Inside AGC Legislative Update

November/December 2008

AGC Meets Success on Many Issues with 110th Congress

Industry must brace for new challenges in 2009 and beyond

The elections are over, and Washington is bracing for sweeping changes in leadership. As new leaders prepare for the start of the 111th Congress, they also must address key legislative priorities for AGC that Congress failed to address in the last two years. Despite these setbacks, AGC saw many victories in the 110th Congress, with lobbying and education efforts paying off for contractors across the country. Below is a review of recent legislative action before the adjournment of the 110th Congress.

Highway Trust Fund Fix Approved

In September, the House and Senate passed legislation transferring $8 billion from the Treasury’s general fund to the Highway Trust Fund. The transfer prevented a shortfall in the highway account of the Highway Trust Fund that would have slowed down or even stopped federal reimbursements to states for federal-aid highway projects.

The budget transfer is expected to fully fund SAFETEA-LU at authorized levels through FY 2009, the final year of the program. AGC remains concerned that if the number of miles driven in the U.S. continues to decline, due largely to the high price of gasoline, additional Highway Trust Fund revenue may be needed before the program expires in September 2009.

President Signs Economic Recovery Package

The President signed the Emergency Economic Stabilization Act of 2008. Members led the charge, and AGC was one of the first business groups to engage in the debate. AGC greatly appreciates the thousands of letters from members and an unknown number of phone calls in support of this legislation. The package included financial-market rescue provisions, an increase in FDIC insurance coverage and an extension of numerous expiring business and energy tax provisions, as well as alternative minimum tax relief and disaster assistance.

Infrastructure Stimulus

Democratic congressional leaders continue to push for an economic stimulus package that would include infrastructure funding. AGC has been working with these congressional leaders, federal agency officials and state and local organizations to determine current infrastructure investment needs in such a package.

In September, an infrastructure stimulus proposal passed the House, but failed in the Senate. AGC urged Congress to act again on an economic stimulus bill for infrastructure by sending multiple letters to Capitol Hill and alerting members and chapters to weigh in with their congressional representatives. AGC member Brian Burgett (Kokosing Construction Co., Fredericktown, Ohio) testified before Congress about how contractors can put people to work quickly.

Tax Extenders

The alternative minimum tax "patch" was extended. As one of AGC’s top tax priorities, it would stop a tax increase on middle-class taxpayers. Also passed before adjournment was legislation to extend the state and local sales tax deduction, brownfields expensing, 15-year cost recovery of leasehold, restaurant and retail improvements, and the research and experimentation tax credit. Disaster areas received some specific tax relief, including the victims of the Midwest floods, through limited demolition and cleanup expensing.

Additionally, legislation passed that encourages energy production by extending the following: a production tax credit for energy produced through biomass, investment credits for wind and solar energy and energy-efficiency property tax credits for both residential and commercial properties.

Looking Forward

The next two years will be a pivotal time for the construction industry as the next Congress addresses issues such as additional taxes, health care, immigration, labor and infrastructure. One of AGC’s top priorities is defeating "Card Check" legislation, which would remove an employee’s right to a secret ballot. AGC will also advocate for repeal of the 3% withholding tax on government contractors, which is scheduled to become effective in 2011, and the repeal or reform of the death tax, as the rate will return to a devastating 55% in 2011 if it is not addressed. In the last days of the 110th Congress, the "E-Verify" program was extended until March. However, long-term authorization must occur before March, and this component of immigration reform could be the springboard for broader reform early next year.

For more information on these issues, visit www.agc.org/legislative.