Construction Legislative Week in Review
www.agc.org November 13, 2014
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On the Inside
CONGRESS
Top Priorities for the Lame Duck
House and Senate Leaders Reelected
2014 ELECTIONS
Several Races End, Others Remain in Overtime
TAX
AGC/CFMA Construction Financial Management Conference
AGC responds to IRS on Contracts
Early Bird Extended for AGC Financial Issues Winter Meeting
CONGRESS
Top Priorities for the Lame Duck
 

Now that the election has concluded, only four weeks remain until Congress adjourns for the year.  There are a number of legislative items Congress needs to address during this four-week lame duck session before they leave Washington.  Here is a breakdown of the construction industry priorities that need to be addressed.

Tax

In the remaining four weeks of legislative action for tax policy, the most likely outcome is a renewal of approximately 60 expired provisions, retroactively for fiscal year (FY) 2014 and possibly prospectively for FY 2015 – depending on the scenario that plays out among the changing majorities. There may be an effort to make some provisions permanent, such as the bipartisan supported Research & Development tax credit; the Section 179 business expensing at some threshold above $25,000; and/or there may be horse-trading to ensure Democrats get permanency on their priorities in the tax code, such as the refundable child tax credit or the American Opportunity Tax Credit. Comprehensive versus “business-only” tax reform has been on the top list of priorities for many government leaders, and the debate will be renewed with incoming Republican chairmen and a more conciliatory administration.

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

Federal Procurement

Opportunity remains for the inclusion of a number of direct-federal agency contracting reforms as part of the National Defense Authorization Act (NDAA) bill, which has passed Congress annually for the last 53 consecutive years.  Those contracting reforms include: (1) prohibiting reverse auctions for construction services; (2) reasonably limiting single-step design-build procurements; (3) reasonably limiting second-step design-build finalists to three to five teams; (4) preventing individual surety fraud; and (5) expanding small business loan opportunities by increasing the Small Business Administration’s loan guarantee threshold. As it stands, AGC worked to ensure these initiatives were included in the House version of the NDAA bill, which passed in May. The Senate has never approved its version of the NDAA bill. During the lame duck session, a final NDAA bill is expected to pass and AGC continues to push for the enactment of these same initiatives. AGC members are encouraged to take action and contact Congress to support prohibiting reverse auctions for construction services and the rest of these important initiatives.  

For more information, please contact Jimmy Christianson at (703) 837-5325 or christiansonj@agc.org.

Immigration

In 2013, the Senate passed bipartisan comprehensive legislation which generally met AGC’s priorities for reform. The House opted to follow a strategy of “piece meal” reform and never considered the Senate bill. Leading up to the mid-term elections, the administration threatened executive action on immigration because of Congress’ inability to pass legislation and the flow of undocumented and unaccompanied minors from Central America was becoming a humanitarian crises. With the election in the rear view mirror and the crisis on the southern border waning, the president is again looking toward an executive action that would among other provisions, suspend deportation orders for up to 4.5 million unauthorized immigrants. The proposal offers short-term, temporary relief, but fails to address the broken immigration system, the very system that allowed millions of unauthorized immigrants to become stranded in the US. Because the plan being contemplated by the White House does not address less-skilled foreigners, Congressional Republicans are already looking at ways to defund and override what they view as an abuse of presidential power. The immigration debate could be a big influencer of how (and for how long) the government is funded during the lame duck session, but neither the White House nor House Republicans have fully committed to a strategy yet.

Health Care

Limited health care policy is expected in the lame duck and there will be no way to block or repeal the Affordable Care Act next year. But changes to the law on the periphery mostly regarding employer mandates are possible and likely. The 30 hour/week rule for defining full-time employment is the most vulnerable and could see the threshold restored to a more common definition, such as 40 hours. The phase-in of the employer mandate will also be targeted, and there is bipartisan support to reduce the burdens of the reporting requirements for employers and repeal of the medical device tax.

NLRB

The term of National Labor Relations Board member Nancy Schiffer (D) expires Dec. 17 and it is expected that a new nominee could be in place prior to next year. That may very well be the case because Republicans will be unable to avert the confirmation of a Democratic nominee during the lame duck, but would be able to do so when they control the Senate next year. The nominee for the post is expected to be Lauren McFerran (D), a former congressional lawyer for the Senate labor committee. Other issues regarding the NLRB could occur during the next several weeks, including a final rule from the board on expediting the election

Pensions

With the midterm election behind us, AGC is once again pushing for Congress to pass multiemployer pension plan reform legislation, largely based off the NCCMP’s Retirement Security Review Commission’s Solutions Not Bailouts (SNB) proposal. Our goal now is to force Congress to deal with this during the lame duck. The breadth of Republican pickups in the election will probably delay action on this legislation next year, so we are making a full-court push during the lame duck session.

