Federal Construction Budget Tradeoffs

No matter where you may believe the federal Highway Trust Fund spending level will ultimately rest on the spectrum between the House measure’s $34.6 billion annually and the Obama administration’s $79.2 billion annually, the sad fact is that these appropriations are offset by dramatic cuts to other federal construction spending programs, to the ultimate long term continuing injury to this important sector of the American economy. Obama’s own budget proposal cuts $450 million a year from transit construction funding in Illinois alone.

HR 7 takes us “back to the dark ages,” according to Transportation Secretary Ray LaHood, eliminating all funding for building bike paths, bike lanes and pedestrian safety projects. With the current Highway appropriations expiring March 31, 2012, the industry is undoubtedly looking at another series of short term extensions, making government and industry planning impossible until a long term funding measure is ultimately passed through both houses.

Meanwhile, even the comparatively generous Obama budget slashes Defense Department construction spending by 20%, Corps of Engineers civil construction projects by 13%, clean water state revolving funds by 20%, drinking water state revolving funds by 8%, Veterans Administration construction by 10%, and airport improvement grants by 28%. While the heavy civil sector of the US construction economy will feel these cuts most severely, resultant price increases in construction materials and equipment, due to the loss in sales volume, will impact all construction businesses across the country. Our national elected leadership continues to fail our industry.

Highway Trust Fund Battle Lines Reemerge – More Potholes On The Way

Shortly after his first State of the Union message, President Obama proposed a $550 billion six year reauthorization of the federal Highway Trust Fund. It didn’t pass Congress. Many industry experts labeled that proposal as woefully inadequate to meet even present infrastructure construction, repair and maintenance needs. Since then infrastructure construction funding in the federal budget has been accomplished by a series of interim appropriation extensions, a few months at a time.

Earlier this week two bills emerged from Congressional committees which would provide more or less long term appropriations for the Highway Trust Fund, though at levels far beneath the amounts Obama initially proposed, despite the fact American infrastructure continues to fall deeper and deeeper into disrepair as state and local government budgets are strained by declining revenues and burgeoning human sustenance needs.

Chairman John Mica’s (R. Fla) House Transportation and Infrastructure Committee reported out the 847 page HR 7, dubbed the American Energy and Infrastructure Jobs Act of 2012, which includes appropriations of $138.5 billion for the Highway Trust Fund over the next for years or about $34.6 billion each year: a mere 37.8% of the amount President Obama couldn’t get through a Democratic Congress. Chairman Max Baucus’ (D. Mont.) Senate Finance Committee reported out the 632 page SB 1813, entitled the Highway Investment, Job Creation and Economic Growth Act of 2012,  which includes appropriations totalling $83.3 billion over only the next 2 years, or about $41.6 billion each year, a somewhat more ambitious 45.4% of President Obama’s initial annual request.

Both pieces of legislation are peppered with various anti-pork and anti-earmark provisions, which could well steal the spotlight from the awesome decreases in spending levels. Conservative think tanks are already assaulting the meagre provisions of funds for hiking trails, bicycle paths and scenic preservation construction – work often subbed out to minority and woman owned small businesses to meet the 10% small business set aside requirements in both measures. This is less an assault on highway beautification than it is an attack on minority and women construction business set asides. These public opinion campaigns, couched as “living within our means” policy, are in reality ambushes laid against the progress in the construction industry which public funding set asides have enabled women and minority owned businesses to achieve.

Whatever the ultimate conference committee version of Highway Trust Fund reauthorization may look like, I predict it will be a long time coming, and be woefully underfunded. Meanwhile, with the wintertime freeze/thaw cycle in full swing, we will be seeing more and more potholes on our streets and highways while Congress endlessly debates these measures.

Political Rancor Holds Up Government Appropriations

Unable to come to any agreement on funding levels for most major federal government departments in the Senate, Congress is preparing to pass another continuing resolution to keep federal government’s doors open through December 15, 2009. The current continuing resolution expires October 31. The resolution will probably be attached to one of the appropriations bills expected to come out of conference committees this week for floor votes in both houses. The most likely vehicle for the continuing resolution appears to be the conference report on the Interior and Environment Department appropriations for FY 2010.

