Construction Legislative Week in Review
www.agc.org May 27, 2010
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On the Inside
TAX
House, Senate Try to Pass Trimmed-Back “Extenders” Bill
ENVIRONMENT
Senate to Vote June 10 on Resolution to Block EPA from Using Clean Air Act to Stop Construction Projects – AGC Action Requested!
HEALTH CARE
Guidance on Small Business Health Insurance Tax Credits Released
LABOR
AGC Represents Contractors at Wage & Hour Division Stakeholder Forum
Department of Veterans Affairs Seeking Information on Project Labor Agreements
TRANSPORTATION
Transportation Construction Coalition Pushes for Transportation Authorization
WATER
House Committee Approves Drinking Water Legislation
ELECTIONS
DISCLOSE Act Pulled from House Consideration
Hawaii, Colorado, Connecticut Make Headlines Last Weekend, More Competitive Primaries to Come
TAX
House, Senate Try to Pass Trimmed-Back “Extenders” Bill
 

The U.S. House of Representatives is attempting to finalize a bill that would extend a variety of tax provisions, infrastructure programs, and unemployment and health care payments. The American Jobs and Closing Tax Loopholes Act, H.R. 4213, also includes much-anticipated pension relief for single- and multiemployer plans.  Both Republicans and Democrats have expressed concern with the amount of spending in the bill not paid for. Meanwhile, AGC, shopping center developers and architects have expressed opposition to provisions included in the measure, such as a proposed tax increase on “carried interest” and changes to how S corporations are taxed. 

AGC’s message to the House is that the carried interest provision, as well as a proposed payroll tax increase on certain S corporations, significantly dilutes any benefits that are otherwise provided by the bill.  Despite being portrayed as a way to tax wealthy investment fund managers, the carried interest provision is particularly damaging to private building developers.  It proposes to increase the tax on carried interest from the 15 percent capital gains tax rate to ordinary income rates as high as 35 percent.  The provision is also retroactive, so real estate partnerships and limited liability companies (LLC) that existed before enactment would lose the capital gains treatment on the carried interest, effectively devaluing existing and already depressed properties. 

The bill also contains a complicated and arbitrary provision that would increase payroll taxes paid by S corporations and partnerships engaged in certain professional service businesses.  Like carried interest, proponents of the provision claim that it is designed to combat what they see as abuses by certain bad apples – in this case those in law and lobbying – although other businesses, including architect and engineering firms, are targeted in the bill.  While “construction” is not targeted specifically, all S corps should be concerned.  It is unclear whether “construction management,” which the Internal Revenue Service (IRS) already defines as a service, or firms with incidental architectural or engineering services, would ultimately be excluded.  Moreover, as drafted, the provision sets forth a vague test for a small business to determine whether its principal asset is the “skill and reputation” of fewer than three key employees, and it also arbitrarily discriminates against small businesses by taxing businesses with three or fewer key employees at higher tax rates than businesses that are identical in every respect, except that it has four key employees.  The IRS already has provisions at its disposal to address such problems. 

Notwithstanding the proposed tax hikes on the industry, the bill includes a number of incentives for construction activity and pension relief. 

  • Build America Bonds.  The bill would extend this highly successful program through 2012.  Roughly $100 billion in Build America Bonds have been issued to date. 
  • Water Infrastructure Private Activity Bonds.  The bill would exclude water and sewer bonds from a state’s private activity bond volume cap.
  • Real Estate Depreciation.  The bill would extend for one year the special 15-year cost recovery period for certain leasehold improvements, restaurant buildings and improvements, and retail improvements.
  • Multiemployer Pension Relief.  The bill would allow multiemployer pension plans to elect a 30-year amortization period for certain losses incurred in 2008 and/or 2009. The bill also extends the smoothing period from 5 to 10 years and allows plans the option of up to a 5 year extension of their funding improvement or rehabilitation periods.

Since some of the provisions relating to unemployment benefits and health care expire on Monday, the Senate may stay this weekend to consider the bill. 

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

ENVIRONMENT
Senate to Vote June 10 on Resolution to Block EPA from Using Clean Air Act to Stop Construction Projects – AGC Action Requested!
 

