AED Washington Insights Newsletter
October 2009
Prepared by Christian A. Klein, AED Vice President of Government Affairs
and the AED Washington team
In this Issue:
Start Us Up USA! turns up the heat in Washington, D.C.
Start Us Up USA! roared into Washington, D.C. this week with a high profile rally on the National Mall, idle equipment caravan through the streets of Washington, and an unprecedented grassroots push by AED members around the country.
Start Us Up USA! is a joint effort between AED and the Association of Equipment Manufacturers (AEM) to educate Congress about the dismal economic state of the construction equipment industry and to push Congress to enact legislation, particularly a multi-year highway reauthorization bill, to get the industry back on track.
On Sept. 29, AED and AEM officially launched the Start Us Up USA! campaign with a rally in Las Vegas coinciding with the release of an equipment industry economic condition assessment by IHS Global Insight, which shows that while the recession is abating for some sectors of the U.S. economy, the construction equipment industry remains mired in a deep depression. The report is available at http://www.startusupusa.com/pdf/09-29-09-Global-Insight-Construction-Equipment-Report.pdf.
In Las Vegas, MaryKaye Cashman, chairman and CEO of Cashman Equipment Company based in Henderson, Nev., attested to the challenges the industry is facing. "Our Caterpillar dealership has experienced a decline in sales by 50 percent, and has 25 percent fewer employees today than at its peak a few years ago," Cashman said. In addition to Cashman, Arnold Machinery Company, APCO Equipment, Blain Equipment and Goodfellow Crushers also contributed equipment for the idle equipment caravan.
The campaign's next stop was Chicago on Oct. 20, for an event at Soldier Field. AED board member Diane Benck of West Side Tractor Sales Co. articulated how the deep depression in the construction equipment industry is impacting her company and urged the federal government to act now on multi-year highway legislation and other infrastructure and tax policies that will create jobs and spur economic recovery. Illini Hi-Reach, Kropp Equipment, McCann Industries, Metro Lift, Patten Industries, Runnion Equipment Co., Plote Construction, Vermeer Midwest, and West Side Tractor Sales Co., all provided equipment for the Chicago event. To see video highlights of the Chicago rally, go to: http://www.youtube.com/startusupusa#p/c/B5D8FEB8106475D4/0/UAdkKP9Jsf8.
As Insights went to press, Start Us Up USA! was wrapping up a successful first month with an Oct. 28 rally on the National Mall in Washington, D.C. Rep. James Oberstar (D-MN), chairman of the House
Transportation & Infrastructure Committee, joined AED board member Monty Boyd of Whayne Supply Co., in calling on Congress to enact a multi-year highway reauthorization bill as soon as possible. Among the other visual elements, 5,500 orange flags surrounded the speakers' platform – one for each 100 jobs lost in last three years due to the downturn in the construction equipment industry.
The Oct. 28 rally occurred in the middle of Equipment Industry Action Week. During the week of Oct. 26, AED saw unprecedented grassroots participation as equipment distributors sent hundreds of e-mails to the administration, Congress, and their governors urging action on the construction equipment industry revitalization effort. It is not too late to get involved with this historic grassroots effort.
Visit StartUsUpUSA.com to learn more about the AED-AEM campaign, see videos and pictures from the campaign so far, upload a testimonial, sign the Start Us Up USA! petition, and send your senators and representatives e-mails urging them to support the construction equipment industry recovery agenda.
Also, AED members should be aware that AED's share of the cost of the campaign is being borne by voluntary special contributions from AED members. If you believe in what AED is doing to turn your markets around, please pledge your support today!
