Construction Legislative Week in Review
www.agc.org January 16, 2014
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On the Inside
APPROPRIATIONS
Congress Passes Spending Bill to Fund Government in 2014
TRANSPORTATION
Infrastructure BillIntroduced in the Senate
AGC Tells FHWA to Encourage Use of CMAQ Funds for Diesel Retrofits
Transportation Construction Coalition Fly-In June 10-11- Save the Date
News From The Transportation & Infrastructure Committee
TAX
Finance Committee Discussion Draft
Future of the Tax Extenders Movement Uncertain
Ways and Means Chairman Renews Reform Push
2014 ELECTIONS
The Casualty List of the 113th Congress
Special Election in Florida
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APPROPRIATIONS
Congress Passes Spending Bill to Fund Government in 2014
 

Yesterday, the House passed H.R. 3547, the Consolidated Appropriations Act, 2014, by a vote of 359 - 67.  This evening the Senate passed the bill by a vote of 72-26.  The bill comes after Congress failed to pass any of the 12 appropriations bills for fiscal year (FY) 2014.  AGC advocated for the passage of the bill to ensure predictability for FY 2014 federal construction programs.

The legislation – which ends four years of Congress funding government agencies through a series of stopgap spending bills and funding extensions – sets  overall discretionary spending levels of $1.1 trillion as agreed to in the budget conference agreement.  These levels are $45 billion over levels that had been scheduled under automatic sequester spending cuts.

AGC has done an analysis of the FY 2014 federal construction accounts in the bill. According to AGC estimates, the federal construction accounts will receive nearly $108 billion in funding, which amounts to an overall decrease of slightly over $1 billion from FY 2013. It should be noted that the 2013 numbers do not take into account sequestration cuts.  As a result, contractors should expect to a slight increase in certain areas like military construction spending.   On the U.S. Army Corps Civil Works side, contractors should expect a small spike—$723 million—in funding, a positive development. Also, and perhaps most notably, the General Services Administration will receive over $1.5 billion for construction, which is more than the last three fiscal years combined.

The following is a summary of the appropriation bill and the federal construction programs that AGC closely monitors:

Transportation

The bill provides MAP-21 funding levels for federal-aid highways ($40.256 billion) and transit ($8.595 billion).  The bill also provides $1.943 billion for transit Capital Investment Grants and $600 million for U.S. DOT’s TIGER grant program.   Other transportation accounts of importance to AGC members include the Airport Improvement Program - $3.350 billion - and AMTRAK - $1.390 billion. The final transportation funding bill did not include the Senate’s proposed $500 million discretionary bridge program or the Senate’s $100 million for high-speed and intercity passenger rail.

EPA State Revolving Loan Funds

Funding for state revolving loans for clean and drinking water saw their smallest cuts in nearly 10 years.  The Clean Water State Revolving Loan Fund received an appropriation of $1.45 billion , which is only $2.9 million less than 2013 and 32 percent higher than the president’s 2014 budget request.  The Drinking Water State Revolving Loan Fund received an appropriation of $907 million, a decrease of $1.8 million and 11 percent higher than the president’s request. 

Military Construction

Despite the small decrease in total military constructionaccounts in FY 2014, contractors should expect slightly more—roughly 3percent—overall dollars flowing to military construction projects, as the FY2013 figures do not include sequestration cuts. The Department of Defense will add significantly more constructiondollars into the Air Force construction accounts in FY 2014, after asignificant draw-back in FY 2013.

The final FY 2014 appropriations bill’s explanatory text (after page 13) lists all of the projects included in the final bill by state and country.  In addition, it should be noted that:

None of the funds from the Air Force Military Construction Account earmarked for military construction projects in Saipan or for Pacific Air-power Resiliency in Guam, Joint Region Marianas may  be obligated or expended until the Department of Defense completes a Pacific Air Resiliency Study;

Funds in the BRAC 1990 and BRAC 2005 accounts have been merged into one account, under BRAC 1990; and

The bill includes $150 million for DOD’s Energy Conservation Investment Program, which promotes green building initiatives,among other things.

