The New Republican Agenda

According to Republican Representatives heading back to Washington, D.C. after the election recess, their emphasis in Congress will be on job creation and economic recovery. Their first priority – making the Bush tax cute permanent. They expect Obama and the Democrats to cave in to this legislation. Ohio’s John Boehner, expected to be elected speaker once the lame duck Congress comes to a close, announced in a Wall Street Journal piece today that the next Speaker should take four immediate steps to restore voter confidence in the federal government: 1) no more earmarks for favorite projects in appropriations legislation; 2) no floor votes on legislation that has not been available on line to the public for at least three days; 3) no more unfocused, thousand page bills with spending priorities and policy changes buried in incomprehensible bureaucratic text; and 4) no more secret drafting of legislation in the Speaker’s office rather than through the open committee hearing process.

Call me a cynic, but I expect if Boehner is elected speaker, his adherence to these four principals will last just until the first House Bill in the new congress comes to the floor for a vote. I hope he proves me wrong.

House Budget Conferee Appointments Bode Ill For Transportation Infrastructure

The fiscal conservatism of the five House members named to the Budget conference committee today is another downer for construction industry businesses. Democratic conferees including Budget Chairman John Spratt, Rosa DeLauro and blue dog Allen Boyd, and Republican conferees Paul Ryan and Jeb Hensarling, former chair of the conservative Republican Study Committee, all seem unlikely to fully restore the $72.1 billion slashed by the Senate from the transportation infrastructure construction budget passed by the House. Appointment of Senate conferees is expected later today or early tomorrow, but since it was Senators who slashed the House's five year budget in the first place, the construction industry shouldn't hold out much hope in this regard.

Sewer Funding To Advance In House

A floor vote could come this week in the House on the $13.8 billion appropriation over the next five years for waste water treatment construction, mostly through the Clean Water State Revolving Fund. Contact your state's clean water agency to see which projects are on tap for bidding once this legislation passes and is signed by the President in the next couple weeks.

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.

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.

Fiscal '09 Budget Passes House

On a vote of 245 in favor and 178 opposed, the $410 billion fiscal year 2009 omnibus appropriations bill passed the House February 25. The Senate has to vote on the bill next week because the continuing resolution funding federal government operations at fiscal 2008 levels expires March 6. Unless the Senate passes the omnibus before that deadline, another continuing resolution would be necessary to avoid a government shutdown.

This appropriation for fiscal 2009 includes budget increases of about 8% for most federal government operations. It also contains 8,330 earmarks, which can be viewed at this link:

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

Senate Majority Leader Harry Reid says he expects the bill to pass the Senate before the March 6 deadline, so when federal employees leave work Friday afternoon they will know they can report back on Monday morning, expecting to get paid for their efforts.

Meanwhile, President Obama unveiled his budget outline for fiscal 2010, which for the first time in many years actually includes every dollar the federal government truly expects to spend, including war spending by the Department of Defense, and a contingency fund for natural disaster relief. The total budget is $3.55 trillion.

The Obama budget outline includes plans for spending over the next ten years, rather than the five year plans the Bush administration was fond of presenting. The outline contains a few things which should give encouragement to the construction industry:

Spending $150 billion over ten years for clean energy initiatives.

Spending $5 billion over 5 years for high speed rail construction, in addition to the $8 billion appropriated in the stimulus legislation.

Spending $64.5 billion on other transportation projects.

In other pro-construction talk around Washington, Interior Secretary Salazar wants to fund a Civilian Conservation Corps of 10,000 young trades workers to begin addressing the $8 billion backlog in national park projects, starting with such urban facilities as Independence Hall in Philadelphia and the Frederick Douglass Home in Washington, D.C.

One negative in the outline is the suggestion that the stimulus bill's one year deferral of the new three percent withholding tax on government contractors will not be made permanent, and collection of the tax will start next year.

Have You Ever Seen An Earmark?