Early media coverage from the DC Start Us Up USA! rally:
Listen to a radio interview with AED President and CEO Toby Mack
View photos from the DC rally
View an article on CNNMoney.com
5,500 orange flags - one for each 100 jobs lost in the last three years because of the downturn in the equipment industry - provide a stunning visual image on the National Mall at Wednesday's Start Us Up USA! event. |
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Senate floats six-month extension, as states lose money to rescission of balances to feds
Most in Washington expected the debate over the length of the extension of the highway program to be completed by Sept. 30. However, with the House passing a three-month extension and the Senate unable to come to an agreement on any extension before the end of September, Congress was forced to enact a 30-day extension as part of a continuing resolution (CR). As a result, Congress must pass another extension before the end of October.
Enactment of the 30-day highway program extension in the CR bought Congress until the end of October to enact a longer extension of the current highway program. As part of our Start Us Up USA! campaign, AED has been urging Congress to pass the shortest extension possible to keep the pressure on for fast action on a multi-year bill.
As Insights went to press, word on the Hill was that the Senate would support a six-month extension of the current highway program. It is unclear whether Rep. James Oberstar (D-MN), chairman of the House Transportation & Infrastructure Committee, will support a six-month extension or insist on a shorter extension. Stay tuned for more details in the days to come.
Unfortunately at the end of the fiscal year, many states found themselves in a precarious situation because of the $8.708 billion rescission of highway contract authority balances held by states that took effect on Sept. 30 pursuant to the 2005 SAFETEA-LU law. In an effort to limit the cost of the previous highway bill, Congress included language requiring that any federal-highway balances left unobligated at the end of FY 2009 had to be returned to the federal government. In anticipation of the rescission, many states' DOTs obligated all their remaining balances before Sept. 30. However, the arcane rescission provision went unnoticed by many. Several states failed to obligate all their money and had to return large amounts of highway funding to the feds.
The Senate's six-month extension legislation is expected to include an extra $8.7 billion in highway contract authority formula apportionments to states to reimburse them from the effect of the rescission. In the past, the Chairman Oberstar has refused to deal with the rescission issue, creating a possible roadblock to the House accepting the Senate's compromise offer.
AED members must stay involved and continue to keep the pressure on Congress to enact multi-year highway reauthorization legislation as soon as possible (see story in Insights on Start Us Up USA! for more information on how you can make a difference).
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Credit and tax provisions of the construction equipment industry revitalization agenda move forward
Thus far, the Start Us Up USA! campaign has primarily focused on the enactment of multi-year reauthorization bills that increase investment in critical infrastructure such as highways and bridges, sewers and
drinking water systems. However, there are other components of Start Us Up USA! agenda that have received less attention, but in many regards are as important as the infrastructure-related bills.
One important area in which there has been recent positive movement is the availability of credit. For months, AED has been sounding alarm bells in Washington about the construction industry credit crisis. In the past month, both the Obama administration and Congress have taken significant steps in this area.
On Oct. 21, President Obama unveiled a combination of Treasury Department and Small Business Administration (SBA) initiatives that include providing new government capital to community banks for the purpose of spurring lending to small businesses. The initiative would provide Treasury capital to smaller banks through the Troubled Asset Relief Program (TARP). Additionally, the House Small Business Committee has approved legislation aimed at updating and improving the SBA's capital access programs to help small firms find affordable financing.
There are also tax proposals, including the extension and expansion of several successful provisions from the American Recovery and Reinvestment Act (ARRA or "stimulus"), which are important pieces of the construction equipment industry revitalization agenda and are finding support in Congress.
There are several proposals to extend and expand the successful home purchase tax credit. The home purchase tax credit, an idea originated by AED, was included in ARRA. However, the $8,000 credit was limited to first-time home buyers and began to phase out for individuals making more than $75,000 per year. The credit is set to expire on December 1.
Several pieces of legislation have been introduced that will extend the home purchase tax credit through next year, increase the credit amount, eliminate the income cap, and expand the tax credit beyond first-time home buyers. The Tax Credit Extension for Homebuyers with a Loss Deduction Incentive Act (H.R. 3640) will extend for one year the $8,000 home-buyer tax credit, expand the credit to all homebuyers purchasing a principal residence, and provide relief for individuals or families who are forced to sell their home at a loss.