USACE Civil Works

For major construction accounts overall, the U.S. Army Corps of Engineers Civil Works program will experience a significant 17 percent—$723 million—increase in FY 2014. Most notably, the Operations and Maintenance(O&M) Account—which largely funds harbor maintenance dredging—and the Mississippi River and Tributary Account will both see a 25 percent plus increase in FY 2014. You can find a list of projects that could receive construction account funding in FY 2014 by viewing the bill explanatory text, starting at page 7A.

It is also important to note that over $1 billion allocated from O&M comes from the Harbor Maintenance Trust Fund (HMTF). Consequently,more than 50 percent of the annual HMTF revenues will go towards harbor maintenance. This is a truly positive step by appropriators in moving towards fully using HMTF revenues for harbor maintenance, for which AGC has long advocated.

Concerning the Construction Account, USACE can only initiate up to, but no more than, four new construction projects in FY 2014. However, funding in the Construction Account may be used without restriction for construction projects that received funding in prior fiscal years.  

Federal Facilities

General Services Administration

GSA will see a robust FY 2014 program reminiscent of thestimulus years. The Construction and Acquisition Account is funded at $506 million and the Repairs and Alterations Account is funded at $1.253 billion. As the chart below indicates, GSA has seen anemic levels of construction  funding over the previous three fiscal years. In its advocacy efforts, AGC has noted that such levels of funding fail to adequately fund maintenance activities, let alone improve the federal facility portfolio.

Department of Veterans Affairs

For the VA, while overall construction funding remains nearly the same as in FY 2013, the story rests in a drastic change in allocation of funds. The VA construction accounts will see total funds amounting to $1.057 billion in FY 2014. However, the vast majority of thosefunds will be for the Minor Construction Account--$714.8 million—which pays forprojects below $10 million. The VA’s Major Construction Account—for projects over $10 million—has dipped from $1,194 billion in FY 2010 to just $342 million in FY 2014. This is likely a result of difficulties the VA has had successfully completing major hospital projects throughout the country over the last several years, responsible for the continuing loss of congressional faith in the agency to deliver cost-effective projects.

To view the priority projects funded by Congress under this appropriations bill from the Major Construction Account, see page 45 of the bill explanatory text.

Overall, AGC is encouraged that Congress was able to put forth funding bills for the remainder of 2014 and we look forward to the budget and appropriations process returning to regular order in 2015 and beyond.  The return of regular order will allow AGC to continue to educate members of Congress on the importance of investing in our nation’s infrastructure and federal facilities.

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

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TRANSPORTATION
Infrastructure BillIntroduced in the Senate
 

This week, Senators Michael Bennet (D-Colo.) and Roy Blunt(R-Mo.) introduced an AGC-supported Senate companion to Representative John Delaney’s House bill that would attempt to finance transportation, energy, communications, water, and education infrastructure projects.   The bill, known as “The Partnership to Build America Act,” would create the American Infrastructure Fund (AIF) which would provide loans and loan guarantees to state or local governments to finance qualified infrastructure projects. 

The AIF will be funded by the sale of $50 billion worth ofInfrastructure Bonds.  The bill does not require an appropriation; rather, it would generate the $50 billion by incentivizing U.S. corporations to purchase the bonds by allowing them to repatriate a certain amount of overseas earnings at a reduced tax rate. The legislation assumes the $50 billion would be leveraged at a 15:1 rate to provide up to $750 billion in loans or guarantees.   A summary of the Senate’s Partnership toBuild America Act can be found here.

The Senate bill does make some changes to the House version,some of which were advocated by AGC and our colleagues in the High Performance Building Coalition.  Changes include language to require more public-private partnerships for projects the fund finances and the clarification that the fund can make subordinated loans – making it easier for state and local recipients of loans to combine AIF financing with supplemental private equity and debt financing. 

 AGC welcomes innovative financing proposals that will help our nation address our growing infrastructure needs.  AGC is supportive of the Partnership to Build America Act, but our number one goal is to ensure the long-term viability of traditional infrastructure funding mechanisms, such as the Highway Trust Fund.

