Tuesday, June 30, 2009

Broadband Construction Grant Guidelines Due For Release Tomorrow

Vice President Biden and newly sworn in FCC Chairman Julius Genachowski are scheduled to appear together tomorrow at a news conference in Erie, Pennsylvania, where the Obama administration is expected to announce the Notice of Funds Availability for $7.2 billion in broadband stimulus funding for construction of wireless network facilities in unserved and underserved areas of the United States. The release will include details of restrictions on those who participate in the grant program, including the FCC "network neutrality" principles already in place as well as expected new restrictions on anti-competitive behavior like delivering the signal of competing content providers at slower speeds than the network owner's own programming.

One FCC desire is that the networks built with grant funds offer the fastest available data transmission speeds. It will not be clear until the NOFA is released whether the FCC will include objective data speed requirements, or will merely give award preferences to those applicants offering the highest transmission speeds.

Unions And Abortion Become Latest Health Care Legislation Obstacles

Nineteen House Democrats have signed a letter to Speaker Pelosi pledging to vote against any healthcare reform legislation "unless it explicitly excludes abortion funding from the scope of any government-defined or subsidized health insurance plan." Signatories include Dan Boren of Oklahoma, Bart Stupak of Michigan, Tim Holden, John Murtha, Kathleen Dahlkemper and Paul Kanjorski of Pennsylvania, Collin Peterson and James Oberstar of Minnesota, Travis Childers and Gene Taylor of Mississippi, Li9ncoln Davis of Tennessee, Solomon Ortiz of Texas, Mike McIntyre and Heath Schuler of North Carolina, Jerry Costello of Illinois, Bobby Bright of Alabama, Steve Dreihaus and Marcy Kaptur of Ohio, and Charlie Melancon of Louisiana.

Labor unions opposed to taxation of health care benefits received from employers as income are mounting a television ad campaign in opposition to Senate Finance Chairman Max Baucus and Senator Kent Conrad of North Dakota, over those Senators' promotion of taxing health benefits as a means of funding health care reform. Release of similar ads attacking Senator Charles Grassley of Iowa for the same reason, and suspension of the attacks on Baucus and Conrad, has been agreed to by the unions pending the outcome of a meeting between Baucus and Jacob Hay of the Laborers International Union of North America.

Meanwhile, Vincent Panvini, lobbyist for the Sheet Metal Workers International Association, announced that his union is suspending all campaign donations and redirecting the $2 million slated for federal candidates toward media efforts against taxation of health benefits. Further opposition to taxing hard won health care benefits comes from the United Food and Commercial Workers and the Teamsters unions. Gerry Shea, of the AFL-CIO says he believes the union campaign against forcing blue collar workers out of the middle class by taking their health care benefits is losing steam in the Senate Finance Committee already as a result of union opposition.

Monday, June 29, 2009

DeKalb County Approves Wind Farm Zoning

Last week the County Board of DeKalb County, Illinois approved rezoning of nearly 200 acres of farmland in the county for construction of 119 wind turbine power generators, to be situated in Shabbona, Milan, Alton and Clinton Townships, over the objections of crowds of homeowners and other opponents who objected to destruction of what they characterized as "the county's agricultural heritage." The Board voted 16-4 to approve the zoning change, with the majority of Board members agreeing that stimulation of the local economy and the tax benefits to county government from construction and operation of the wind farm would outweigh the cultural and aesthetic considerations raised by wind farm opponents.

Highway Trust Fund Clash Sharpens

Senate Environment and Public Works Chairman Barbara Boxer announced last week, at a hearing featuring Transportation Secretary Ray LaHood, that her committee is leaning toward LaHood's suggested 18 month extension of the present funding formulas for highway funding, rather than going along with House Transportation and Infrastructure Chairman James Oberstar's desire to pass a six year $500 billion extension of the Fund before the current authorization expires this coming September 30. Neither Oberstar nor Boxer has advances any idea where the money for their competing proposals will come from.

Senate Environment and Public Works Ranking Member James Inhofe suggests crediting the Highway Trust Fund will the interest earned on its cash balances, which might go a long way towards covering August's expected $20 billion overdraft on the Fund, and Senator Dan Vitter of Louisiana suggests putting all unspent stimulus money into the Highway Trust Fund. Neither Senator has predicted the level of support for his suggestion. Unless someone comes up with a politically acceptable way to raise $500 billion over the next six years real soon, it looks like Oberstar's proposed six year reauthorization is dead in the water for the next year and a half, and the road and bridge segment of the construction industry will suffer accordingly.

House Narrowly Passes Climate Change Bill - Senate May Not Follow

Late last Friday night the House passed the Waxman/Markey climate change measure, as amended by the 40 page manager's amendment filed at 3 a.m. the same day, leading to extremely contentious debate on the House floor and a 61 minute long detailed review of the managers amendment by Minority Leader John Boehner which ran an hour over the debate limit set by the House Rules Committee. House tradition permits the minority leader and majority leaders to close the debate with remarks unlimited by the time rules regarding any bill.

There were 44 Democrats voting against the bill, and the 2 vote margin of passage was procured only by the first floor appearance of Patrick Kennedy of Rhode Island since he checked into rehab, a last minute vote switch by Lloyd Doggett of Texas who announced at the beginning of the day that he would vote against the bill, and finally the yes vote of Alan Grayson of Florida, who was persuaded by Energy and Commerce Chairman Henry Waxman's promise of $50 million from the funds raised by the measure to fund a National Hurricane Research Center in Grayson's Florida congressional district. Defending the Waxman - Grayson deal, which was brokered openly on the House floor during the four hours of debate, Ways and Means Chairman Charles Rangel said "Deals are a means of bringing people together and coming up with a better bill."