In the Senate, Sens. Chris Dodd (D-CT) and Johnny Isakson (R-GA) recently reached a compromise to support extending the home purchase tax credit until June 30, 2010, remove the first-time home buyer requirement, and raise the income limits to $150,000 for an individual or $300,000 for a couple. Other proposals include extending the home purchase tax credit, but gradually phasing it out over the course of next year.
Other tax provisions of the construction equipment industry revitalization agenda – including the extension of the depreciation bonus, extension and expansion of the net operating loss (NOL) carry back rules, and higher Sec. 179 expensing levels – are all gaining momentum in Congress.
AED will continue to monitor these developments and advocate for tax policies that will create jobs and spur economic recovery in our industry. Stay tuned in the coming months, as Congress will be forced to act on expiring tax credits and incentives.
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Energy & Water appropriations bill clears Congress, as others remain stalled
Congress was finally able to complete its work on the FY2010 energy & water appropriations bill (HR 3183) on Oct. 15 when the Senate agreed to the conference report version of the legislation by a vote of 80-17. The House had passed the conference report on Oct. 1, 308-114. The legislation provides a total of $5.445 billion for the water resources programs of the Army Corps of Engineers. The bill now awaits President Obama's signature.
Unfortunately, the FY 2010 Transportation-Housing & Urban Development (HUD), appropriations legislation (HR 3288) remains stalled with no signs of the stalemate breaking in the near future. Both the House and Senate passed versions of the legislation that contained about $41.107 billion for the highway program, a 1 percent increase over the current fiscal year.
However, there are differences between the House and Senate bills relating to the funding of a National Infrastructure Bank and high-speed rail, which have delayed enactment of HR 3288. The next step will be for the House to agree to a conference with the Senate and appoint conferees to work out the discrepancies between the two chambers. However, the House has refused to send the bill to conference until the major issues between the chambers are worked out, and the Senate refuses to negotiate until a conference date is set.
Appropriations bills providing funding for Clean Water and Drinking Water State Revolving Funds (SRF) are moving forward slowly. On June 26, the House passed its version of the Department of the Interior, Environment, and Related Agencies Appropriations Act for FY 2010 (HR 2996), by a vote of 254-173. HR 2996 includes $2.3 billion for the Clean Water SRF, $1.4 billion for the Drinking Water SRF, and $160 million for direct grants to communities for water infrastructure. The House Appropriations Committee estimates these funds will create as many as 40,000 new construction jobs.
On Sept. 24, the Senate passed its version of HR 2996. The Senate legislation includes $2.1 billion for sewer system improvements through the Clean Water SRF and $1.39 billion for drinking water system improvements through the Drinking Water SRF. As Insights went to press, differences between the House and Senate versions of the legislation had been reconciled and the conference report was ready to be voted on by both chambers.
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Legislation introduced to provide uniform standards to agriculture equipment manufacturers
On Oct. 6, Reps. Phil Hare (D-IL) and Aaron Schock (R-IL)) introduced the Agricultural Machinery Illumination Safety Act (HR 3720). Reps. Tom Latham (R-IA), Leonard Boswell (D-IA), and Bruce Braley (D-IA) are co-sponsors of the legislation.
HR 3720 would require the U.S. Department of Transportation (DOT), after consultation with the American Society of Agricultural and Biological Engineers, to develop a rule to improve the daytime and night-time visibility of agricultural equipment that is operated on public roads. DOT will establish minimum lighting and marking standards for new agricultural equipment to improve the safety of rural highways and provide consistency for manufacturers of agricultural machinery.
Currently, there is no federal standard for such requirements, and state laws that apply vary widely, often representing outdated technology. HR 3720 will provide uniformity regarding lighting and marking requirements for agricultural machinery.
AED joins the Association of Equipment Manufacturers (AEM), National Association of Manufacturers (NAM), and North American Equipment Dealers Association (NAEDA) in their strong support for HR 3720.
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