Construction Legislative Week in Review
www.agc.org June 12, 2014
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On the Inside
2014 ELECTIONS
Shocking Loss for the U.S. House Majority Leader
TAX
House Passes Two Tax Bills
Attend Next Week’s AGC Summer Financial Issues Forum Meeting
TRANSPORTATION
House Passes FY 2015 Transportation Funding Bill
TCC Fly-In Brings 400 Contractors to D.C. to Support a Highway Bill
2014 ELECTIONS
Shocking Loss for the U.S. House Majority Leader
 

The political world was stunned Tuesday night when college professor David Brat toppled U.S. House Majority Leader Eric Cantor in Virginia’s 7th Congressional district. With 100 percent of the precincts reporting, Brat beat Cantor 55.5 percent to 44.5 percent and by a margin of 7,212 votes.

 Cantor lost for varying reasons. First, his perceived position of supporting amnesty as part of the immigration issue proved a lightning rod used against him by conservative commentators.  Second, the majority of his central Virginia Republican electorate clearly believed he was part of the problem in Washington.  Third, the campaign strategy of attacking Brat as a liberal clearly backfired and was ill-advised. It is unlikely that painting someone who hails from the Tea Party as a "liberal" would carry any credence with a voter who pays attention.   Finally, it became apparent that the Majority Leader had lost touch with the core Republican base that originally elected him. Still, this is a shocking outcome and the first time in electoral history that a majority leader was denied re-nomination.

 Cantor’s loss caught the entire political world by surprise. Polling, most specifically the released McLaughlin Associates poll for the Cantor campaign that showed the Majority Leader ahead 62-28 percent in the closing days, badly missed predicting the race's outcome.

The Democratic nominee is Randolph Macon College professor Jack Trammell. He teaches at the same school as Brat, which should make for an interesting general election. The 7th District is heavily Republican so, barring a mistake-laden campaign, the new GOP nominee begins as the favorite to win the general election.

Who Will Succeed Cantor (Changing by the minute)

Majority Whip Kevin McCarthy (R-Calif.) has announced his intention to run for Cantor’s position with the outgoing Leader's backing. Meanwhile, House Conference Chair Cathy McMorris Rodgers (R-Wash.) stated that she will remain in her current post. The same is true for House Budget Committee chairman and former Vice Presidential nominee Paul Ryan (R-Wis.).

The Texas delegation is deciding who to back from their delegation against McCarthy; either Rules Committee and former National Republican Congressional Committee chairman Pete Sessions (R-Texas) or Financial Services chairman Jeb Hensarling (R-Texas). Both men hail from Dallas. A leadership candidate brandishing support from a united Texas delegation would be formidable. Late last night, unconfirmed but well-placed, sources suggest that Hensarling has decided not to pursue running.

 McCarthy has vulnerabilities, though he must be viewed as the leading candidate. His detractors say his job performance as Whip is lacking. While others may concede such, they counter with the observation that his talents and attributes blend better with the Majority Leader's position rather than running a Whip team. Conservative McCarthy opponents say that electing him will signal that the Conference is continuing to languish in their current lackluster pattern, a trend that at least central Virginia voters overwhelmingly rejected on Tuesday night.

Additionally, in his favor, Rep. McCarthy is a strong fundraiser with the potential to reach an even higher level. With Cantor on the way out - the Majority Leader was the House's top fundraiser next to Speaker Boehner - the party has a major void to fill. An alternative, however, also carries major fundraising ability especially with Sessions coming from the wealthy North Texas region. 

The Race for Whip

With McCarthy running for Leader, his Whip post must be vacated. Therefore, a replacement election for this position will also occur on the 19th. Here, it appears the leading candidates are Chief Deputy Majority Whip Peter Roskam (R-Ill.) and New Orleans area Rep. Steve Scalise (R-La.). Rumors abound that a deal might be in the works to put Roskam in the Whip's chair while slotting Scalise as his Chief Deputy. Others discount such talk suggesting that Scalise, with his strength among conservatives is actually the man to beat.  To complicate the race, Rep. Marlin Stutzman (R-Ind.) announced Thursday morning he too would enter the Whip’s race.

With leadership elections arising in the wake of Cantor’s surprising defeat, but nonetheless during the middle of campaign season, the Republicans are making a smart move in allowing only a small time window for the leadership contests. On the other hand, the fast schedule likely plays to McCarthy’s benefit and could be the true underlying reason for moving so quickly. It should also be noted that the election next week is just a warm up to the leadership elections that Republicans will hold after the election.

Other Primary News

Up Interstate 95 to northern Virginia, former Lt. Gov. Don Beyer easily captured the Democratic nomination, which is equal to winning the seat this November. Twelve-term Rep. Jim Moran (D-Va.) is retiring.

In other states, South Carolina Sen. Lindsey Graham and appointed Sen. Tim Scott easily won their Republican nominations. The only two members of the House delegation to draw primary challenges were Reps. Joe Wilson (R-S.C.) and Jim Clyburn (D-S.C.); both were easily re-nominated.