Such are the workings of our federal government.

On the other side of the Capitol Rotunda, there are six different Senate committees with jurisdiction over climate change legislation. Senate Environment and Public Works Chairman Barbara Boxer says her committee will finish marking up the Senate version of climate change legislation by the end of July, but Senate Majority Leader Harry Reid does not expect toe other five committees to finish work on the bill before September 18, which would mean the climate change issue will not likely reach the Senate floor until October at the earliest. Look for many more months of deal making and horse trading before a final bill emerges from the conference committee.

Thursday, June 25, 2009

Senator Proposes Fingerprinting Everyone Working In The United States

Senate Judiciary Committee Immigration Subcommittee Chairman Charles Schumer proposed yesterday that everyone with a job in this country should be fingerprinted to document his or her citizenship or other legal right to work in this country. He proposes to make this a provision in comprehensive immigration reform legislation expected in Congress, and pushed by the Obama administration, later this fall. No one is talking yet about how the government will pay for the taking and processing of 100 million sets of fingerprints, but you can bet if Schumer's proposal actually goes forward, the cost will somehow be pushed off onto the nation's businesses which employ the people to be fingerprinted. Going to work in the twenty first century is looking more and more like going to jail.

Contractors Association Opposes Cap And Trade Bill

With House Democratic leaders predicting passage of the Waxman/Markey cap and trade legislation tomorrow with 218 votes in favor, and President Obama throwing the full weight of his administration behind the measure, the Associated General Contractors Of America is urging its members to write their Congressmen in opposition to the bill. AGCOA, while maintaining it is in favor of "reasonable climate change policies that reduce greenhouse gas," it opposes the Waxman/Markey legislation because, according to AGCOA, the bill will increase the cost of construction, make investment in manufacturing and industrial facilities less attractive, add 77 cents to the cost of a gallon of motor fuel, and further squeeze the Highway Trust Fund, which is already falling $20 billion short of infrastructure needs in the next 12 months.

AGCOA also asserts that onerous planning requirements in the legislation will create disincentives for local and state government investment in highway and bridge projects in the future. To facilitate the efforts of its members and like minded construction businesses in opposing the legislation, AGCOA has created a web page making it easy for citizens to write their Representatives in opposition to the legislation:


Chicago Area Construction Industry Over The Precipice

Local construction starts in the Chicago metropolitan area are now forecast to be $11 billion, a 39% drop from last year, and 50% less than the 2006 peak of $22 billion. All major sectors of the industry are predicted to decline, with residential construction expected to fall 22% from last year, institutional construction expected to be down 44% from last year, and commercial construction down 73% from 2008.

Wednesday, June 24, 2009

LaHood Predicts Highway Trust Shortfall of $20 Billion

At a meeting with key Senators Monday evening Transportation Secretary Ray LaHood, together with OMB Deputy Director Rob Nabors and National Economic Council Deputy Director Jason Furman, estimated that the shortfall in revenues flowing into the federal Highway Trust Fund between now and the 2010 elections will be $20 billion, but nevertheless reiterated the Obama administration's opposition to any motor fuel tax increase to close the burgeoning gap in funding. Last year the first ever deficit in the Highway Trust Fund was closed by Congress with an $8 billion appropriation from general revenues, but a similar $20 billion appropriation to carry the fund past the 2010 election cycle seems unlikely, given the stimulus bill already passed this year, and other deficit exploding legislative initiatives including health care reform and climate change which are on the Congressional docket right now.

Administration officials are parsing the math on "loophole closers" such as reduction of the favored tax status of oil and gas production, known as "depletion allowances," though such tax measures could also affect other types of mining operations in addition to oil and gas. Although any such tax code changes would likely result in price increases at the pump, they would be less direct than a motor fuel tax increase, and therefore politically more palatable to the Obama administration, which would rather be seen as taxing corporations than as taxing consumers.

How American Is "Buy American?"

Ten House Democrats, led by Ellen Tauscher of California and Adam Smith of Washington, sent a letter to OMB Director Peter Orszag, urging him to draft stimulus spending regulations subjecting state and local governments awarded stimulus money to the same international procurement agreements applying to the federal government. The letter is an effort to head off a threatened move by Canadian cities to stop buying pumps and other water infrastructure equipment from United States manufacturers, which could cost the U. S. industry as much as $2 billion each year. The letter also requests that Orszag define as "American made" both products made in U. S. owned foreign factories from U. S. produced material, and products made in U. S. factories from foreign sourced materials. The letter does not explain how such definitions save or create jobs in this country.

House Climate Change Text To Be Released Today For Friday Debate

The complete text of the Waxman/Markey climate change measure, including the deal announced late yesterday between Energy and Commerce Chairman Henry Waxman and Agriculture Chairman Collin Peterson, is expected to be released to Representatives later today, in preparation for floor debate beginning Friday. Lagging behind the House proceedings, Senate Majority Leader Harry Reid won't meet with Environment and Public Works Chairman Barbara Boxer, Energy and Natural Resources Chairman Jeff Bingaman, Foreign Relations Chairman John Kerry and Agriculture Chairman Tom Harkin to discuss the Senate version until after the Independence Day recess.