There has been a lot of talk during the presidential campaigns, and since the inauguration of President Obama, about Congressional earmarks in appropriations legislation. Have you ever seen an earmark? If not, click on this link to the House Appropriations Committee home page and you can see 9,000 of them:

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

The link will take you to a listing of the various portions of the $410 billion omnibus appropriation bill pending in the House of Representatives for fiscal year 2009. Congress has to pass this bill before the end of March to avoid a government shutdown. After each section of the bill you will see a line that looks like this:

Summary : Bill : Statement : Certification Letters

Click on "Certification Letters." These letters are the "earmarks" everyone has been talking about. They are requests by individual Senators and Representatives that money be set aside out of the appropriations for specific projects. Note well that the letters do not specify how much is being requested in the earmark.

If you are looking for specific projects in your locality to bid on, scroll through the 9,000 earmarks in this bill and find the letterhead of your own Senators or Congressman, and the letter will identify the project money is being earmarked for.

Happy Hunting!

American Recovery And Reinvestment Act Passes

By a vote in the House of 246-183, and in the Senate of 60-38, Congress has passed President Obama's economic stimulus legislation. Obama was watching on C-Span at his Hyde Park home as the Senator from Ohio returned to Washington, D.C. following his mother's wake to cast the deciding vote on the Senate floor at 10:47 p.m. Washington time.

The bill will be promptly enrolled, and delivered to President Obama, who is expected to sign it Tuesday in Colorado. His pen on the paper will begin the clock ticking on all the time limitations in the measure for awarding of construction contracts and expenditure of funds appropriated in the bill. The construction industry will be receiving contracts worth over $145.6 billion funded by this legislation, which the provisions of the bill require to be completed and paid for within two years.

President Obama also signed an executive order Friday encouraging federal agencies which will be spending this money to use project labor agreements on the major projects funded by the bill, favoring union contractors on those projects. The legislation also requires all contractors building any projects funded by the measure to pay Davis Bacon prevailing wages, to hire only citizens and aliens here legally to work on the projects, and to buy American steel and manufactured goods for use on these jobs.

Every estimator who has been paying attention is going to be unusually busy for the next five months or so putting sealed envelopes into the hands of federal, state and local contracting officers all over the country. Good luck to you all.

School Modernization Funding Restored In Part

At the urging of House Democrats, the Conference Committee has restored funding of $6 billion for school modernization and repairs to the total $789.5 billion cost of the American Recovery and Reconstruction Act, slated to be voted on in the House tomorrow and in the Senate Friday, and likely to be signed by President Obama as soon as the bill can be enrolled and delivered to the Oval Office. Total appropriation for construction projects of all sorts is $145,632,000,000.00.

The cost figure was held in large part by cutting President Obama's middle class tax cut from $500 per individual or $1,000 per family down to $400 per individual and $800 per family. Other tax measure reductions include elimination of the deductibility of car loan interest, and restrictions on availability of the home purchase tax credit and business loss tax carry backs.

The airwaves will undoubtedly be filled to overflowing for the next two days with analysis and commentary respecting the details of this legislative measure, as well as steamy political rhetoric from the extremes of both parties regarding what they had to give up to get a bill which can pass both houses of Congress. Economists of various stripes will debate ad nauseam whether or not this particular formulation of spending and tax relief will reinvigorate the American economy.

To me, passage of the bill will mean at least this: there is a profit opportunity of $7.25 billion or more out there for businesses in the construction industry which position themselves to take advantage of it.

Construction Stimulus Totals $145.632 Billion

The conferees have agreed on a breakdown of the American Recovery and Reinvestment Act, to be voted on Thursday in the House and Friday in the Senate, including total appropriations of $145,632,000,000 for construction projects.

Senate Debates Stimulus - House Prepares For Conference

While floor debate on President Obama's economic stimulus measure proceeds amendment by amendment in the Senate, House Majority Leader Steny Hoyer announced today that the House will be in session Monday to begin work on a joint House/Senate Conference Committee version of the legislation. Speaker Pelosi says the bill is still on track to reach the Oval Office before Valentine's Day.