Senators agreed this week to vote June 10 on a resolution that would block the U.S. Environmental Protection Agency (EPA) from regulating greenhouse gases under the Clean Air Act.  AGC is concerned that Clean Air Act regulation of greenhouse gases would delay or stop construction projects nationwide.

S. J. Res. 26 was introduced by Senator Lisa Murkowski (R-Alaska) and is designed to block EPA’s effort to regulate greenhouse gases from motor vehicles that then trigger requirements for emission controls from all other sources, including commercial buildings, industrial facilities, and more.   

EPA regulation under the Clean Air Act means more pre-construction permits, operating permits, and costly technology control installation requirements for building projects, and puts approval and federal funding for highway and bridge projects at risk.  It also means higher energy process for businesses and consumers that will affect demand for construction services nationwide, especially in a down economy. 

AGC urges all members to contact their Senators in support of Senator Murkowski’s resolution.  To send a message to your Senators, you can use AGC’s Legislative Action Center by clicking here.

For more information, contact Karen Lapsevic at 202-547-4733 or lapsevick@agc.org. Return to Top

HEALTH CARE
Guidance on Small Business Health Insurance Tax Credits Released
 

The Internal Revenue Service (IRS) has released guidance and some clarification on the small employer tax credit for health care coverage. The credit was included in the Patient Protection and Affordable Care Act and was designed to encourage employers with average annual wages of less than $50,000 and fewer than 25 full-time equivalent employees to begin offering coverage or to help them maintain the level of health care benefits to their employees.

The new guidance helps employers calculate the average annual wages and clarifies that partners in a business and certain owners are not taken into account as employees nor are their wages used in determining the FTEs average annual wages. The guidance notes seasonal workers are disregarded in determining the FTEs average annual wages unless they work more than 120 days in a year.

During the legislative debate, AGC advocated the tax credits in the Patient Protection and Affordable Care Act were too targeted, complex and offered limited value because the credit phased-out as firm size and average wages increased.

  • Phase I: For tax years 2010 through 2013, employers can receive a tax credit of up to 35 percent of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50 percent of the total premium cost. The full credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000.
  • Phase II: For tax years 2014 and later, eligible employers that purchase coverage through the state Exchange can receive a tax credit of up to 50 percent of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50 percent of the total premium cost. The credit will be available for two years. The full credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000.

Click here to view phase out tables. Table 1 shows the amount of the credit eligible for employers from 2010 through 2013. Table 2 shows the credit available beginning in 2014.

For more information, contact Jim Young at (202) 547-0133 or youngj@agc.org. Return to Top

LABOR
AGC Represents Contractors at Wage & Hour Division Stakeholder Forum
 

On Friday, May 21, 2010, the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) held a Stakeholder Forum to discuss some of the issues and regulations that fall under their purview.  AGC attended the event and participated in sessions that addressed topics with a potential effect on the construction industry.  The Wage and Hour Division is using the theme of “Plan, Prevent, and Protect” to become a more effective enforcement agency.  Success will be measured by baseline investigations in industries where they believe violations are most likely to occur.  Construction is listed as one of the top industries on which they will focus.   A WHD official expressed that while there are no numerical targets for enforcement, results will be measured on an ongoing basis.

The Deputy Administrator, Nancy J. Leppink, began the plenary session by giving an overview of the day as well as the mission of the department.   The overall theme of her remarks echoed many others at DOL under the Obama Administration, including labor secretary Hilda Solis, that enforcement is their top priority.  Driving home the point, she recognized the agency’s accomplishments of hiring 250 new investigators in 2009, with 100 more new hires expected in 2010.  She also acknowledged the agency’s new public service campaign, “We Can Help,” which educates workers on their workplace rights while encouraging them to report employers that are violating those rights, and the new focus on the use of administrative interpretations instead of opinion letters, which she says is a “better use of agency resources” by addressing issues more broadly.