Waxman agreed with Peterson to give USDA, rather than USEPA, oversight of agricultural activities coming under the cap and trade program, and to suspend for at least five years the EPA proposal to factor in Brazilian rain forest land use changes into calculation of the carbon footprint of American corn based ethanol. The deal gives USDA veto power over a National Academy of Sciences study on the land use issue during the interim five year period. Look for House passage of the climate change bill before the Independence Day recess, and for Boxer and other Senate leaders to fall substantially in line soon after Congress reconvenes.

Tuesday, June 23, 2009

Allies Assemble Along Both Sides Of Transportation Battle Line

Transportation Secretary Ray LaHood and House Transportation and Infrastructure Chairman James Oberstar are both enlisting powerful allies in their ongoing clash over the reauthorization of the federal Highway Trust Fund, as the battle lines harden in Congress. LaHood has enlisted the support of Senate Environment and Public Works Chairman Barbara Boxer, Pennsylvania Governor Ed Rendell and Vermont Governor James Douglas, chairman and vice chairman, respectively, of the National Governors Association Economic Development and Commerce Committee, in favor of a proposed $10 billion, 18 month temporary patch for the fund while seeking a way forward during the long term by finding new revenue sources other than an increase in motor fuel taxes. At the same time, Oberstar, with the support of the American Association of Port Authorities and the Laborers International Union of North America, forges ahead today with a subcommittee markup of his 775 page, six year, $450 billion reauthorization measure, which he proposes to move to the House floor before Labor Day.

Boxer's committee on the Senate side is far in Oberstar's dust in terms of legislative drafting, which makes her a prime candidate to support LaHood's band aid proposal. Meanwhile, House Ways and Means Chairman Charles Rangel will hold a hearing on highway and transit financing tomorrow. This will be a pitched battle, and the outcome will be extremely meaningful, one way or the other, for the construction industry.

Climate Change Hurtles Forward In The House

Late yesterday the House Energy and Commerce Committee filed its 1,202 page climate change measure with the House Rules Committee, in preparation for beginning floor debate on Friday. Final details of ongoing negotiations between Energy and Commerce Chairman Henry Waxman and Agriculture Chairman Collin Peterson needed to generate the 218 votes required for passage of the bill in the House will be handled as a floor managers' amendment during the debate. Meanwhile, Ways and Means Chairman Charles Rangel is seeking tougher provisions respecting countervailing tariffs to be imposed against goods from countries not coming up to at least 80% of U. S. emissions restrictions.

The Waxman/Markey bill currently requires other countries to meet only 60% of U. S. emissions restrictions, and gives the President discretion to either impose countervailing tariffs, or to continue distributing free carbon emission credits to American industries. Rangel wants the extension of free credits to be the exception to the countervailing tariff rule, and to be available only with Congressional approval.

Meanwhile, the Congressional Budget Office has scored the Waxman/Markey measure, and, despite the inflammatory rhetoric of many Republican politicians against the bill, CBO has determined that the average cost of cap and trade and all the other energy independence and efficiency requirements of the bill to consumers of power and heating fuels would be about $0.48 per day, or the equivalent of one postage stamp. Finally, a University of Massachusetts study of the legislation concludes its enactment could create as many as 1.7 million new jobs.

Monday, June 22, 2009

Highway Reauthorization Conflict Continues

Delivering a direct head butt to Transportation Secretary Ray LaHood and the Obama administration, House Transportation and Infrastructure Chairman James Oberstar announced this morning that he intends to begin a markup Wednesday in the Highways and Transit Subcommittee of a six year, $500 billion Highway Trust Fund reauthorization measure for federal surface transportation projects. Unwilling to accede to Secretary LaHood's request for an 18 month interim funding measure for the Highway Trust Fund while new revenue sources to pay for transportation infrastructure are explored, Oberstar and his committee still have not disclosed how they expect to raise the revenue required to fund his proposals.

The current Highway Trust Fund legislation expires September 30, 2009, and the fund is expected to be as much as $7 billion in the red by that date if no new measure is signed into law before the fiscal year ends on that date. President Obama has dismissed both current proposals for raising the needed funds, including increasing the gasoline tax to $0.40 per gallon, and imposing a new tax on vehicle miles driven. Transportation and Infrastructure Ranking Member Jerrold Nadler of New York insists that other revenue raising measures to fund surface transportation are under consideration. Congressman and Transportation and Infrastructure Committee Member Vernon Ehlers of Michigan has suggested new taxes on intermodal freight containers, and an oil refinery tax, as possible revenue measures to fund transportation infrastructure projects.

Oberstar's draft bill would reduce the time states are allowed for completing highway and other transit and transportation infrastructure projects funded by the bill from 14 years to 3 years. The Oberstar draft also would cut the number of different formulas for distributing the cash to states and territories from 108 different formulas to only four formulas, greatly simplifying state and local transportation construction project planning. If Oberstar gets his way, the legislation should be delivered to the Oval Office before the Labor Day recess.

Chairmen Still At Odds Over Climate Change

House Energy and Commerce Chairman Henry Waxman and House Agriculture Chairman Collin Peterson remain in disagreement over the details of the cap and trade provisions of proposed climate change legislation, with Peterson insisting he will not vote for the measure unless USEPA gives up its plan to use Brazilian rain forest deforestation impacts in calculating the carbon footprint of American corn based ethanol as an alternative fuel.

Meanwhile, a CBO stand alone scoring of the cap and trade provisions of the climate change proposals predicts an average increase in energy bills for American households of $175 annually, with the poorest households seeing a reduction of $40, middle class folks getting bigger bills ranging from $235 up to $340 more than their current costs, and the richest of all among us [who presumably are already heating and cooling their mansions at great expense] an increase of $245 annually. Now we know the cost of energy independence and environmental responsibility.