House To Vote On Spending Stopgap Wednesday

Tuesday the House Rules Committee will consider a 30 day stopgap spending bill so the federal government will have money to continue operating beyond the September 30 end of the fiscal year. The House floor vote is expected Wednesday and the Senate should act on the measure before Wednesday, September 30. This will give Congress another month to finish the appropriations legislation for fiscal year 2010.

The House has passed all 12 appropriations bills, but the Senate has acted on only five of them, and there have been no votes on conference committee reports. Conferees are expected to begin their work on appropriations measures later this week. Furthermore, an extension of three months is expected so both houses can finish work on a three year extension of air traffic control improvement funding, and various House and Senate leaders are still bickering over whether the temporary extension for the six year highway trust fund legislation should be three months or 18 months.

Congressional Session To Stretch Past Thanksgiving

House majority leader Steny Hoyer has announced that Congress will remain in session long past the scheduled adjournment at the end of October. He would give no fixed estimate of a realistic adjournment date, but did say the House would take Thanksgiving week off, indicating he expects the current session not to adjourn until some time in December. The calendar is crowded with a continuing resolution, action on all annual appropriations legislation, health care reform, climate change bills, and perhaps immigration law reform as well. E-verify expires September 30, and nothing has been done about reauthorizing it, though federal contractors are now supposed to use it for all their employees.

Maybe the longer session will give the politicians a little breathing room to act on some non-controversial and badly needed legislation to permit government agencies and contractors to plan their projects and budgets some distance into the future, and get our sector of the American economy going again.

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.

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.

Washington Post Details Transparency Beefs

An article in today's Washington Post by Alec MacGillis details Congressional beefs regarding the lack of information about stimulus spending on the Obama administration's Recovery.gov website when compared to the private sector site Recovery.org, which is using the technique I first suggested in my March 16 blog post this year:

OMB's RAT Board Chairman Earl Devaney has complained that the transparency respecting expenditure of stimulus legislation funds on the Recovery.gov website will require most of his $84 million oversight budget, and over a year to develop. Federal and state agencies can't agree on how much detail should be included in reports on construction projects funded by the American Recovery and Reinvestment Act.

I have an idea that won't require creation of a single additional piece of paper. How about assigning a unique identifying number to each individual project funded in whole or in part by these appropriations. Create a database attaching the identifier with the brief project description already included in the front end of every government construction contract. Then, link the identifier to .pdf copies of the contractor's sworn statement and lien waivers already submitted with each monthly pay request on every government construction job.

This way, citizens interested in the progress and efficiency of any particular project could quickly drill down to a complete list of every business that was paid any money for labor or materials on the project. Furthermore, neither the bureaucrats nor the contractors on the project would have to write up a single document they are not already required to prepare. As far as I can tell all this information is already required to be public under the freedom of information laws in every state anyway, so no one's toes get stepped on, and no one has to do any extra work. Just run the sworn statements and lien waivers through a scanner every month and e-mail them to Devaney's folks in Washington, D.C. for electronic insertion into the database. Nobody even has to spend money on stamps. Mission accomplished.

Devaney is defending the failure of Recovery.gov to include more detailed information because, he says, he is "worried about overburdening small businesses," according to the MacGillis newspaper story. Someone with knowledge of public construction contracting practices ought to tell Devaney that all of this information is already required of, and reported by, construction contractors every time they apply for payment on a government project, right down to the names, addresses and amounts paid to every subcontractor and material supplier who gets any money on the job. Without these lien waivers, the general contractor won't get paid. Asking the local or state government agency to scan the lien waivers and sworn statements and e-mail them to Devaney's folks in Washington D.C. would probably require six minutes per month per project out of the busy workday of some government secretary in a state or local agency office. No additional burden is placed on either the contractor or the contracting government agency.

There are no secrets in these pay request packages, and as far as I can tell the documents are already publicly available under the freedom of information laws in every American jurisdiction, so all that is needed is forwarding them to Devaney and his staff, and posting them on Devaney's Recovery.gov website.

