FY2010 $3.5 Trillion Budget Passed on Obama's 100th Day

On a party line votes in the House of 233 to 193, and in the Senate of 53-43 the $3.5 trillion budget resolution passed both houses of Congress yesterday, on President Obama's 100th day in office. I'm not sure what the particular significance of the 100th day might be, but the good news for the construction industry is that every dollar of the $72.1 billion the Senate cut from transportation infrastructure spending was restored in the measure as passed.

Stimulus Infrastructure Spending On Track [We Think]

In testimony before the House Transportation and Infrastructure Committee Wednesday, Transportation Secretary Ray LaHood said nearly $9 billion in stimulus spending by the Transportation Department has been obligated among the 50 states and the territories, putting the Department ahead of schedule for distributing the whole $48 billion within 18 months of the bill's passage. EPA reported at the same hearing that $1.5 billion of its $7.2 billion to be spent on construction by that agency has already been distributed to the states, mostly for clean water and drinking water infrastructure. Meanwhile GAO reports that in many of the 16 states it has checked up on so far, state auditors say local governments and state transportation agencies may not be able to adequately track and report expenditure of these funds.

Gallons Or Miles?

House Transportation and Infrastructure Chairman James Oberstar announced Tuesday he wants to switch from federal per gallon fuel taxes to an automated system of federal mileage taxation based on miles driven over federal highways and other roads. The proposal calls for every vehicle to be equipped with a GPS device which would automatically record how far and over which roads the vehicle is driven, and automatically calculate the tax due.

While this proposal will be a bureaucratic nightmare for both vehicle owners and the government, it might be a good deal for the construction industry. Why? Because fuel taxes on the equipment which operates for weeks or months in the same location, such as cranes, concrete pumps, backhoes, graders and end loaders, will remain constant or be eliminated, while such equipment will pay little or no mileage tax. Of course, the amount of road building tax on your personal car would skyrocket. I doubt whether anyone at all has looked at this part of the equation.

Bingaman Dings Energy Department, Pushes Renewable Power Generation

Senate Energy and Natural Resources Chairman Jeff Bingaman is threatening to introduce legislation establishing a Clean Energy Deployment Administration to oversee loan s and guarantees for development of new energy technologies, because the Department of Energy has not yet approved a single loan application under the program established in 2005. Four years and nary a dollar spent. Whoa!

Meanwhile, construction of power generation facilities using alternative sources of energy is being held up while Bingaman's committee debates the question whether it should mandate 255 renewable energy production by 2025, as Bingaman and the Democrats insist, or only 155, as Republicans propose. House Energy and Commerce Chairman Henry Waxman is putting forth an alternative proposition of 17.5% renewable energy, with 10% improvement in the efficiency of power production overall. Until this Congressional debate is resolved, power production facility designers will remain unable to envision the power plant of the future, and power facility construction will remain at a standstill.

Conference Committee Restores Transportation Funding

The report of the Conference Committee on the Budget Resolution was released by Senate Budget Committee Chairman Kent Conrad late yesterday, and it does contain good news for the construction industry. The proposed joint resolution, which will come to the floor of both houses for voting later this week, restores all the transportation construction funding which the Senate resolution had cut from the House version. Of course, year by year it will be up to Congress to actually appropriate the budgeted funds, but at least the present plan is favorable to a quicker recovery of the construction economy, particularly in the heavy civil construction sector.

Homebuilders: Watch Out For The Arbitration Fairness Act

Tomorrow is "Arbitration Fairness Day" in Washington, D.C., when supporters of the Arbitration Fairness Act now pending in Congress will gather at a press event attempting to press this federal legislation forward. Introduced by Congressman Hank Johnson of Georgia, HR 1020 would amend federal arbitration laws to prohibit entering into arbitration agreements before a dispute arises in certain types of situations, including franchise agreements, civil rights disputes, employment, and consumer transactions. "Consumer transactions" are not defined, but could readily be interpreted to include purchase of a condominium unit or single family home. The unintended effect of this bill, if passed as it is now worded, would be to destroy all arbitration clauses in residential construction contracts. Call your congressman before it is too late.

Transportation Infrastructure Spending Hangs In The Balance

Meetings of the House/Senate Conference Committee on the budget resolution officially began this afternoon at 1:00 p.m. Washington, D. C. time. Staffers from both houses have been working on the details of the bill over the last two weeks, and legislative leaders hope to bring it to the floor of both houses later this week. The Senate version lags way behind the House version in every year 2010 through 2014 with respect to the spending Senators expect to authorize for road, bridge, railway, transit and waterway construction projects. The Senate version of the resolution cuts down the spending authority provided in the House bill by $12.9 billion for 2010, by $13.7 billion for 2011, by $14.1 billion for 2012, by $15.1 billion for 2013 and by $16.1 billion for 2014. These cuts represent a total slashing of over $72.1 billion from surface transport construction over the next five years.

All the media focus so far has been about the political fuss over whether or not the final resolution should include "reconciliation instructions" regarding health care and education funding, which would reduce the number of votes required for passage of health care and education appropriations in the Senate from 60 votes to 51 votes. There is no work out of the staff members or the Congressmen or Senators themselves regarding the fate of the transportation infrastructure numbers. Hopefully the news will be good once the final document is released to the public. Overall, the expectation is that final numbers will be $10 billion less than the administration wants. Hopefully none of that will come out of the construction budget.

No matter which way the debate falls out in the Conference Committee, the budgeted funds will fall far short of the $1.3 trillion in projected transportation infrastructure construction needs over the next six years. According to the American Association of State Highway and Transportation Officials and the American Public Transportation Association, the traveling public should have $166 billion a year in highway construction and $59 billion a year in mass transit construction during the six year period from 2010 to 2016.