Health Care Reform Stumbles Along The Halls Of Congress

Not to be outdone by Senator Kennedy, House Energy and Commerce Chairman Henry Waxman, together with other House leaders, unveiled an 850 page draft of the House health care reform proposals, a mere 235 pages longer than the incomplete Kennedy draft legislation. The House version includes a public plan, and requirements that every citizen purchase health insurance, and every employer provide health coverage for its employees. Employers not providing insurance would have to pay a tax equal to 8% of gross payroll, and individuals not purchasing coverage would pay a tax equal to 2% of gross income.

CBO has not scored the House draft yet, but you can bet it will cost out at least equal to the $160 billion annual cost of the incomplete Kennedy draft. Leaders in both houses have already conceded that neither measure will come to the floor before the Independence Day recess.

Obama Throws Another Log On The Fire

As if climate change, highway funding and health care reform were not enough fuel for the fires of Congressional debate this session, this morning President Obama unveiled the outline of his immigration law reform proposals. In a speech at the annual Esperanza prayer breakfast, Obama said, "We must ... clarify the status of millions who are here illegally, many who have put down roots ..." by requiring the illegals to pay a fine, pay all unpaid U. S. taxes for the time they have been here, learn to read and speak English, and go to the back of the line of those wading through the citizenship process.

Look for a bill this session, but probably not before the end of the fiscal year.

Thursday, June 18, 2009

Federal Highway Trust Fund Reauthorization Hits Another Speed Bump

House Transportation and Infrastructure Committee Chairman James Oberstar wants to proceed with a $450 billion, six year reauthorization measure for the Highway Trust Fund, which expires at the end of the current fiscal year on September 30, 2009, and which at the current burn rate will likely run out of cash as soon as August 1, 2009. House Democrats would like to fund the bill by increasing the federal gasoline tax above the current level of $0.184 per gallon, but the Obama administration, including in particular Transportation Secretary Ray LaHood, is opposed to any fuel tax increases.

Last time this sort of impasse came up in Congress, there was a series of three month long interim extensions of funding for highway construction. LaHood is proposing an 18 month extension measure, to give the administration time to figure out how to fund a permanent reauthorization. LaHood's announcement yesterday seriously undercut Oberstar's proposed release today of an 80 page outline of his committee's proposed permanent reauthorization measure, and both Republican and Democratic Representatives on the Transportation and Infrastructure Committee are upset. Ranking Member John Mica raised an eyebrow over the timing of LaHood's announcement in light of the bipartisan agreement on the committee: "It's very unfair to Chairman Oberstar," he said. "He's worked long, hard, and very effectively, and for them to come in at the eleventh hour and undermine him, I've never seen anything like it before. I'm very disappointed."

Meanwhile, Association of Equipment Manufacturers President Dennis Slater spoke out in favor of Oberstar's long term approach to reauthorization, and against a temporary fix for highway construction authorization legislation. "If Congress can make a long term commitment to investing in infrastructure, contractors will be able to make needed investment in capital equipment that will meet the short term need to put people back to work and meet the long term need to repair and update the U. S. infrastructure," Slater remarked. "An efficient and safe transportation network benefits all of us, and we urge swift action by the Committee and the House to consider this vital legislation."

Illinois Budget Stalemate Delaying Stimulus Projects

Illinois has joined the ranks of states where legislative stalemates over capital improvement budgets are stalling the spending of stimulus dollars which could be creating jobs for contractors, subcontractors and material suppliers in the construction industry. As much as $39 billion in federal cash slated for "shovel ready" highway projects in Illinois, without any state matching funds, is nevertheless being held up due to the failure of the state legislature to pass a budget Governor Quinn will sign. Without a budget bill signed by the governor, the state Comptroller can't cut checks to pay road contractors, and although the Illinois Department of Transportation is already beginning to award contracts for some of the stimulus funded projects, DOT will not issue notices to proceed until the budget is signed into law, because DOT wouldn't be able to process contractor pay applications unless the Comptroller is authorized to issue checks to pay for the work.

According to IDOT spokesperson Paris Ervin, "If the legislature sent the governor a budget he agreed with we wouldn't be in this situation." The legislature will reconvene in special session on June 23, but because the regular legislative term has already ended, passage of any budget measure now will require a supermajority vote in favor of the bill.

Wednesday, June 17, 2009

Health Care Rationing By Another Name

President Obama and his allies in Congress continue to insist that "health care reform" will not mean federal government takeover of the medical care system in the United States, and they are not attempting to ration care as a way of reducing the overall cost of health care as a portion of America's Gross Domestic Product. However, as Congress explores various methods of paying for what the CBO has now scored as the $150 billion annual cost of the proposed legislation, one serious revenue raising proposal offered is taxing all employer provided health benefits greater than 110% of the federal government employee health benefits. This means that if your business, together with employee contributions, would pay more than $17,240 per year in 2013 for family health coverage, or more than $6,800 per year for individual health coverage, every dollar in excess of those amounts would be taxed at the employee's highest marginal rate.

What ever happened to "if you like your present plan, you can keep it?" And if this does not represent a form of rationing of health benefits, I must have missed class the day my high school English teacher explained the new meaning of the word "rationing."

Other measures under discussion for funding the enormous cost of universal health coverage for all Americans include increasing the current Medicare tax from 1.45% up to 2.1% of the employee's income, and a "value added tax" of 3% on everything except housing, banking, education and medical care. Ouch!! Finally, Representative Allyson Schwartz of Pennsylvania suggests a ten cents a can tax on all naturally sweetened soda drinks. Diet sodas would not be taxed.