Senators Ben Nelson of Nebraska and Susan Collins of Maine will be offering a bipartisan amendment aimed at stripping non-stimulative appropriations out of the spending side of the bill, such as Interior Department and Agriculture Department new computers, along with funds for HIV screening, wildlife management and NASA. As it stood late Wednesday afternoon February 3, the cost of the Senate version of the measure exceeded $900 billion. The major additions approved thus far have been an $11 billion tax credit for car purchasers, and $6.5 billion for National Institutes of Health research projects.

Senators Patty Murray and Diane Feinstein are preparing another attempt to increase spending for construction by $13 billion for highways, $7 billion for water and sewer construction, and $5 billion for transit construction, to be offset by cuts in other programs.

Senator Charles Schumer wants an even bigger increase for transit funding, of $6.5 billion rather than the $5 billion Feinstein and Murray will propose.

Domestic steel mills are fighting to keep the "buy American" requirements for construction steel in the measure, while other interest are assuring trading partners the protectionist requirements will not exceed those already in existence in general Congressional appropriation measures.

Senator Johnny Isakson of Georgia will offer a proposal to double the home buyer tax credit from $7,500 up to $15,000, and remove the restriction to first time buyers, at a cost of $20 billion.

President Obama, at a White House meeting Wednesday afternoon, urged key Senators not to "make the perfect the enemy of the essential" in finalizing the measure, and remarked that the recession will turn into "a catastrophe" if legislation is not on his desk before Presidents' Day.

House Passes Recovery And Reinvestment Act

Wednesday, January 28 the House of Representatives passed President Obama's economic stimulus legislation, entitled H.R. 1 The American Recovery And Reinvestment Act, on a roll call vote with 224 Democrats and 0 Republicans voting in favor. So much for bipartisanship. The 224 to 188 vote along party lines is probably a preview of what will happen when the Senate votes next week.

H.R. 1 includes spending of $550 billion and tax relief of $275 billion for a total economic stimulus of $825 billion. At present the Senate bills are still undergoing committee markups, with the likely outcome in the Senate including $515 billion in spending and $375 billion in tax relief, for a total package of $880 billion. The Conference Committee reconciliation version which ultimately goes to President Obama could increase to over a trillion dollars in economic stimulus.

As they now stand, both packages include over $150 billion for the construction industry.

The Senate Appropriations Committee has already reported out its portion of the Senate package, including appropriations of $365.6 billion. The Senate Finance Committee has approved its portion of the package, which has $375 billion in tax cuts, including a $70 billion patch to the alternative minimum tax which the House left out of its version, and expanded spending for unemployment benefits, Medicaid, health insurance for laid off workers, and $18 billion to switch Medicare to electronic recordkeeping.

Amendments may be offered on the Senate floor regarding the distribution of Medicaid payments, and reduction of the bottom two income tax brackets.

Fortunately, it looks like any further changes in the construction appropriations are more likely to be increases rather than decreases.

Stimulus Provisions Harden Political Party Lines

The good news: The House version of economic stimulus legislation contains over $153 billion in hard dollars for construction projects.

The bad news: Debate over this important legislation is already degenerating along the old political party lines, despite the best efforts of officials and staff of the incoming Obama administration to include something for everyone in the package.

Republicans in the Senate, led by Senate Appropriations Ranking Member Thad Cochran, sent a letter to Senate Appropriations Chairman Daniel Inouye complaining that the Senate should not even take up the bill until it has been vetted by Obama administration OMB staff and OMB can report to the committee on the effects the proposed spending will actually have on the economy. Republicans are miffed that tax reduction is such a small portion of the House package. So the age old beliefs - Democrats that spending stimulates the economy; Republicans that tax relief stimulates the economy - will apparently define the debate over this legislation.

While House Appropriations Chairman David Obey is already talking about the potential need for additional stimulus spending even after the House measure passes, House Appropriations Ranking Member Jerry Lewis pans the measure as giving "little thought to real economic results, job creation or respect for the taxpayer," and Senator Tom Coburn complains that "75% to 80% of [the House measure] won't stimulate anything."