For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org. Return to Top
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AGC Tells FHWA to Encourage Use of CMAQ Funds for Diesel Retrofits
 

The Federal Highway Administration (FHWA) and U.S. DOT continue to produce regulations and guidance in response to changes that were contained in MAP-21 transportation reauthorization legislation. The latest from FHWA is guidance for implementation of changes made in the Congestion Mitigation and Air Quality (CMAQ) program, which is a special category of highway funding to be used for transportation projects that improve air quality in areas not in compliance with air standards. AGC was successful in expanding the eligibility detailed in MAP-21 for the use of CMAQ funds to assist contractors in retrofitting their off-road construction equipment in air non-attainment areas when required by the contract and addressed this same issue in comments to FHWA on the proposed guidance.

AGC’s comments suggest that the guidance encourage states to use a greater share of CMAQ funds for diesel retrofits because they have proven to be effective in reducing particulate matter (PM 2.5) emissions. The comments object to the directive encouraging states to seek a higher amount of as much as a 50-50 split, with the private sector paying for the retrofits. AGC pointed out that this places a higher financial burden on private sector contractors in accomplishing what is largely a public benefit and that diesel retrofits can have an adverse impact on contractors because they may invalidate a manufacturer’s warranty and undermine the machine’s efficiency. AGC also encouraged FHWA to direct that states take credit for the air quality improvements from the retrofits as part of their transportation air quality conformity process. Taking credit for these air quality improvements can help states avert construction bans and/or threats to their highway funding. 

For more information, please contact Brian Deery at (703) 837-5319 or deeryb@agc.org. Return to Top
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Transportation Construction Coalition Fly-In June 10-11- Save the Date
 

Contact with Congress this year will be vital in getting a well-funded highway reauthorization bill passed on time. The Transportation Construction Coalition (TCC) Fly-In is a great opportunity to bring that message to Capitol Hill. This year, the TCC Fly-In is scheduled to occur at the same time as the AGC Federal Contractors Conference.

The schedule for this year’s TCC Fly-In is as follows:

Tuesday, June 10, 2014

9:00 a.m. – Noon - AGC Meetings with Federal Transportation Agencies

Noon - AGC Issues Luncheon

2:30- 5:00 p.m. - TCC Fly-In Legislative Briefing

6:00 p.m. - Capitol Hill Reception

Wednesday, June 11, 2014

8:00 a.m. - Rally for Roads on Washington Mall

9:30 a.m. – Remainder of Day—Visits with Congressional Delegations

More details will be forthcoming.

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

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News From The Transportation & Infrastructure Committee
 

The House Transportation & Infrastructure Committee this week held their first hearing on surface transportation reauthorization and announced the creation of a special panel on public-private partnerships.

The hearing titled, “Building the Foundation for Surface Transportation Reauthorization” marked the formal kickoff of the committee’s reauthorization process. With MAP-21 expiring on Sept. 30, 2014, Chairman Bill Shuster (R-PA) said he hopes to get the reauthorization done on time and plans to spend the coming months holding more hearings and roundtable discussions to give stakeholders an opportunity to share their policy priorities and concerns.  He went on to say the Committee hope to take action on the reauthorization in the late spring or early summer with the goal to be on the House floor before the August recess.  In terms of what the next bill may focus on, Chairman Shuster highlighted a few key principles – the bill needs to be fiscally responsible, build on the reform in MAP-21, continue to reduce regulatory burdens and provide more flexibility to states and localities.

AGC and plans to work with the House and Senate to ensure that the reauthorization of MAP-21 includes policies supported by AGC and our members.

Also this week, the Transportation & Infrastructure Committee announced the establishment of a special panel focusing on the use of and opportunities for public-private partnerships (P3s) across all modes of transportation, economic development, public buildings, water, and maritime infrastructure and equipment.

The bipartisan panel, to be known as the “Panel on Public-Private Partnerships” will be chaired by Representative Jimmy Duncan (R-Tenn.) with Michael Capuano (D-Mass.) as the ranking member.   The panel will seek to identify: the role P3s play in development and delivery of transportation and infrastructure projects; if/how P3s enhance delivery and management of transportation and infrastructure projects beyond the capabilities of government agencies or private sector acting independently; and how to balance the needs of the public and private sectors when considering, developing and implementing P3 projects.  