Federal Loan Guarantees For New Nuclear Power Reactors

It appears that four power companies will split the $18.5 billion in loan guarantees established by the Obama administration for construction of new power generating reactors in the next few years. Construction of these new reactors by UniStar Nuclear Energy, NRG Energy, Scana Corporation and Southern Company could begin as early as 2011, with the power coming on line in 2015 or 2016. If you are involved in nuclear power plant construction, sharpen your pencils right now and get ready to bid.

Monday, June 15, 2009

Defense Supplemental Appropriates $4.4 Billion For Construction

Both houses of Congress begin debate this week on the fiscal 2009 Defense Supplemental Appropriations bill, which has been reported out of the conference committee. The $106 billion measure funding the wars in Iraq and Afghanistan includes a little over $4.4 billion for military and other construction projects. The Defense Department will get $2.7 billion for various construction projects, including $263 million to complete construction projects at the Naval Hospital in Bethesda, Maryland and the Dewitt Army Hospital at Fort Belvoir, Virginia. An additional $488 million is included for construction at other stateside military hospitals, and $170 million for a data center for the National Security Agency.

The State Department is getting $896 million for a new embassy and some consulate buildings in Pakistan. The Army Corps of Engineers is provided $847 million for barrier island and ecosystem restoration projects in the Gulf states, to repair hurricane damage from the last several years.

Clean Coal Creeps Forward, Climate Change Stumbles Once More

Energy Secretary Steven Chu announced today that his department will commit $1 billion to move forward with the Mattoon, Illinois carbon capture demonstration power plant project which stalled under Bush administration Energy Secretary Samuel Bodman. Chu promises the Energy Department will complete and review a new cost estimate for construction of the plant before making a final decision whether to break ground and build the power plant.

Comprehensive climate change legislation, however stumbled again in Congress as House Agriculture Chairman Collin Peterson prepares a comprehensive amendment to address the concerns of the National Farmers Union over certain provisions of the Waxman/Markey climate change proposal from the House Energy and Commerce Committee. NFU President Roger Johnson issued a statement asserting his organization could not support the Waxman/Markey bill unless the Agriculture Department is given authority over agricultural carbon offsets rather than USEPA, there is no cap on domestic offsets, and farmers are permitted to stack environmental benefit credits.

Across the Capitol lobby, Senate Energy Chairman Jeff Bingaman amended the Senate version of climate change legislation to give FERC power to site new power transmission lines, and give federal courts the power to override state law eminent domain jury trials and procedures should transmission line building require private property to be condemned for power line easements. And, Florida Senator Bill Nelson is still threatening to filibuster any climate change bill in the Senate unless authority for offshore drilling along Florida's Gulf Coast is stricken from the measure.

Health Care Reform: Checking In For A Check Up

President Obama was in Chicago today speaking at the American Medical Association, in an effort to enlist physicians in his health care reform movement. Last Week the AMA formally announced opposition to any plan which forces doctors to accept patients at Medicare reimbursement rates. Obama promised his Public option plan would pay more than Medicare [the Kennedy bill calls for 110% of Medicare rates] and promised he is not trying to achieve government run health care in the United States.

Obama also said he wants to "scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care," but he spoke out against caps on jury awards for medical malpractice. Although the Senate Health, Education, Labor and Pensions Committee will begin marking up Senator Kennedy's draft measure Wednesday, nobody has yet come close to explaining how the federal government is going to raise the $100 billion a year these proposals will cost.

Thursday, June 11, 2009

New Federal Stimulus Subcontract Front End

Yesterday the Associated General Contractors of America and its affiliated construction industry organizations which together publish the ConsensusDOC series of construction contract forms released the new ConsensusDOC 752-Subcontract For Federal Government Construction Projects. This form document is designed to include in the subcontract all the provisions needed to comply with current Federal acquisition Regulations, according to ACGOA. If your business plans to perform work on any of the stimulus funded projects that come along this summer, you and your lawyer should get familiar with this new document right away, as you will be seeing a lot of it, even from other general and trade contractors with which you have done business in the past, and whose forms you think you already know.

House Appropriations Subcommittees Gear Up

Beginning action for the regular federal spending cycle, subcommittees of the House Appropriations Committee approved some measures of potential interest to the construction industry this week, including $64.4 billion for the Justice, Commerce and Science budget, which includes another $400 million for jail construction and policed officer hiring in areas overwhelmed by illegal immigration problems. This measure passed after a 29-22 defeat of an amendment which proposed to rescind every dollar of the $625 billion stimulus appropriations which has not been spent so far.

A second appropriation measure for the Interior Department totaling $32.3 billion includes $10.75 billion for EPA clean water and drinking water projects and environmental cleanup activities, among other agency needs. This is in addition to the $10.95 billion for EPA projects in the stimulus package.

The third important measure for businesses in the Washington D.C. area is the appropriation measure providing for $3.7 billion for Congress itself, which includes down payments on a $100 million reconstruction of the U. S. Capitol Dome, and $700 million to rebuild the century old Cannon building housing legislative offices.

Agriculture Department Broadband Grant Rules Coming June 30

USDA Undersecretary for Rural Development Dallas Tonsager announced yesterday that rules governing grants for broadband construction provided for in the stimulus legislation under the Rural Utilities Service will be published by June 30, opening the way for interested businesses to apply for these funds.

