Editor’s Note: The following article on economic stimulus legislation was written in late January to meet publishing and distribution deadlines. As many of you know, the legislation has been a fast-moving target. For the events as they unfolded, NUCA’s important role in the process and the current status of the legislation, visit the NUCA Web site and review the association’s Economic Stimulus Update.

As this issue of Utility Contractor was about to go to press, Barack Obama had just been sworn in as the 44th President of the United States. When he alluded to the seriousness of the economic problems facing the country in his inaugural address on January 20, he no doubt had the devastating numbers released the previous month by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) in mind. That report revealed that 1.4 million construction workers were out of work, bringing the unemployment rate for the construction industry to more than 15 percent. In December alone, 101,000 construction jobs were lost, marking the 18th consecutive month of such loss. In all, 893,000 construction jobs had been lost since the start of 2007.

When the December report was released, economic stimulus legislation was already considered a national priority, with then President-elect Obama and like-minded members of Congress repeatedly calling for quick action on a huge economic recovery bill. What follows is an overview of what was on the table a week after Obama took office.

Congress Puts Proposals on the Table

In mid-January, Speaker of the House Nancy Pelosi (D-Calif.) outlined an $825 billion economic stimulus package that was scheduled to be marked up in several House committees the last week of that month. According to an executive summary of the measure, Pelosi said: “To build a 21st century economy, we must engage contractors across the nation to create jobs rebuilding our crumbling roads and bridges, modernize public buildings and put people to work cleaning our air, water and land.” The proposal included $19 billion for clean water, flood control and environmental restoration investments and $30 billion for highway and bridge construction, as well as several other provisions that would benefit the underground utility construction industry.

Soon after, the Senate dropped its own bill, and thankfully, most of the same provisions of interest were included, although some of the funding levels had been adjusted. Although legislation is a work in progress until it goes to the president’s desk, at press time NUCA was actively working to ensure that the following provisions were included and with significant investment:

• the Clean Water and Drinking Water State Revolving Fund programs to help communities upgrade wastewater treatment and drinking water infrastructure;
  
• grants and loans to help rural communities fund drinking water and wastewater treatment systems;
  environmental restoration, flood protection, hydropower and navigation infrastructure overseen by the U.S. Army Corps of Engineers;
  
• Bureau of Reclamation projects to provide safe drinking water to rural areas and to ensure adequate water supply to western localities impacted by drought;
  
• watershed improvement programs to design and build flood protection and water quality projects, repair aging dams and purchase and restore conservation easements in river flood zones;
  
• projects for flood control systems along the international segment of the Rio Grande damaged by hurricane Katrina and other serious storms;
  
• “Superfund” projects to clean up hazardous and toxic waste sites;
  
• “Brownfields” projects (hazardous waste sites that are not contaminated enough to be considered Superfund sites but need to be cleaned up in order to turn them from problem properties to productive community use);
  
• cleanup of leaky underground storage tanks;
  
• cleanup activities at closed military installations that would allow local communities to redevelop these properties for productive use;
  
• highway, road and bridge construction projects (a modest amount considering that it was widely estimated that states have over 5,100 projects totaling over $64 billion that could be awarded within 180 days);
  
• grants for wireless and broadband investment in rural and underserved areas;
  
• “Smart Grid Investment Program” projects to modernize the electricity grid;
  
• repairs to military facilities, a large portion of which would be for water and sewer improvements;
  
• new construction to support National Guard and Reserve units across the country with operations and training facilities and utilities infrastructure; and
  
• infrastructure projects on federal lands and parks for improvements to visitor facilities, road and trail restoration, preservation of buildings of cultural and historic importance, rehabilitation of abandoned mines and oil fields and environmental cleanup projects.

On the tax side, both chambers included the net operating loss (NOL) “carry back” period from two years to five years for NOLs in taxable years ending in 2008 and 2009. Additionally, the House and Senate included provisions to allow businesses to depreciate an additional 50 percent of the cost of an asset acquired and placed into service, as well as increase the expensing limit to $250,000 and the phase-out to $800,000 for equipment purchased and placed into service in 2009.

At press time, progress had been made on the “contractor withholding” provision (Sec. 511) as well. Although the Senate version only provided a one-year implementation delay of Sec. 511, the House bill was set to fully repeal the withholding burden altogether. Full repeal of Sec. 511 would be a huge victory for NUCA and for businesses across America.

Finally, both bills extended the depreciation bonus and increased Sec. 179 expensing provisions, which allow for expedited depreciation schedules for equipment and for companies to essentially write off new equipment purchases over a period of time. It’s worth noting that NUCA repeatedly made the point that provisions like these were only effective when there was enough work to provide the incentive to buy, and that blending tax incentives with strong investment in America’s underground network is a recipe for economic success.

Immediate GOP Opposition

Not surprisingly, Republicans in Congress were quick to criticize the spending provisions in the bill and call for more tax relief. Democrats said there should be more federal investment in infrastructure programs. At press time, several House committees were set to mark up the provisions under their respective jurisdictions.

Soon after the bill’s details were released, a report by the Congressional Budget Office (CBO) questioned the stimulative effects of the infrastructure provisions.

According to the CBO, only seven percent of discretionary spending would be spent by September 30 of this year and less than 40 percent spent by the end of FY 2010. Republicans jumped on the CBO report, despite the “use it or lose it” requirements on federal stimulus funds, which would require states to put federal dollars to quick use or risk having them apportioned to other states that were better prepared.

A spokesperson for Speaker Pelosi quickly defended the spending provisions: “The new CBO report does not take into account the fastest spending provisions in the bill, leaving the false impression that the overall spend-out rates are slower than they actually are. These provisions will go out quickly to give the economy a jolt while others will represent down payments on crucial priorities for our economic future — investments in clean energy, health care, education and repairing our nation’s infrastructure.”

NUCA continued to encourage Congress pass stimulus legislation with stipulations that ensured transparency and accountability. Federal funding that comes with strict reporting requirements that include public disclosure of when, where, who, why and how much federal money is being spent is needed. States and localities that can’t get their ducks in a row won’t get their projects. Those that do will.

When this article went to press, the pressure was on Capitol Hill to do something about the economic crisis and have something on President Obama’s desk by the latter half of February. As we have done since the beginning of the stimulus debate, NUCA will continue to work to ensure the inclusion of items of critical interest to our industry, especially investment in underground infrastructure projects that will create work and, in turn, jobs. Hopefully, by the time you read this, help is on the way.

Eben Wyman is NUCA Vice President of Government Relations.