The failure of the folks in Washington D.C. to accept this simple truth is utterly astonishing.

Here's the story:

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/20/AR2009052003535.html?nav=hcmodule

OMB To Require Detailed Stimulus Reporting

In testimony today before the Senate Homeland Security and Governmental Affairs Committee, OMB Deputy Director Rob Nabors said guidelines to be issued tomorrow will require federal agencies charged with distributing $630 billion in contracts and grants appropriated in the American Recovery and Reinvestment Act to report who is getting the money, including contractors and subcontractors. Nabors said Recovery.gov will post information, for example, about contractors receiving $40 billion in highway and transit construction projects. In his remarks, Nabors said "The administration believes this level of reporting strikes the appropriate balance between transparency for Recovery Act spending and the burden that reporting imposes on recipients."

Since it seems Nabors has not read my March 16, 2009 E-mail to the White House reminding the administration that construction contractors are already required to submit lien waivers identifying all subcontractors and material suppliers along with their monthly billings on every project in every state. So, I sent him another copy. If only someone from the construction industry were in Washington working on this.

Nabors did predict that $252 billion of the money will be spent before the end of July, 2010.

Gasoline Tax Indexing Compromise Proposed

Yesterday Senate Environment and Public Works Chair Barbara Boxer proposed indexing the gasoline tax to inflation at a meeting of the Subcommittee on Transportation and Infrastructure, as compromise between the administration's resistance to gasoline tax increases, defended by Transportation Secretary Ray LaHood, and ranking member George Voinovich, who insists on a gas tax increase, which would be the first since 1993.

Legislators predict the need for investment of half a trillion dollars in highway and bridge construction over the next six years, and the gasoline tax will fall far short of raising that much money at present rates. LaHood said the administration had not considered indexing the tax to inflation, but would be open to evaluating the idea.

Indexing the tax to inflation would be good news for highway contractors, but bad news for others in the construction industry who would have to pay the tax but who get no direct benefit from the increased highway spending appropriations which would follow.

Another Funding Bottleneck

Mimicking the bureaucratic obstruction to rapid distribution of stimulus appropriations for construction projects, home appliance makers are facing difficulties posed by delays in availability of funds to pay the $300 million set aside in the stimulus legislation for rebates on purchases of hew, energy efficient home appliances. Jill Notini of the Association of Home Appliance Manufacturers wants the money to be available during spring and summer this year, then home renovations and repairs peak for the year.

The federal Department of Energy says it is working on making the cash available to states, but can't say how long it will take for state bureaucracies to distribute the money to the consumers who will be purchasing these appliances.

Obama Signs '09 Omnibus Appropriations

Disdaining the usual public signing ceremony associated with putting the President's name to significant legislation, President Obama signed the '09 omnibus appropriation bill sent to him by the Senate last night, complete with all 8,330 attached earmarks. While his statement to the press expressed once again his determination to alter the process of earmarking funding for legislators' pet projects, he acknowledged that under current circumstances he would accept the bill as is in order to keep the federal government functioning and addressing the serious problems the country faces.

The money spent by this bill will not show up on the Recovery.gov website, though construction projects funded by the bill will appear on the FedBizOpps.gov website. If you are looking for projects in your neighborhood, the text of the bill itself, including all the earmark letters, can be found here:

http://appropriations.house.gov/FY2009_consolidated.shtml

The earmark letters are attached in alphabetical order of the legislator's last name. Scroll through until you come to your Senators or Congressman, and you will find the group of earmarked projects designated for your locality.

Transportation Reauthorization - More Funds For Highway and Transit Construction

House Transportation and Infrastructure Committee Chairman James Oberstar priced the forthcoming surface transportation reauthorization bill at approximately $500 billion over the next six years, saying he expects to have the legislation on the House floor at the beginning of June. The funding will include about $123 billion for mass transit construction and $377 billion for road and bridge construction, in addition to the funds already appropriated in the stimulus legislation.