Climate Change Measure Continues To Rankle

It isn't just Republican Congressmen and Senators who are opposing the American Clean Energy and Security Act of 2009; the Obama administration's carbon cap and trade measure pending in the House. Democrat Senator Bill Nelson of Florida is threatening to filibuster the measure in the Senate unless an amendment permitting oil and gas drilling off the Florida coast is stripped from the bill. Meanwhile, on the House side, Agriculture Chairman Collin Peterson and Commerce Chairman Henry Waxman are meeting in person today to see if they can resolve an impasse between the committee staffs on the question whether EPA or the Agriculture Department should control agricultural carbon offsets. At the same time, House Republicans are calling for alternative proposal to increase domestic oil and gas production, and construction of 100 more nuclear power plants in the next 20 years.

The problem for the construction industry is this: passage of the Democrat backed cap and trade bill will promote construction in certain energy sectors, and passage of the Republican backed measure would promote construction in other energy sectors. A deadlock resulting in no legislation on the subject, however, will stall energy sector construction for the next two years.

What's Coming For Business In Health Care Reform?

I have spent the last day and a half parsing the 615 page "draft" of Senator Kennedy's Affordable Health Choices Act. Without waiting for the Senator and his Committee to fill in the few significant sections stating only "Policy Under Discussion," here's what's in the bill as presented:

if you have health coverage now, you can keep it.

everyone who applies must be accepted.

all policies must be guaranteed renewable.

dependent coverage must continue up to age 26.

employers must offer coverage and file an information return identifying covered employees and telling how many months each employee was covered.

everyone must purchase health insurance, or pay a fine in an amount to be determined by the Secretary of Health and Human Services.

all health insurance will be subject to the following requirements:

no exclusion for preexisting conditions
no premium differences based on health status, gender, past claims
premiums may vary from locality to locality based on local costs
premiums may vary based on age and family structure
no annual or lifetime limit to benefits payable

The bill leaves it up to the Secretary of HHS to determine the amount of the fine for not being covered during any period of 90 days or more, but I am predicting the amount will be equal to the individual coverage premium under the prior year's public plan as proposed in the legislation. How will the government know you aren't covered? Your employer will report social security numbers of those who are covered, and if you file a tax return and don't show up in the database of covered SSN's as reported by all employers, you will be charged the fine.

If you or your business has any concerns with these proposals, now is the time to get in touch with your Congressman and Senators.

Tuesday, June 9, 2009

Stimulus Controversy Continues

Arguments in Washington over the pace and effectiveness of spending the stimulus appropriations continued yesterday, with President Obama and Vice President Biden promising to increase the pace of spending to save and create jobs, while House Oversight and Government Reform ranking member Darrell Issa complained about the lack of any mechanism for tracking and monitoring the expenditures. At the beginning of yesterday's Cabinet meeting, President Obama announced that 150,000 jobs have been saved in the first 110 days since enactment of the legislation, and promised to create or save 600,000 more jobs in the next three months by speeding up the pace of spending. Vice President Biden added "What we're talking about here is putting some pace on the ball."

President Obama contends that the infrastructure and safeguards for spending the remaining $675 billion in stimulus appropriations is in place, and added, "... you haven't heard a bunch of scandals - knock on wood - so far." Before the cabinet meeting began, Representative Issa complained that "[President Obama] has put in place an impossible scenario where the federal bureaucracy will be asked to absorb and disburse an unprecedented amount of taxpayer dollars without any reliable mechanism in place to track and monitor stimulus spending."

House Appropriations Proposes $68.8 Billion For Transportation And Housing

Despite the delays in progress of a surface transportation reauthorization bill for the next six years, the House Appropriations Committee today is expected to propose annual discretionary appropriations for fiscal 2010 totaling $68.8 billion for the HUD and Transportation departments. There is no clear path for this appropriation in the Senate as yet, however.

E-Verify Funding Extension Through 2011 Proposed

The House Homeland Security Appropriations Subcommittee unanimously approved a spending bill for the Homeland Security Department yesterday including reauthorization of the cost of the employer on-line work authorization program E-Verify for checking prospective employee eligibility to work in the United States. The reauthorization was requested by the Obama administration through 2012, but the Committee extended the program only 2 years amid hopes for enactment of comprehensive immigration law reform before the 2011 expiration.

Commuter Rail Tunnel Ground Broken In New Jersey

Federal contributions of $3 billion toward the $8.7 billion cost of a new commuter train tunnel between New Jersey and Manhattan is the largest federal expenditure for a single project to date in the history of the Federal Transit administration, agency chief Peter Rogoff announced at the ceremony yesterday, where New Jersey Governor Jon Corzine said the project will create 6,000 new construction jobs for the next six or seven years, and 45,000 more new jobs once the two tracks in the tunnel are operational in 2017.

Monday, June 8, 2009

Stimulus Funding Under New Attacks

Opponents of the American Recovery and Reinvestment Act appropriations inside and outside of government are renewing their attacks on the spending program, this time by arguing that the economy is improving, and that the approximately $675 billion which is still unspent out of the total $787 billion in appropriations should be repealed and used instead to pay down the expected federal deficit of $2 trillion. Senator Jim DeMint of South Carolina, along with House Minority Leader John Boehner of Ohio and Stanford University economist John Cogan all argue that the economy is already beginning to recover, and that the recovery is not the result of the stimulus legislation. At the same time they assert that the appropriations have failed to stem job losses, and the money should be redirected to other purposes.

The 85% of stimulus appropriations still sitting in vaults at the Treasury Department are, of course, a tempting target for any legislator needing funding for his or her project which got left off the stimulus list. The lesson business people can take from the renewed attacks is that if you want your business to get any help at all from the stimulus measure, you need to get to work and see to it that your contract or grant is not only approved, but also funded, before these new repeal efforts can gain momentum.

