After months of battling between the White House and congressional Democrats, Congress has approved a $120-billion Iraq war spending measure that also would provide up to $8.4 billion in construction funds, most of it for projects in the U.S. The measure, which won final congressional passage on May 24, also would increase the federal minimum wage and provide $4.8 billion in tax breaks for small businesses. President Bush signed the bill May 25.

The legislation was tied up for months because Democrats wanted to include language setting a timetable for withdrawing U.S. troops from Iraq and the White House opposed it. Bush vetoed an earlier version of the bill that had those provisions and lawmakers dropped the benchmarks from the final measure.

Bush also had criticized Congress for including substantial funding for non-defense items, but in the end agreed to accept most of that non-military funding.

Construction allocations in the final bill, a fiscal 2007 supplemental spending package, include $1.7 billion for military construction, with about half of that for projects in Iraq, Afghanistan and Djibouti.

In addition, the legislation has $3.1 billion for the current round of military base realignments and closures in the U.S. Much of that funding is expected to go for construction of facilities at installations slated to gain personnel from other posts on the shutdown list.

There is substantial civil construction spending, too. The bill provides $1.3 billion for the Corps of Engineers to upgrade New Orleans-area levees and $108 million for projects along Mississippi’s Gulf Coast, all hit hard by 2005’s Hurricane Katrina.

The bill also aims to address Dept. of Veterans Affairs health-care facilities needs, providing $550 million for maintenance and repairs and $326 million for construction.

For homeland security, the measure allots $285 million to acquire and install explosive-detection equipment at U.S. airports, $110 million for port security grants and $100 million for rail and transit security grants.

The legislation also includes $871 million in Federal Highway Administration emergency relief aid, to repair roads damaged in natural disasters around the country. That funding is offset by rescinding the same amount of FHWA contract authority.

Besides the spending, the package hikes the minimum wage to $7.25 from the current $5.15, in steps over two years. To ease the impact of the higher wage on small companies, it also has $4.8 billion in tax breaks. For construction, the major tax provision is a one-year extension of Section 179 expensing of purchases of equipment, software and other assets. The bill also raises the amount such small firms can expense to $125,000, from $112,000 now and increases the threshold above which the deduction phases out to $500,000, from $450,000.