In Maine, state Sen. Emily Cain easily outdistanced state Senate Majority Leader Troy Jackson to claim the Democratic nomination in the open 2nd District. For the Republicans, ex-state Treasurer Bruce Poliquin defeated former two-time congressional nominee and state Senate President Kevin Raye. Now, Poliquin and Cain square off in the Democratic district, where she will be favored. Current Rep. Mike Michaud (D) is running for governor.

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

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TAX
House Passes Two Tax Bills
 

This week, the House of Representatives voted to approve two more bills that permanently extend expired tax provisions. The “America’s Small Business Tax Relief Act of 2014,” (H.R. 4457) would extend increased expensing limitations under Section 179; and the “Permanent S Corporation Built-in Gains Recognition Period Act,” (H.R. 4453) would make permanent the reduced recognition period for built-in gains of S-corporations. On Monday, AGC joined 154 business associations on a letter to representatives calling on them to pass the bill to permanently extend Section 179 expensing.

H.R. 4457 sponsored by Congressmen Pat Tiberi (R-Ohio) and Ron Kind (D-Wis.) would retroactively restore the 2013 expensing and phase-out levels for Section 179 to $500,000 and $2 million respectively. The bill also would make these provisions permanent and index those levels for inflation.

Under current law, an S-corporation is subject to an entity-level tax at the highest corporate rate on certain built-in gains of property that it held while operating as a C corporation.  The tax applies to gain recognized within ten years from the date that the C corporation elected to be an S corporation, and in the past, Congress has shortened that period to five years.  H.R. 4453 would make permanent the five year period, eliminating a significant deterrent that often discourages closely held C-corporations from electing S-corporation status, thus subjecting them to double tax. 

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org Return to Top

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Attend Next Week’s AGC Summer Financial Issues Forum Meeting
June 19-20, 2014 | Washington, D.C.
 

The Summer 2014 AGC Financial Issues Forum (FIF) will be held June 19-20 in Washington, D.C. at the Westin Georgetown. The meeting is geared toward member company CFOs, CEOs and other senior accounting professionals – in which forum attendees have an opportunity to network and hear from tax experts and congressional representatives present on a wide variety of topics, speakers include:

  • Update on FASB Revenue Recognition and other projects by Cullen Walsh, Assistant Director, FASB
  • FASB & Construction tax issues - presentations by representatives from Moss Adams LLP, CBIZ MHM LLC, Ernst & Young, LLP
  • Presentation on the State of the Surety Industry by David Finkelstein, Executive Vice President, Arch Insurance Group
  • An economic outlook for the industry from Bernard Markstein, U.S. Chief Economist, REED CONSTRUCTION DATA
  • Tax policy discussion with Congressmen James Renacci (R-OH) of the Ways and Means Committee
  • Presentation on AGC’s Health Care Exchange by AGC and Willis

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org Return to Top

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TRANSPORTATION
House Passes FY 2015 Transportation Funding Bill
Senate Prepares Their Bill for Floor Action
 

Earlier this week, the House of Representatives passed the fiscal year 2015 funding bill for the Departments of Transportation & Housing and Urban Development (THUD).  The bill remained largely intact from the one approved by the Appropriations Committee two weeks ago.

The bill which provides $52.02 billion in discretionary funding is over $2 billion less than the $54.4 billion Senate bill, which is expected to be considered later this month.  The major differences between the bills on the transportation side deal with Amtrak and TIGER grants.   For more details on the House and Senate bill can be found here and here.

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

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TCC Fly-In Brings 400 Contractors to D.C. to Support a Highway Bill
 

Earlier this week, nearly 400 contractors, suppliers and other construction industry partners participated in the 2014 Transportation Construction Coalition (TCC) Fly-In to deliver the message to Congress that without a fix to the Highway Trust Fund in the next several weeks, transportation construction throughout the country will be significantly slowed.  Attendees also pressed their Representatives to reauthorize and fully fund the reauthorization of MAP-21 before its expiration on Sept. 30, 2014, sharing an AGC created HTF funding chart.  In addition, the contractors urged members of Congress to ask the Environmental Protection Agency to redo their recent rule expanding Federal Clean Water Act jurisdiction. 

U.S. Department of Transportation Secretary Anthony Foxx and key congressional leaders addressed participants prior to their meetings with their representatives and senators.  Secretary Foxx shared highlights of the administration’s reauthorization bill, the GROW America Act , while Congressman Earl Blumenauer (D-Ore.) rallied the crowd with his declarative support of increasing the gas tax to pay for the next highway bill.  Attendees also heard from House Transportation & Infrastructure Committee Chairman Bill Shuster (R-Pa.) and Senate Environment & Public Works Committee Ranking Member David Vitter (R-La.).  Chairman Shuster and Senator Vitter provided updates on the reauthorization of MAP-21 and the importance of avoiding any disruption in the Highway Trust Fund this summer.

The TCC Fly-In provided AGC members the opportunity to spread the message of our  Hardhats for Highways grassroots campaign on Capitol Hill and encourage Congress to act in a bipartisan bicameral way on real solutions that will address the immediate and future HTF revenue shortfalls.

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

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