Friday, June 5, 2009

Fuel Tax Shortfall Woes Trashing Road Construction Programs

In statements to the House Transportation - HUD Appropriations Subcommittee yesterday, Transportation Secretary Ray LaHood reiterated that the Obama administration does not want to increase motor fuel taxes to shore up the Federal Highway Trust Fund, despite funding shortfalls amounting to $3.6 billion. Pressed by Subcommittee Chairman John Oliver of Massachusetts about how the executive branch proposes to supply the missing cash, LaHood vaguely referred to public toll roads, toll bridges, public-private partnerships and an "infrastructure bank." Although he cited the average citizen's dire financial straits as the reason for not increasing the federal gasoline tax, it sounded like all his other proposals would just represent a different way of taking money out of the pockets of the driving public.

In a related development yesterday, Michigan DOT Director Kirk Steudle told a legislative committee in Lansing that his department will cancel 137 road projects totaling $740 million in value because the state gas tax shortfall of about $102 million will mean inability to provide matching funds for $576 million in federal highway funds. Michigan Infrastructure and Transportation Association spokesman Mike Nystrom says his state stands to lose $1.9 billion in federal highway grants through 2013 unless the fuel tax shortfall can be remedied. To make up the difference, Michigan gas tax would have to go up from $0.19 per gallon to $0.34 per gallon.

With federal fuel efficiency requirements going up, public transportation usage on the increase in major metropolitan areas, and people just plain driving less because of their economic circumstances, this situation will only get worse. Even should the economy snap back, more miles driven per gallon of gas purchased will constantly increase road wear and tear while at the same time reducing the money available for repairs, improvements, and new highways and streets. And LaHood never said where the money to build all these toll plazas and bridge tollgates will come from.

Unless Congress and 50 state legislatures have the courage to raise taxes and fill in this revenue pothole, the road building segment of the construction industry is going to have it pretty rough over the next several years, in spite of the stimulus appropriations.

Climate Change Bill Still Running The High Hurdles

In addition to the ongoing maelstrom swirling around House Energy and Commerce, House Ways and Means, and House Agriculture Committees over the carbon emissions cap and trade provisions of the climate change legislative measure, two other aspects of the bill of particular interest to the construction industry have floated to the stormy surface of the debate. Yesterday Republicans on the Senate Natural Resources Committee proposed an amendment to strip from the bill its requirement that state and local building codes be periodically revised to keep up to date with energy efficiency technologies in construction, to boost building energy efficiency in the year 2016 by 50% over 2006 levels. The amendment was defeated 13-10 on a party line vote, but the controversy will continue. While the House version of the bill requires states to certify that their building codes have been updated to modern energy efficiency standards, the Senate version does not.

A second hurdle in the House version is the "buy American" provisions for new plug in electric cars, and for construction of the factories needed to build them. "Buy American" requirements would apply to auto factory construction for electric plug in car production whether the factory was entirely new, as well as remodeling existing production lines to build these new cars.

Lobbyist: Verizon Lukewarm Towards Stimulus Broadband Grants

Verizon Communications chief lobbyist Tom Tauke said yesterday at a news briefing that Verizon expects most of the federal stimulus grants for wireless internet expansion construction to go to state and local governments, who will then contract the actual network construction to companies best positioned to expand high speed internet access to unserved and underserved areas. Verizon is going to stay away from these grants as it positions itself to oppose proposals for stricter federal limitations in Verizon's ability to give preference to its own content on its networks. I guess this means Verizon is going to leave the construction work to the little guys, contracting with local governments which receive the grant funds.

Health Care Reform Battle Lines Emerge

Describing two key elements of the Kennedy/Obama/Baucus health care reform outline as "litmus test" issues, Senate Finance ranking member Charles Grassley said yesterday that the Republican caucus in the Senate is "very, very much" against including provision for a public insurance option in the measure, and also opposes any mandate that employers offer health insurance to employees. Isn't this where the idea got tripped up the last time?

Thursday, June 4, 2009

Mandatory Contractor E-Verify Regulation Delayed

The Department of Homeland Security told Congress yesterday that it is delaying the June 30 deadline for requiring federal contractors to submit all employees through E-Verify until September 8. No reason was given for the delay. House Homeland Security Appropriations Subcommittee ranking member Harold Rogers and House Judiciary ranking member Lamar Smith both criticized the delay as inexcusable.

Rogers said the E-Verify requirement for federal contractors should be implemented immediately, "so that taxpayer money isn't funding illegitimate employment and hard working citizens aren't pushed to the back of the employment line." Smith added, "American workers should not have to compete with illegal immigrants for employment, especially taxpayer-funded federal contract jobs."

The tenor of Congressional response to this delay suggests it is probably the last one, and every contractor, subcontractor and supplier on federally funded projects should get ready to fully participate in the E-Verify system on or before September 8, 2009.

Finding Federal Grant Funding

I have had a lot of inquiries about how to find out what federal stimulus programs could provide grant funding for various projects. There is a government web site which provides a lot of information on the subject, though sometimes it requires a lot of work to find the specific information you are looking for. Here's the link:


Good hunting!

Congress Begins Debating Fannie/Freddie Restructuring

The fate of government sponsored enterprises in the mortgage markets will be a "long distance relay between Congresses, not a 100 meter sprint within the 111th Congress" according to House Financial Services Capital Markets Subcommittee Chairman Paul Kanjorski of Pennsylvania. His subcommittee began hearings yesterday on restructuring of Fannie Mae and Freddie Mac, both of which were put under Treasury Department conservatorship last September. House Financial Services ranking member Spencer Bachus says "any discussion of the long-term future of the GSE's must include a bailout exit strategy."

