the second time in three months. Construction, on the other hand, lost 75,000 jobs in January 2010.

The survey respondents expect the economy to grow at 3 percent this year, as many changed their predictions for personal income, consumer spending, business investment and pre-tax corporate profits, BNA reported.

For more information, contact Ken Simonson at simonsonk@agc.org. Return to Top

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