Read more here. For more information, contact Tamika C. Carter at (703) 837-5382 or cartert@agc.org. Return to Top

Department of Veterans Affairs Seeking Information on Project Labor Agreements
 

The Office of Construction and Facilities Management (CFM) located in Washington, D.C., is conducting a survey regarding the use of a Project Labor Agreement (PLA) on a series of projects nationwide. They are looking for interested contractors to fill out the following questionnaire on a series of recent solicitations posted on FedBizOpps.gov.

1. Is your company familiar with Project Labor Agreement (PLA) used on construction projects? Yes/No Comments
2. Would your company likely submit a proposal for the VA construction solicitation that requires the use of a PLA? Yes/No Comments:
3. If VA requires a PLA, would your proposed construction cost likely to increase? Yes/No Comments
4. Does the VA requirement to use of a PLA on a construction project restrict competition? Yes/No Comments
5. Do you expect subcontractor resistance should VA requires the use of a PLA on this construction solicitation? Yes/No Comments
6. Do you have additional comments regarding the use of a PLA for this project?

AGC urges all interested contractors to fill out the questionnaire to give the Department of Veterans Affairs a clear idea of the impact a government-mandated PLA would have on the construction of federal projects. The questionnaire is included with individual job solicitations.

To view AGC’s comments on the PLA Rulemaking, click here and here.

For more information, please contact Marco Giamberardino at (703) 837-5325 or giamberm@agc.org. Return to Top

TRANSPORTATION
Transportation Construction Coalition Pushes for Transportation Authorization
 

Several hundred highway contractors, suppliers and other interested parties converged on Capitol Hill in this week’s Transportation Construction Coalition (TCC) Fly-In.  The agenda for the Fly-In focused on the much delayed surface transportation authorization, status of the Highway Trust Fund and draft climate legislation recently introduced in the Senate that has the potential to establish a new user type fee on motor fuels while allocating only a small portion of the revenue for transportation investments. 

Participants of the TCC Fly-In, co-chaired by AGC, visited hundreds of congressional offices to lobby highway issues, as well as 3% withholding, creation of a Water Trust Fund and pension relief. The group also placed an advertisement in Capitol Hill's Roll Call newspaper.

The Fly-In participants heard from Transportation and Infrastructure Committee Chairman Oberstar (D-Minn.), who pledged his continued commitment to moving the Surface Transportation Reauthorization Act (STAA).  Congressman John Mica (R-Fla.), Ranking Member of the Transportation and Infrastructure Committee, also expressed his commitment to a reauthorization while detailing the challenges of passing an increase in the gas tax to pay for a reauthorization bill.  Ranking Member on the Senate Environment and Public Works Committee, Senator Jim Inhofe (R-Okla.) provided an update on the status of the Senate surface transportation reauthorization bill and also expressed his opposition to the proposed climate change bill and its treatment of revenue derived from the transportation sector.  In addition, Congressman Earl Blumenauer (D-Ore.) provided an impassioned address on the need to tackle our country’s surface transportation and water infrastructure needs.

For more information, contact Sean O’Neill at (202) 547-8892 or oneills@agc.org. Return to Top

WATER
House Committee Approves Drinking Water Legislation
 

Yesterday the House Energy and Commerce Committee passed H. R. 5320, the Assistance, Quality, And Affordability Act Of 2010, or Aqua Act. The legislation originally authorized $14.7 billion dollars over five years for the EPA Drinking Water State Revolving Fund (SRF). Due to objections from Republican committee members, changes were approved by the bi-partisan leadership of the committee to lower the proposal to $4.8 billion over three years and scale back provisions involving mitigation and treatment of  endocrine disrupting chemicals,  which  are increasingly showing up in water systems nationwide.  Instead, the legislation calls for additional EPA studies on the matter.

The presence of the these substances in drinking water are largely thought to be result of  pharmaceuticals and personal care products, which resurface in tap water after being flushed down toilets or drains. These products are among those targeted for user fees to finance  H.R. 3202, the AGC-supported water trust fund legislation. 

Despite AGC’s opposition, the committee accepted an amendment offered by Representative Betty Sutton (D-Ohio) and other members that applied “Buy American” requirements modeled after the Recovery Act.  The legislation also applies Davis Bacon prevailing wages to SRF federal assistance.