Employees And Employers Likely To Be Put Under Health Insurance Mandates

Discussion of health care reform on the Hill and at 1600 Pennsylvania Avenue leads to the conclusion that any legislation on the subject coming out of this Congress will most likely include a requirement that every person purchase health insurance, just like most states now require every driver to have car insurance. In order not to completely dismantle the present health insurance delivery system, employers will likely be forced to pay part of the premiums for employees, and also to do the work of collecting and remitting the employee's share by payroll deduction. Medicare and Medicaid will probably continue in substantially their present form, though coverage under Medicare may be reduced to cut costs.

If your business already contributes to employee health care premiums, and collects and remits their share by payroll deduction, nothing much will change for your business. If not, get ready to participate, whether you like it or not.

Ways And Means, Agriculture Committees May Punt Climate Change Measure

Given a June 19 deadline for marking up the Waxman/Markey climate change bill by House Speaker Nancy Pelosi, House Ways and Means Chairman Charles Rangel and House Agriculture Chairman Collin Peterson both suggest that their committees, which have jurisdiction over large parts of the proposed legislation, may skip full markups of the bill before it goes to the House floor. Pelosi wants climate change off her docket before health care reform is addressed, but these two chairmen complain they can't work on both bills at the same time. The complexities of carbon cap and trade have so split these two committees that neither chairman sees any early resolution. Ducking out may be the only way to keep the bill on Pelosi's aggressive schedule.

Tuesday, June 2, 2009

Highway Trust Fund Soon Tapped Out

Senate Environment and Public Works Chairman Barbara Boxer convened a hearing today on the President Obama's appointment of Victor Mendez to be Federal Highway Administrator, but the controversy at the session was not about the qualifications of the nominee. Boxer announced, and Transportation Department spokesperson Jill Zuckman confirmed, that the Federal Highway Trust Fund will run out of cash sometime this August, before the end of the fiscal year, and in spite of an infusion last fall of $8 billion in general revenues. According to Senator Boxer's statement, the Fund is nearly $7 billion short of the amount of money needed to pay for current construction projects through the end of the fiscal year on September 30, 2009.

It does not seem likely that a six year reauthorization bill will pass before the current legislation expires, also September 30, 2009, and Boxer says the administration has advised her that as much as $10 billion will be needed through September 30, 2010, to make up for shortfalls in the fuel tax revenues that supply funding for highway, waterway, railway and public mass transit construction and repair projects. Ranking Member James Inhofe complained at the confirmation hearing that the Obama administration held a conference call with Democratic committee members, to the exclusion of Republicans, to discuss these funding problems, and received a commitment from nominee Mendez that the Transportation Department would include members from both sides of the aisle in future communications.

The Federal Highway Trust Fund was created in 1956 as part of the legislation authorizing the federal interstate highway system, and has been fully supported by fuel taxes until the emergency $8 billion infusion last fall. Federal gas tax revenues have been falling since late 2007, due to declines in miles driven by citizens, greater fuel efficiency of vehicles, and increasing ridership of public transportation. Without an increase in the present tax of 18.4 cents per gallon, the situation will get worse and worse as time marches on. Two Congressionally mandated study commissions have recommended fuel tax increases, to as much as 58 cents per gallon, to maintain surface transportation infrastructure. The alternative proposal of a mileage tax would take as long as 10 years to implement, and if driving mileage continues to decline, it still would not solve the problem in the long run. Despite President Obama's adamant refusal to propose a gas tax increase now, Senator George Voinovich said at the Mendez confirmation hearings that such an increase "is the reality of the situation."

With the complex and contentious issue of health care reform now at the top of the Congressional in box, any permanent solution to this problem is unlikely during this session of Congress, and any serious investment in infrastructure repair and construction beyond the economic stimulus appropriations is just a pipe dream.

New Ethics Rules For Stimulus Grant Applicants

Do you think of yourself as a lobbyist? No? If you have applied for any sort of grant under any of the numerous economic stimulus programs enacted in the American Recovery and Reinvestment Act, you have become a lobbyist. Under new rules announced yesterday by Norm Eisen, Obama administration special counsel for ethics and government reform, any person or business seeking a share of the $787 billion in stimulus funding is now bound by rules which used to apply only to registered lobbyists.

Under the new rules, all grant applicants are forbidden from having any telephone or in person communication with the officials to whom their grant application was submitted, and anything the applicant submits in writing regarding the application or the grant must be published on the agency web site within three business days. So, if you are writing to inquire about the status of your grant application, or its merits as opposed to competing applications, be aware that your customers, competitors, employees and the general public will see exactly what you have written. This will include E-mails.

Remember, when writing in about your grant application, everything you say will become public and will reflect on your company, perhaps for years to come. Never write anything in anger or in haste, and it is probably a good idea to have someone else look it over before you send it in.

Monday, June 1, 2009

HUD Monetizes New Home Buyer Tax Credit

Housing and Urban Development Secretary Shaun Donovan announced last Friday at the spring board of directors meeting of the National Association of Homebuilders that HUD will permit first time home purchasers to apply the $8,000 tax credit enacted in the stimulus legislation either to their down payment or toward closing costs, rather than merely crediting $8,000 against their income taxes on the next return they file after buying the house or condo. NAHB estimates that this new policy will produce 160,000 new home sales during the time the tax credit is in effect.