AGC looks forward to working with the committee as they continue to develop legislative proposals that will encourage the use of private investment across all modes of transportation.

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

AGC will send Senate Finance Chairman Max Baucus (D-Mont.) a letter commenting on the “Cost Recovery and Accounting Tax Reform Discussion Draft,” released on Nov. 21, 2013. The staff discussion draft addresses a number of areas of concern for construction companies, including depreciation of tangible assets, accounting rules, business expensing and specific deductions such as Section 179D.

The letter AGC is sending the committee tomorrow will address:

  • Proposed depreciation pools
  • Retroactive date for replacement of a new depreciation system
  • Limitations on Repair Regulations
  • Section 179 expensing levels
  • Maintaining Section 199
  • Cash-basis threshold
  • Threshold at which the PoC method of accounting is required
  • Repeal of the home construction contracts exception
  • Taxation of income while in dispute
  • Look-back calculations
  • Repeal of Section 1031 like-kind exchanges
  • Repeal of the Section 179D deduction

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org Return to Top
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Future of the Tax Extenders Movement Uncertain
 

Neither congressional tax-writing committee has a clear path for advancing the recently expired package of 55 tax provisions, and few lawmakers are willing to publicly advocate for anything less than a comprehensive and highly improbable rewrite of the tax code.

This week, Senate Finance Committee Ranking Member Orrin Hatch (R-Utah) called for a case-by-case examination of the expired provisions. He stated, “The extender package is a very difficult thing to do, and I’m going to insist that we cut back rather than just keep all of them.”

Furthermore, Ways and Means Committee Chairman Dave Camp (R-Mich.) continues to hold hard and fast that his focus is on promoting a comprehensive reform and that scrutinizing the extenders would be part of that process, with no separate action on them by the committee. Committee aides acknowledged in the fall that withholding the tax extenders gives the chairman leverage in getting businesses to participate in the reform efforts.

Senate Finance Chairman Max Baucus (D-Mont.) recently said he is working with Senate leaders on the expired tax provisions as the sole agenda before he begins his confirmation hearings for ambassador in the coming weeks. He noted that lawmakers are “trying to see our way through” on how to deal with the tax extenders, and that “there’s a lot of discussion, a lot of interest.” It is unclear whether the incoming Finance Chairman, Senator Ron Wyden (D-Ore.), will immediately act on the tax extenders, some of which he asked for expeditious retroactive passage as the current Energy and Natural Resources Committee chairman.

AGC continues to advocate for comprehensive tax reform, as well as maintaining predictability and certainty for businesses that rely on accurately accounting for certain tax provisions on their financial statements.

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org. Return to Top
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Ways and Means Chairman Renews Reform Push
 

On Wednesday, Ways and Means Committee Chairman Dave Camp (R-Mich.) released a two-and-a-half minute video produced by the committee to highlight the complexity, confusion and cost associated with the current tax code for families and job creators. In December, Chairman Camp was tasked by Republican leadership to acquire the votes required to pass reform in the House before advancing his tax policy agenda. Chairman Camp is now spending the first months of 2014 educating and lobbying members of his own conference on the merits of reform.

Ways and Means Committee members plan to use the Republican policy retreat at the end of January to provide tax reform 101 sessions for members - a process started during the Republican conservative caucus meeting where Chairman Dave Camp highlighted the committee's newest reform-focused video. At the meeting, Republican Study Committee Chairman Steve Scalise (R-La.) told members that Republicans needed a “bold agenda” for 2014, which should include tax reform.

AGC is involved with the education and lobbying of rank-and-file members on the need for comprehensive reforms to the tax code, and is providing additional support through various tax coalitions. The chairman’s video can be viewed here.

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org Return to Top
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2014 ELECTIONS
The Casualty List of the 113th Congress
 

The casualty list for the U.S. Senate and House of Representatives continues to grow each week.  In the past four days, four members of the House announced they would not seek re-election with more announcements likely in the coming weeks and months.