In a speech to the American Public Transit Association, Oberstar criticized the fact that it takes the Federal Transit Administration 14 years to approve new mass transit construction projects, vowing to streamline procedures within that agency and "make the 21st century the bright age of mass transit."

Senate To Vote Tuesday On '09 Omnibus Appropriations

Working under the midnight Wednesday deadline imposed by last Friday's continuing resolution, the Senate will consider 12 more Republican proposed amendments to the '09 omnibus appropriations bill today and tomorrow, with all 12 expected to fail, and a cloture vote and passage of the bill expected late Tuesday. The two key proposed amendments come from John McCain, proposing to strip almost all of the 8,330 earmarks from the bill, and from John Thune, to prohibit FCC reinstatement of the fairness doctrine. While the Republicans protest earmarks, it appears that $51 million in earmarks belong to Senate Minority Leader McConnell. Go figure.

House Subcommittees Start Work On '10 Appropriations

Among 20 subcommittee hearings scheduled this week on fiscal '10 appropriations legislation is Thursday's hearing by the Homeland Security Appropriations Subcommittee on beefing up rail and transit system security across the country. Given the fact we now rely mostly on bomb sniffing German shepherds for train station security right now, this hearing could lead to funding for major projects to install airport level security systems in urban rail and transit stations all over the nation. Pay attention and be at the head of the line when bidding opens on these projects in the future.

Stimulus In The 50 States

Thursday, President Obama holds a meeting with one official from each of the 50 states to discuss how state government agencies are using economic stimulus appropriation funds to bolster their economies. State agency officials will meet with the President, cabinet officers, and Earl Devaney, Chairman of the RAT Board, to talk about reporting requirements imposed on the states for expenditure of all this cash from Washington. Look for the federal folks at this meeting to express their displeasure that over half the states still do not have reporting web sites linked up to Recovery.gov so citizens can see where all their tax dollars are going.

Omnibus '09 Funding Bill Delayed

Falling apparently one vote short of the 60 required for cloture on the '09 omnibus appropriations bill, the Senate will receive a House continuing resolution funding government operations through midnight next Tuesday, March 10, averting a shutdown of most government operations. The Senate wants more time to vote on amendments to the House version, especially with regard to school vouchers in Washington, D.C., and FTC regulation of mortgage terms.

Both amendments are expected to fail, but short of putting them to a vote cloture could not be achieved. Speaker Pelosi has been adamant about not wanting the House to have to reconsider Senate changes to the omnibus. It will likely be on President Obama's desk, earmarks and all, before the new Tuesday midnight deadline.

Clean Water Appropriation Clears Another Hurdle

H.R. 1262, the clean water funding bill, passed the House Transportation and Infrastructure Committee Thursday. The bill authorizes #13.8 billion through 2014 for sewer treatment construction, including $1.8 billion for sewer overflow control projects. No word yet on when the bill will come to the House floor for a vote. The only controversial provision is retention of the Davis Bacon prevailing wage requirement on these projects, many of which will be built in right to work states.

Wastewater Treatment Construction Appropriations Expected Soon

Wednesday, March 4, the House Transportation Water Resources Subcommittee approved, on a voice vote, H.R. 1262, the Water Quality Investment Act of 2009, and sent the bill along to the full House Transportation Committee for consideration. The Act appropriates $13.8 billion over five years for waste water infrastructure projects, in addition to the billions already appropriated in the economic stimulus legislation. The only Republican objection to this particular appropriation is its imposition of Davis Bacon prevailing wage requirements on contractors who are awarded these projects. The bill is expected to pass both houses in regular order and create thousands of construction jobs in western and southwestern United States, as well as the Great Lakes area and along the Ohio River.

Senate Overrules Republican Appropriation Amendments

Fiscal '09 appropriations legislation is moving through the Senate with Republican efforts to reduce the $410 billion in spending defeated in vote after vote. Amendments aimed at deleting specific earmarks, as well as those designed to restrict overall spending levels to the '08 funding amounts have been voted down, and it looks like the bill will get to the Oval Office before the weekend.