Congress has several options available to address pension legislation in the remaining weeks of the current session:

  • The AGC-preferred action would be enactment of legislation, including the principles in the SNB proposal; however, enactment of SNB is becoming more of an uphill battle, although possible.
  • Congress could simply extend the Pension Protection Act (PPA) for another year or two, with a one-year extension being the most likely course of action.
  • Congress could fail to act on SNB and allow the PPA to sunset. This scenario is the most unlikely.

AGC continues to advocate for enactment of SNB and highlights the risk of delaying action into another Congress. 

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

Transportation

Surface transportation policy remains uncertain going forward.  Rep. Shuster (R-Pa.) will likely chair the house committee, but his likely Democratic ranking committee member Peter DeFazio (D-Ore.) is being challenged by John Garamendi (D-Calif.) for the spot as top Democrat on the committee.  Chairs and ranking members are in the process of being selected over the next few days.  After those selections, they will appoint subcommittee chairs and ranking members and then move to fill open committee slots over the next few weeks.

In a phone call with AGC members today, Chairman Shuster acknowledged that the solution to the trust fund problem has not yet been identified and that he and the speaker are working very closely to find a solution that will allow Congress to write a long-term, well-funded bill.   The Chairman urged AGC members to educate newly elected members of Congress about the trust fund, the solid rationale for conservatives to support infrastructure, and the fact that devolution efforts would likely exacerbate rather than mitigate the infrastructure funding shortfall the country faces.  He also mentioned the importance of the Ways and Means Committee members in the House for their role in finding a long-term funding solution.

On the Senate side, they will also be selecting chairs and ranking members on key committees. Once that is completed, we will have a better idea of where the lame duck will take us.

For more information, please contact Jeff Shoaf at (202) 547-3350 or shoafj@agc.org. Return to Top

House and Senate Leaders Reelected
 

The House and Senate held leadership elections this week with no real surprises.  The lone spot on the Senate Republican side that had been up for grabs – the chairmanship of the Republican Senatorial Committee – went to Roger Wicker of Mississippi.  The lone surprise on the Democratic side went to Elizabeth Warren (D-Mass.) who was appointed to a new spot in Senate Democratic leadership that will handle the outreach to progressives.  Meanwhile, Sen. Amy Klobuchar of Minnesota is expected to take the steering and outreach slot now occupied by Sen. Mark Begich of Alaska, who was ousted by Republican Dan Sullivan on Nov. 4. The timing of when that pick will occur remains unclear.  These two changes can be seen as Majority Leader Reid’s effort to make some changes after the election defeat last week.  House members stuck with their leadership team, re-electing Speaker Boehner and Majority Leader Kevin McCarthy.  Only the Speaker is forced to do a vote of the full house when Congress reconvenes in January.  The speaker is expected to win that election as well.

For more information, please contact Jeff Shoaf at (202) 547-3350 or shoafj@agc.org. Return to Top

2014 ELECTIONS
Several Races End, Others Remain in Overtime
 

As has been the case during this entire week, covering the 13 various campaigns that were too-close-to-call immediately following the election has been the dominant political subject.  A few of those races have officially ended, while others are still in limbo. 

Alaska

The Senate race, as has been predicted since Election Night, officially went to Republican former state Attorney General Dan Sullivan. With almost 20,000 post-election ballots counted, Sen. Mark Begich (D) could only manage to cut Sullivan's 8,000+ vote margin by 238 votes. The Alaska victory means the Senate party division is now 53 Republicans and 46 Democrats, counting the two liberal Independents, Sens. Bernie Sanders (Vt.) and Angus King (Maine), who caucus with the Democratic party. 

In the Alaska Governor's race, the election night pattern likewise continues. In this case, Gov. Scott Parnell (R) is losing further ground to Independent Bill Walker. Though the 4,004 vote deficit is not insurmountable for the Governor based upon the number of votes remaining to be counted, the trends suggest it is highly unlikely that he will be able to turn the outcome.

Arizona-2

Republican Martha McSally (R) claimed victory in her race against Rep. Ron Barber (D). Arizona has a specific system for handling races that end in close fashion. According to state election law, an automatic recount is ordered for any contest that ends within a 200 vote spread. Given that McSally’s margin was 161 votes, this race will head to a December recount. 

California

CA-07: Rep. Ami Bera, in what is now being tabbed as the most expensive congressional race in the country, has taken the lead over ex-Rep. Doug Ose (R) as absentee ballots continue to be counted. With still approximately 19,000 votes to count, Bera has taken a 711 vote lead. He had trailed during the entire counting process until yesterday.

CA-09: Rep. Jerry McNerney (D) was projected the winner in his San Joaquin County district. This race had never been on the political board, but challenger Tony Amador (R) made it a battle. McNerney won 52 percent of the vote. 

CA-16: Rep. Jim Costa (D) has taken the lead. He now holds an 86 vote advantage over farmer Johnny Tacherra (R). This finish could become incredibly close. With Costa now holding a small edge, approximately 4,600 votes remain to be counted.

CA-17: The double-Democrat battle between Rep. Mike Honda and former Obama administration official and high tech attorney Ro Khanna is over. The victory goes to Rep. Honda who wins an eighth term, but with a diminished 52-48 percent victory margin.

