Construction Eyes an Expected New Stimulus Bill
CARES Act has $25 billion for transit, but agencies may well use the aid for operations.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY PHOTO BY LARRY LEVINE
The newly enacted $2-trillion stimulus package to ease the impact of the coronavirus outbreak has benefits for engineering and construction firms—and their client companies—through provisions for small-business loans and tax breaks, plus some funding. But industry officials also are focusing on a likely follow-up measure, and they hope that it will be a vehicle for an infusion of funds for highways and other types of infrastructure.
The Coronavirus Aid, Relief and Economic Security, or CARES, Act, which President Donald Trump signed March 27, focuses on emergency responses to the pandemic. “I think these provisions and the funding levels reflect that—what do our infrastructure clients need right now to stay operational,” says Steve Hall, an American Council of Engineering Companies senior vice president.
Looking ahead, Hall adds, “A broader focus on infrastructure—the kind of focus we would like to see—is really for the next package … and lawmakers are already starting to talk about that.” Even before the bill was signed, House Speaker Nancy Pelosi (D-Calif.) told reporters on March 26, “Next we’ll go from emergency mitigation to recovery,” with a bill aimed at boosting the economy and creating jobs.
The American Road & Transportation Builders Association and other groups wanted Congress to include a multiyear highway bill in the CARES Act, but they weren’t successful. At least not yet. Dean Franks, ARTBA senior vice president for congressional relations, says, “We’ve been told that we … should be in play for the next go-around or subsequent phases.”
The CARES Act includes $339.9 billion in appropriations. Of that, ENR estimates, construction could be eligible for more than $40 billion.
But there’s a crucial caveat: In some cases, it will be up to states, localities and other aid recipients to determine how much of the funds will go for operations and how much to construction. The law has $25 billion for “transit infrastructure grants.” But it says funds can be used for transit agencies’ “operating expenses related to the response to a coronavirus public health emergency.” It also may help offset agencies’ lost revenue from recent sharp ridership declines.
The measure has $10 billion for Airport Improvement Program (AIP) grants. AIP has traditionally funded runway work and other infrastructure. But the new law says nearly all of the $10 billion can go for “any purpose for which airport revenues may lawfully be used.” That would include non-infrastructure purposes.
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Still, Todd Hauptli, CEO at American Association of Airport Executives, says some of the $10 billion may finance construction. He says the funds “will help keep people at work, avoid defaults on bonds, allow critical projects to continue and assist with recovery efforts that will be massive over time.”
Projects to add hospital capacity clearly will get CARES Act funds. The measure gives the Defense Dept. $1.5 billion to expand health facilities and modular field hospitals. Those dollars could triple the current 4,300 beds in military health facilities, a congressional summary says. The new law allots $606 million for Dept. of Veterans Affairs medical facilities to modify building systems for coronavirus patients. It also has $150 million in VA grants to states to reconfigure veterans facilities, such as nursing homes.
The statute provides $5 billion in Housing and Urban Development Dept. community development block grants and $1.5 billion for Commerce Dept. economic development grants. Historically, infrastructure work has been eligible for both types of grants.
The law’s tax provisions include allowing all employers to increase cash flow by deferring payments to their share of Social Security payroll taxes through Dec. 31. They would have to pay half of the deferred taxes in 2021 and half in 2022.
In another move to boost companies’ cash flow, the package allows any employer to “carry back” operating losses from 2018, 2019 and 2020 to offset taxable income in the previous five years. That should give employers refunds.
The legislation also includes the $350-billion Paycheck Protection Program, which provides loans of up to $10 million to companies with 500 or fewer employees. If employers use loan proceeds for payroll, health insurance premiums and certain other expenses, 100% of the loan will be forgiven.
