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.

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that the approximately $675 billion which is still unspent out of the total $787 billion in appropriations should be repealed and used instead to pay down the expected federal deficit of $2 trillion.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.

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?

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.