While the inclusion of Recovery Act “Buy American” language and decreased authorization level is disappointing, passage of this legislation signifies an important development in continuing to move forward on a full reauthorization of both the Clean Water SRF, which has passed the full House in H.R. 1262, and  companion legislation reauthorizing both programs in S.1005, which is currently stalled in the Senate.

AGC anticipates that this legislation will move to the floor of the House for a vote by the full body in the near term. Prospects for movement on the Senate SRF bill are improving with the House committee’s passage of the Aqua Act. AGC and the WIN Coalition are still working steadfastly to bring the Senate bill to the floor for a vote in this Congress.

For more information, contact Perry L. Fowler at fowlerp@agc.org or (703) 837-5321. Return to Top

ELECTIONS
DISCLOSE Act Pulled from House Consideration
 

Democrats in the House have slowed down efforts to quickly pass the DISCLOSE Act, a bill designed to: increase scrutiny on corporations that want to participate in issue advocacy and electioneering communications; and prohibit political advocacy by government contractors and companies with a more than 20 percent foreign ownership interest. The bill was added to the House agenda at the end of last week, but it has been pulled for the week.

Unlike past attempts to change campaign laws, this package is designed to take effect immediately rather than during the next election cycle, and unlike the Citizens United Case it purports to address, it treats corporations different from labor unions. The House may now take up the legislation in June.

For more information, contact Jeff Shoaf at shoafj@agc.org.
Return to Top
Hawaii, Colorado, Connecticut Make Headlines Last Weekend, More Competitive Primaries to Come
 

 

Honolulu city Councilman Charles Djou (R-Hawaii) won the special congressional election on the Island of Oahu this past Saturday, defeating state Senate President Colleen Hanabusa (D), former Rep. Ed Case (D-HI-2), and eleven others in the all-mail ballot procedure.  Djou placed first in the winner-take-all field, capturing 39.4 percent (67,610) of the vote.  Hanabusa totaled 30.8 percent (52,802) and Case registered 27.6 percent (47,391).

Of the state's two districts, HI-1 is the one seat that could elect and re-elect a Republican.  Pat Saiki won here in 1986 and was re-elected to a second term before running unsuccessfully for the Senate in 1990.  GOP Gov. Linda Lingle carried the 1st district in all three of her gubernatorial campaigns - with 58 and 65 percent in her victorious 2002 and 2006 campaigns, while still managing to garner 52 percent in a 1998 losing statewide effort. Furthermore, Hawaii voters have never defeated a federal office holder.  Djou is just the eleventh person, and second Republican, to represent the state in the House of Representatives and no incumbent has been defeated after obtaining the post.

Appointed Senator Michael Bennet (D-Colo.) lost the state Democratic Party convention endorsement to former Colorado state House Speaker Andrew Romanoff.  Romanoff, who earned 61 percent of the convention delegates, had fewer dollars than Bennet. However, he has been popular in the state since assisting with the Democratic party takeover in the Colorado House over the past 10 years.  Bennet vows to qualify for the state’s primary election, August 10, as a write-in candidate.  Meanwhile, Republican favorite Jane Norton, former Lt. Governor of Colorado, lost her bid to qualify for the primary ballot to Weld County prosecutor Ken Buck.

State Rep. Raul Labrador won an upset victory in Idaho’s 1st District Republican primary Tuesday, defeating military veteran Vaughn Ward, the preferred candidate of the Washington GOP establishment. Labrador will face freshman Rep. Walt Minnick (D-ID), who ran unopposed in the Democratic primary, in the general election.

State Attorney General Dick Blumenthal (D-Conn.) was nominated to the Democratic party’s primary ticket at the Connecticut convention.  With 51 percent of the vote, WWE cofounder and ex-CEO Linda McMahon (R-Conn) was nominated to the Republican Party’s primary after the apparent frontrunner and former Representative Rob Simmons dropped out of the race.

For more information, contact Blair Hood at (202) 547-5013 or hoodb@agc.org Return to Top

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