Construction Legislative Week in Review
www.agc.org January 13, 2011
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On the Inside
LABOR
Immigration Enforcement and Employment Verification Expected On Congressional Agenda
Health Care Repeal Vote Delayed
TAX
AGC Continues Efforts to Guide Development of Accounting Standards
TRANSPORTATION
House T&I Chairman Announces Start of Transportation Reauthorization Initiative
LABOR
Immigration Enforcement and Employment Verification Expected On Congressional Agenda
 

In the coming months, Congress is expected to hold hearings and introduce bills that would require the use of the E-Verify program and increase enforcement on employers.  AGC will be participating in meetings with the Administration, Congress, and with business coalitions to help focus attention on the needs of the construction industry throughout this debate.  

AGC believes that any mandatory requirement to use E-Verify (currently a voluntary program except for federal contractors) should include: strong liability protections for employers using the system; federal preemption; no vicarious liability; penalties commensurate with the violations; and keeping “knowing” as the liability standard.  While violators of immigration law should face consequences, AGC believes there should be a difference between those who commit simple paperwork violations and those who go out of their way to violate the law. 

AGC remains a steering committee member of the Essential Worker Immigration Coalition (EWIC), which is dedicated to working on immigration issues with both the Administration and Congress. 

For more information, contact Kelly Knott at (202) 547-4685 or knottk@agc.org. Return to Top

Health Care Repeal Vote Delayed
 

The U.S. House had been scheduled to vote this week on repealing last year’s Patient Protection and Affordable Care Act (the health care law).  The repeal bill was expected to pass as well as a resolution instructing various committees in the House to begin the process of crafting a replacement reform package.  However, in the wake of last weekend’s events in Tucson all legislative business in the House was postponed this week and GOP leaders have indicated they would return to legislative business next week. Regardless of the outcome in the House, it is unlikely the Senate would even consider debating repeal legislation.

AGC opposed the health care law because it makes specific changes to the insurance system that directly affects the insurance plans purchased by employers. In order to pay for the cost of the new law, individuals and employers of all sizes will be subject to a combination of new taxes, fees and mandates. At a minimum, AGC hopes provisions such as the 1099 reporting requirement could be repealed before its implementation date of January 1, 2012.  Also, GOP House committee chairs are outlining plans for the health law, with planned oversight investigations and attempts at defunding specific provisions of the law.

AGC continues to encourage members to contact their Representative in opposition to the health care law and urge them to support repeal legislation by visiting AGC’s Legislative Action Center.

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

TAX
AGC Continues Efforts to Guide Development of Accounting Standards
 

Throughout 2010, AGC’s Tax and Fiscal Affairs Committee diligently monitored four major proposed accounting standards updates put forth by the Financial Accounting Standards Board (FASB) that would have a significant impact on the construction industry: loss contingency, revenue recognition, multiemployer pension disclosure, and leases.  Members of the committee formed task forces and volunteered their time and expertise to prepare detailed comment letters to the FASB on each project, participate in FASB-sponsored workshops and meetings, and conduct webinar programs to educate AGC members on the specifics of the proposals.  While the FASB has not issued their final pronouncements, AGC and the committee continue to discuss and work with the FASB to understand the impacts of the proposals on the contractors and towards workable solutions for the industry and the users of its financial statements.  Most recently, the committee discussed the status of these projects with FASB Board Member Larry Smith. Read on for details on each project.

Loss Contingency

On July 20, 2010, FASB proposed new standards for companies to provide enhanced disclosures in financial statements about the contingencies they have made for losses, including potential multiemployer withdrawal liability.  AGC submitted a comment letter to the FASB on September 20 in response to the Exposure Draft.  AGC also joined a group letter that comments on the proposal.  On November 10, in response to the number of negative comments received, the Board announced that a final standard would not be effective for the 2010 calendar year-end reporting period.  The Board will consider the many comment letters received and continue to discuss the issue with stakeholders before redeliberating and issuing a new Exposure Draft.  The Board is not expected to issue a new draft through the first quarter of 2012.

Revenue Recognition

On June 24, 2011, the FASB and the International Accounting Standards Board (IASB) issued a joint Exposure Draft to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).  AGC conducted a webinar for members on July 24 and formed a task force that prepared and submitted a comment letter to the FASB on October 22.  In addition, members of the AGC Tax and Fiscal Affairs Committee have worked closely with FASB staff members leading up to the issuance of the Exposure Draft and into the present. 