The other principal issue to be debated will be protectionism. Representatives Dan Lipinski and Donald Manzullo are complaining there should be more "buy American" requirements in the legislation, and they are joined by Steelworkers Union President Leo Gerard and Scott Paul, executive director of the Alliance for American Manufacturing. At the same time, President Nancy McLernon of the Organization for International Investment points out that stricter requirements to use American produced materials for all this construction work would likely violate the WTO Agreement on Government Procurement, to which the United States is a signatory.

As of Friday afternoon, the details of the House version of appropriations for construction spending looked like this:

INFRASTRUCTURE CONSTRUCTION DOLLARS (Billions)

Agriculture - Construction
$0.253

Agriculture - Rural Facilities Loans
$0.200

Subtotal Agriculture
$0.453

Airport Improvements
$3.000


Defense Environmental Cleanup
$0.300

Defense Facilities
$4.500

Defense Hospitals
$3.750

Defense Reserves and National Guard Facilities
$0.400

Defense Troop Housing
$1.550

Defense VA Medical
$0.950

Subtotal Defense
$11.450



Federal Buildings - Border Protection Modernization
$0.150

Federal Buildings - Border Protection Construction
$1.000

Federal Buildings - Bureau of Indian Affairs
$0.500

Federal Buildings - Commerce Department Science Research
$0.300

Federal Buildings - Fish and Wildlife
$0.300

Federal Buildings - Forest Service Construction
$0.650

Federal Buildings - GSA Energy Conservation
$6.000

Federal Buildings - Indian Health Service
$0.550

Federal Buildings - NASA Hurricane Repairs
$0.050

Federal Buildings - National Mall
$0.200

Federal Buildings - National Parks
$1.700

Federal Buildings - NSF Construction and Equipment
$0.400

Federal Buildings - NSF University Repair Grants
$0.200

Federal Buildings - Other
$0.700

Federal Buildings - Smithsonian
$0.150

Federal Buildings - U. S. Geological Survey
$0.200

Subtotal Federal Buildings
$13.050



Health - Centers for Disease Control Modernization
$0.462

Health - Community Health Center Construction
$0.500

Health - Community Health Center Modernization
$1.000

Health - NIH Central Campus Modernization
$0.500

Health - NIH University Research Construction and Renovation
$1.500

Health - Public Health Service Headquarters Construction
$0.088

Subtotal Health
$4.050



Highway Federal Aid
$30.000



Local Transit Capital
$6.000

Local Transit Investment
$1.000

Local Transit Rail
$2.000

Subtotal Transit
$9.000



Passenger Rail
$1.100



Power - Bonneville Power Administration
$3.250

Power - Carbon Capture And Sequestration Demonstrations
$2.400

Power - Energy Efficiency and Renewable Energy Grants
$8.400

Power - Home Weatherization Assistance
$6.200

Power - Renewable Energy Loan Guarantees
$8.000

Power - Smart Grid Construction
$4.500

Power - Western Area Power Administration
$3.250

Subtotal Power
$36.000



Public Housing Capital
$5.000

Public Housing Community Block Grants
$1.000

Public Housing Lead Paint Remediation
$0.100

Public Housing Native American
$0.500

Public Housing Neighborhood Stabilization
$4.190

Public Housing Section 8 and Elderly
$2.500

Subtotal Public Housing
$13.290



School Federal Impact Aid
$0.100

School Modernization - College
$6.000

School Modernization - K-12
$14.000

Subtotal Schools
$20.100



Water and Environment - Brownfields Cleanup
$0.100

Water and Environment - Drinking Water Construction
$0.500

Water and Environment- Corps of Engineers Construction
$2.000

Water and Environment - EPA Clean Water Construction
$6.000

Water and Environment - EPA Drinking Water Construction
$2.000

Water and Environment - EPA Leaking Underground Tanks
$0.200

Water and Environment - EPA Superfund
$0.800

Water and Environment - Mexican Boundary Water Projects
$0.224

Subtotal Water and Environment
$11.824


TOTAL CONSTRUCTION
$153.317