CA-26: Freshman Rep. Julia Brownley (D) has been re-elected to a second term. With absentee ballots now pushing her lead to 2,730 votes, it is mathematically evident that challenger Jeff Gorell (R) cannot neutralize the difference.

CA-31: In a race the National Republican Congressional Committee left by the wayside until the very end, GOP nominee Paul Chabot conceded his election as San Bernardino County, open seat Democratic contender Pete Aguilar's 51-49 percent margin will be sustained. The result is a Democratic conversion because Republican incumbent Gary Miller chose not to seek re-election.

CA-52: Originally, it appeared that former San Diego City Councilman Carl DeMaio was one of the nation's top Republican challengers, and had a legitimate chance to unseat freshman Rep. Scott Peters (D). However, with the votes now counted, the Congressman has secured a second term in a 52-48 percent margin. 

Louisiana 

The lone remaining Senate race is the Louisiana post-election run-off, and both Sen. Mary Landrieu (D) and Rep. Bill Cassidy (R-LA-6) are hitting the campaign trail hard. Both have ads running, and each are attempting to move the Keystone Pipeline energy bill in their respective chambers during the lame duck session for purposes of showing that they each have legislative clout and can deliver energy-related jobs.  Voters will choose between the two in the December 6 run-off.

Maryland-6

As was expected when freshman Rep. John Delaney (D) went ahead of challenger Dan Bongino (R) by about 2,000 votes with about 5,000 remaining to count, the end quickly followed. Bongino conceded to Delaney picking up 48% of the aggregate vote as compared to the incumbent's 50 percent, a margin of 2,269 votes. 

New York-25

In another race that appeared destined to an obvious finish despite the close battle between the candidates, veteran Rep. Louise Slaughter (D) has now officially been projected as the winner in her Rochester congressional district, nipping Republican Mark Assini by an expanded margin of 869 votes. 

Washingon-4

When Rep. Doc Hastings (R) retired, a bevy of Republicans jumped into the campaign to succeed him. When two members of the GOP advanced to the general election for the first time in the state's history, the party couldn't lose but it was unclear whether former state legislator and Washington Agriculture Department director Dan Newhouse or ex-NFL football player and previous statewide candidate Clint Didier would win the general election. Enough of the mail vote has now been received and counted to declare Newhouse a 51-49% winner.

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

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TAX
AGC/CFMA Construction Financial Management Conference
 

Last week, over 420 construction company owners, CFOs, CPAs and consultants attended the very successful 18th Annual AGC/CFMA Construction Financial Management Conference, jointly sponsored by AGC and the Construction Financial Management Association (CFMA). During 36 interactive sessions over the three-day meeting, owners and financial professionals heard from leading experts in the fields of accounting, tax, financing, IT, insurance and sureties, health care, fraud, workforce strategies, contracting, claims and risk management.

Speakers included Joe Poliafico from FMI Risk Management, Alex Lee from Wills Company, Tim Wilson from BKD, Larry Smith from FASB, and John Armour from CBIZ & Mayer Hoffman McCann. Mark your calendars for the 19th Annual AGC/CFMA Construction Financial Management Conference, which will be held Nov. 4-6, 2015 at Caesars Palace in Las Vegas, Nev.

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

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AGC responds to IRS on Contracts
 

On Nov. 3, AGC sent a letter to the Internal Revenue Service (IRS) responding to the agency's request for comment for the collection of data regarding the aggregation or severance of long-term contracts. The letter stated that "AGC supports the continued effort to reduce the paperwork and respondent burden. However, we feel that making changes to the current regulations to impose additional disclosure requirements on all taxpayers will result in a reporting burden, risk, and cost that far outweigh any benefit that might accrue to the IRS with the disclosure."

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

Early Bird Extended for AGC Financial Issues Winter Meeting
 

The AGC Financial Issues Committee (FIC) Winter Meeting will be held Jan. 8-9, 2015, at the Longboat Key Club. The link to the meeting’s registration page is hereEarly Bird registration has been extended to Nov. 20, so register today!

Speakers added to the agenda include Jeanne Wierman, IRS Construction Technical Advisor and Dean Zerbe from Alliant Group covering taxes and John Armour from CBIZ MHM LLC speaking about FASB issues.

The meeting is geared toward member company AGC member company CFOs, Treasurers, Finance Directors, Controllers, Tax Directors and other senior accounting professionals. Members have an opportunity to learn as well as formulate positions on tax and accounting matters that directly affect the bottom line and operations of AGC member companies of all sizes and specialties. Current FIF projects include helping construction companies to prepare for the new Revenue Recognition Accounting Standard Update that goes into effect in 2017.

Meetings center around discussions with FASB reps, congressional representatives, practitioners, and financial officer breakout groups on topics including internal controls, project performance reviews and using technology like Box.com in operations or accounting functions. Attendees also have an opportunity to network and discuss a wide variety of topics, including: audit issues faced by construction companies; congressional action on tax policy; and an economic outlook for the industry.

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