On December 20, the FASB issued a staff paper detailing highlights of a proposed final standard, including matters that require further deliberations.  The paper is reflective of the substantial input provided by the public and, in particular, the construction industry that objected to the new model for revenue recognition.  Specifically, the paper recommends to the Boards that the model between goods and services be split.  Under that model, most construction contracts would be considered a service rather than a good and would not have to be broken up into more than one performance obligation, as proposed by the Exposure Draft.  While the staff paper appears to be headed in a direction that may be workable for the construction industry, the Boards have yet to adopt the recommendations, and there are still other important items open for consideration.  As a result, AGC is closely monitoring the deliberations as they occur and informing the debate when possible.  At this time, the Boards plan on issuing a final standard in the second quarter of 2011.

Multiemployer Disclosure

On September 1, 2010, the FASB issued an Exposure Draft to enhance the disclosure requirements about an employer’s participation in a multiemployer plan, including withdrawal liability.  On October 6, AGC offered a webinar to discuss the important changes proposed by the FASB.  On November 1, AGC submitted a comment letter to the FASB, as well as joined a group letter.  Earlier in June, the AGC Tax and Fiscal Affairs Committee met with the FASB staff member for the project to discuss specific construction industry issues and concerns.  AGC is particularly concerned about the economic impacts of disclosure of potential withdrawal liability on construction companies. 

The FASB plans on issuing another Exposure Draft in the second quarter of 2011.  In the meantime, the FASB is considering the large number of comments it received on the Exposure Draft and meeting with stakeholders.  The FASB remains committed to enhancing disclosure of employer’s participation and obligations in multiemployer pension plans to respond to user demands for such information.  At the same time, however, the FASB indicated willingness to compromise with stakeholders on the level of detail of those disclosures, including whether or how to require disclosure of withdrawal liability.  AGC stands ready to advise the FASB on the underlying economic, legal, accounting, and auditing issues that the FASB should consider as it develops a new Exposure Draft and will work to meet with the FASB in the upcoming weeks.  AGC remains cautious that the FASB will issue a new Exposure Draft that does not negatively impact the construction industry.

Leases

On August 17, 2010, the FASB and IASB issued a joint Exposure Draft to develop a new approach to lease accounting to recognize assets and liabilities arising under leases in financial statements.  On December 15, AGC submitted its comment letter to the FASB, one of over 750 comment letters sent worldwide.  The construction industry raised many concerns with the Exposure Draft, primarily regarding the possible expansion of the “lease” definition to include contracts historically excluded as “subcontracts,” “purchase orders,” or “temporary rentals.”  Further construction companies performing work for governments are concerned they could find part of their rental costs treated as “interest expense” and non-remimburseable under the Federal Acquisition Regulations.  The Boards plan on issuing a final standard in the second quarter of 2011.  The AGC Tax and Fiscal Affairs Committee has appointed a liaison for the FASB to contact as the finals standard develops. 

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

TRANSPORTATION
House T&I Chairman Announces Start of Transportation Reauthorization Initiative
 

House Transportation and Infrastructure Committee chairman John Mica (R-Fla.) announced this week that he plans to hold field hearings or "listening sessions" outside of Washington beginning in mid-February to get more input from local and regional officials on what to include in the next transportation legislation. He indicated that this is the first step in crafting a new multi-year surface transportation bill, although he did not give a time frame for completing work on the House version of the bill.

Chairman Mica said his priorities in the legislation are to reform the existing surface transportation programs to reduce costs, speed up project delivery, make greater use of loans from existing federal government programs and give more incentives for private investment in transportation projects.

Chairman Mica also indicated his immediate priority will be to complete legislation to reauthorize the Federal Aviation Administration (FAA). FAA has been operating under a series of 17 extensions because Congress has been unable to come to agreement on the terms for a new authorization measure.

The highway and transit programs are currently operating under a short term extension that expires on March 4. AGC is advocating an extension of the program through the end of the fiscal year to provide some certainty to states on the level of funding while Congress negotiates the legislation.

For more information, contact Brian Deery at (703) 837-5319 or deeryb@agc.org. Return to Top

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