After weathering a two-day funding cutoff, federal highway and transit programs are back in operation, thanks to a stopgap bill signed on March 2. But the extension only runs until March 28 and funds the programs at a rate much lower than last year’s. Transportation officials are hoping for quick Senate approval of a further extension through December that also will bolster the shaky Highway Trust Fund and restore road funding to 2009’s level. Further, the Senate is working on a tax bill that includes provisions to benefit construction.
The immediate focus for construction at ENR press time was an impending Senate vote on a House-passed bill that would carry surface-transportation programs through Dec. 31, prop up the trust fund through a $19.5-billion shift from the general fund and bring highway aid back to 2009 levels for the rest of this year.
The highway provisions are part of a broader jobs package that would expand federally subsidized Build America Bonds, which help localities finance public works. Moreover, the bill would extend businesses’ ability to “expense” the cost of capital-goods purchases up to $250,000 and exempt companies that hire unemployed workers from paying the Social Security payroll tax through Dec. 31.
The Senate had approved a similar jobs measure on Feb. 24, but when the House passed the bill on March 4, it made changes, which sent the legislation back to the upper chamber for a new vote.
Further, the Senate was debating another jobs-creation bill, focusing on extending unemployment benefits, COBRA health coverage and an array of expiring tax breaks. Construction-related tax provisions include an extension of accelerated depreciation for costs of new restaurants and improvements to certain existing restaurants, retail facilities and leaseholds.
After the Senate votes on the tax “extenders” measure, it may take up a long-overdue, two-year authorization for Federal Aviation Administration programs, including airport construction grants.
|Extends highway and transit programs through Dec. 31.|
|Shifts $19.5 billion to Highway Trust Fund from general fund.|
|Cancels effect of highway funding rescissions, restoring about $1 billion per month to total.|
|Expands Build America Bonds’ federal interest-rate subsidies to apply to school construction and energy-efficiency projects.|
|Exempts companies from having to pay Social Security payroll taxes when they hire people unemployed for at least 60 days. Exemption expires on Dec. 31.|
|Depreciation: One-year extension of Section 179 and allows companies to expense up to $250,000 in capital purchases for 2010 tax year.|
|Sources: Joint Tax comitte, senate finance comitte, House Transportat ion and Infrastructure comitte|
The House’s approval of the highway legislation ended a turbulent week for state DOTs and transportation construction companies. Things came to a head on Feb. 28, when the latest in a series of short surface-transportation authorizations expired, and Sen. Jim Bunning (R-Ky.) blocked a new extension. That move cut off highway and transit aid financed by the trust fund and caused the U.S. Dept. of Transportation to furlough about 2,000 workers. It also prompted some states to hold off on highway contract awards and delay advertising bids. Missouri’s DOT suspended a bid letting.
But Bunning relented, and the Senate on March 2 passed the one-month stopgap. Furloughed U.S. DOT employees returned to work, and some delayed state projects are starting to move.
For example, after the cutoff, Alabama DOT postponed awarding trust-fund-financed projects from its Feb. 26 bid letting. Now with the one-month extension signed, “I think we will be going forward,” says ALDOT spokesman Tony Harris.
Nevada DOT Director Susan Martinovich said she was reluctant to advertise a major highway project near Las Vegas, “not knowing if I’ll get reimbursed with the federal money.” But with the one-month measure in effect, NDOT now plans to advertise the project, beginning on March 18, a spokesman says. Construction on the job, the cost of which is estimated at $96 million to $110 million, could begin as early as August, he says.
Missouri still isn’t going forward with the $60-million letting it suspended in late February. MoDOT Director Pete Rahn says the newly enacted one-month extension funds highways nationally at a $30-billion annual rate instead of 2009’s $42 billion. “That $1 billion a month less means that we will get $243 million less this year than we would at the planned-for $42 billion,” Rahn says. “I have to cancel the lettings between now and the end of the fiscal year to make up that $243 million,” he adds, unless Congress passes the Dec. 31 extension.
Many other construction and state officials also want to see a 10-month bill approved. David Bauer, American Road and Transportation Builders Association senior vice president for government affairs, says, “I think folks are just very interested in getting this behind us once and for all so we can use the rest of the year to focus on the more important things.” His list includes proceeding with 2010’s construction season and working on a new, multiyear transportation bill.