Here is a list of the representatives and senators that have decided to retire or run for another office:

U.S. Senate (7 total - 5D; 2R)

State

Senator

Party

Reason

Race Rating

MT

Spencer Baucus

R

Retiring

Lean R

GA

Saxby Chambliss

R

Retiring

Lean R

IA

Tom Harkin

D

Retiring

Lean D

NE

Mike Johanns

R

Retiring

Solid R

SD

Tim Johnson

D

Retiring

Likely R

MI

Carl Levin

D

Retiring

Toss Up

WV

Jay Rockefeller

D

Retiring

Lean R

U.S. House of Representatives (29 total - 11D; 18R)

District

Representative

Party

Reason

Race Rating

AL-06

Spencer Bachus

R

Retiring

Solid R

AR-02

Tim Griffin

R

Retiring

Lean R

AR-04

Tom Cotton

R

Running for Senate

Likely R

CA-11

George Miller

D

Retiring

Solid D

CA-25

Buck McKeon

R

Retiring

Solid R

CA-45

John Campbell

R

Retiring

Solid R

GA-01

Jack Kingston

R

Running for Senate

Solid R

GA-10

Paul Broun

R

Running for Senate

Solid R

GA-11

Phil Gingrey

R

Running for Senate

Solid R

HI-01

Colleen Hanabusa

D

Running for Senate

Solid D

IA-01

Bruce Braley

D

Running for Senate

Likely D

IA-03

Tom Latham

R

Retiring

Toss Up

LA-06

Bill Cassidy

R

Running for Senate

Solid R

ME-02

Mike Michaud

D

Running for Governor

Lean D

MI-14

Gary Peters

D

Running for Senate

Solid D

MN-06

Michele Bachman

R

Retiring

Solid R

MT-AL

Steve Daines

R

Running for Senate

Likely R

NC-06

Howard Coble

R

Retiring

Solid R

NC-07

Mike McIntyre

D

Retiring

Likely R

NJ-03

Jon Runyan

R

Retiring

Toss Up

NY-04

Carolyn McCarthy

D

Retiring

Lean D

NY-21

Bill Owens

D

Retiring

Toss Up

PA-06

Jim Gerlach

R

Retiring

Lean R

PA-13

Allyson Schwartz

D

Running for Governor

Solid D

TX-36

Steve Stockman

R

Running for Senate

Solid R

UT-04

Jim Matheson

D

Retiring

Likely R

VA-08

Jim Moran

D

Retiring

Solid D

VA-10

Frank Wolf

R

Retiring

Lean R

WV-02

Shelley Moore Capito

R

Running for Senate

Lean R


For more information, please contact David Ashinoff at (202) 547-5013 or ashinoffd@agc.org
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Special Election in Florida
 

 The first phase of the special election to replace the late Rep. Bill Young (R) was held on Tuesday in Pinellas County on the western Tampa Bay peninsula.  Though the Democratic race was a non-event because former state CFO and 2010 gubernatorial nominee Alex Sink was unopposed, the Republican side featured a three-way race.

Lobbyist David Jolly, a former staff member to Congressman Young, won the nomination securing 45 percent of the vote.  Mr. Jolly raised the most money (more than $400,000) on the Republican side and enjoyed support from the Young political organization, including the late congressman's wife, who voiced her support through a television ad.

Placing second was state Rep. Kathleen Peters who never seemed to get her campaign on track.  She garnered votes from 31 percent of the Republican electorate.

Bringing up the rear in both votes and finances was former Blue Angels pilot Mark Bircher, who had the backing of former Congressman Allen West (R-Fla.-22) and some Tea Party organizations.  Considering his financial receipts were under $100,000, his 21 percent showing was more than respectable.

Mr. Jolly's victory enables him to advance to the special general election against Ms. Sink.  He is the clear underdog despite the seat being held by the House's most senior Republican for 43 years.  Ms. Sink has already raised well over $1 million for the special general election, and her active campaign officially begins tomorrow.

Just under 46,000 voters went to the polls for yesterday's special Republican primary election.  The special general is scheduled for March 11.  The winner takes the seat immediately upon election and serves for the remainder of the present Congress.  The winner is then eligible to seek a full two-year term in November.

For more information, please contact David Ashinoff at (202) 547-5013 or ashinoffd@agc.org Return to Top
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