House Democrats have pushed through a $3-trillion-plus coronavirus relief and recovery package that includes a modest amount of construction-related funding along with provisions aimed at shoring up troubled multiemployer pension plans and increasing flexibility for the popular Paycheck Protection loan program
The measure, which the House approved on May 15 by a narrow 208-199 vote, faces deep Republican opposition—only one GOP lawmaker voted in favor of it. It has next to no chance of moving in the Senate—Majority Leader Mitch McConnell (R-Ky.) slammed the legislation in a May 14 televised interview as “a parade of absurdities that can hardly be taken seriously.”
Nevertheless, the massive 1,800-page legislation may end up representing a starting point for negotiations toward an eventual compromise measure. If one does clear Congress, it would be the fifth coronavirus recovery bill enacted since March 6.
The gap between the parties is wide. But even McConnell said he and top Trump administration officials “all believe that another bill probably is going to be necessary,” though he didn’t specify when that legislation might emerge.
For construction, the most prominent provision in the bill, titled the Health and Economic Recovery Omnibus Emergency Solutions, or HEROES, Act, is $15 billion in highway funding.
Those funds would give a boost to state departments of transportation that are starting to see a falloff in gasoline taxes and other transportation-related revenue because of the pandemic-caused drop in vehicle traffic. [View 5/13/2020 ENR story on state DOT's revenue problems here.]
The highway funding level in the bill is less than infrastructure advocates had hoped for—the American Association of State Highway and Transportation Officials on April 6 had sent Congress a proposal seeking $54.95 billion over 18 months.
But highway funding’s inclusion in the HEROES bill is a sign of congressional support for helping state DOTs. It puts highway aid in the running for being part of a later compromise bill, if one should emerge. Moreover, the House package's $15-billion allocation is close to the $16.7 billion that the AASHTO requested for the fiscal year 2020 portion of its request.
Jim Tymon, AASHTO executive director, said in an emailed statement to ENR, “While the House plan doesn’t include the $49.95-billion state DOTs desperately need, it’s a good start.”
Tymon added, “Now we’re looking forward to working with House and Senate leadership to determine a level of funding that will allow state DOTs to keep construction and maintenance projects funded, supporting jobs and the economy as America gets back to work.”
Emily Feenstra, American Society of Civil Engineers managing director of government relations and infrastructure initiatives, said in an email to ENR, “The bill recognizes that state DOTs need to be a part of the equation. However, the need is unfortunately much greater than the $15 billion provided by the HEROES Act.”
How the DOTs would use their shares of the $15 billion would vary from state to state. If the money materializes, some states are likely to allot at least a portion of it to keeping staff on the payroll, for example.
But DOTs might also draw on part of their allocations to restart recently cancelled projects or put postponed work back on their lists for bid lettings. The American Road & Transportation Builders Association reported that 10 states had delayed or canceled some highway projects, as of May 12.
The bill also has $15.75 billion in emergency relief for public transit agencies. But all of that is designated for transit agencies "to prevent, prepare for and respond to coronavirus" and much of it is likely to go for operating expenses. The American Public Transportation Association had requested $23.8 billion.
Fiscal aid for states, localities
House Speaker Nancy Pelosi (D-Calif.), the HEROES proposal's prime architect, has said one of the “pillars” of the Democrats’ bill is the more than $900 billion in direct federal aid it would provide to state and local governments—which have seen their revenue from income, sales and other taxes plummet due to the coronavirus-related economic slide.
The $900-billion-plus total includes $500 billion for fiscal assistance for the states, $375 billion for local governments and $20 billion for tribal governments and the same amount for U.S. territories.
County governments would get half of the $375 billion; cities and other local governments would get the other half.
Most of the state and local funding would almost certainly be used to shore up operating budgets.
But the large state and local infusion also could have a construction impact. ASCE’s Feenstra says the state and local funds “would go a long way towards offsetting losses due to the pandemic, and lessen the likelihood that transportation and infrastructure budgets would be further decimated.”
Stephen E. Sandherr, the Associated General Contractors of America’s chief executive officer, said in a statement that besides the highway funding, another plus for construction in the package is an expansion of a recently enacted refundable tax credit for employers that retain workers on their payrolls.
The credit was created under the Coronavirus Aid, Relief and Economic Security, or CARES, Act, which President Trump signed into law on March 27. The new House HEROES package, among other things, increases the percentage of wages for which a company can claim the retention credit, to 80%, from 50% now.
The new bill also boosts the limit on per-employee wages subject to the credit to $45,000 for the calendar year, up from $10,000 now.
Multiemployer pension proposals
The voluminous measure includes provisions that take two different approaches toward helping multiemployer pension plans, which are common in construction’s unionized sector.
Many such plans continue to be in poor shape, says Jim Hoffa, the Teamsters union’s general president. Hoffa said in a statement, “The shutdown of the U.S. economy caused by COVID-19 has greatly amplified the financial struggle of multiemployer pension plans.”
The Teamsters is one of the affiliated unions of North America’s Building Trades.
Hoffa praised lawmakers for another section of the bill, which would expand the federal Pension Benefit Guarantee Corp.’s (PBGC) "partition" authority. That authority allows the agency to take on responsibility for paying some benefits of an ailing multiemployer plan. PBGC insures multiemployer pension plans.
The legislation also would increase the maximum guaranteed amount that PBGC would pay to individual members of insolvent plans.
But the Teamsters and United Steelworkers unions oppose—and AGC and business groups support—another section of the HEROES bill. It would create a “composite” type of pension plan that incorporates elements of traditional defined-benefit plans and 401(k)-type defined-contribution plans.
Hoffa said his union is “deeply disappointed” that the composite-plan provisions made it into the HEROES bill.
In the tax policy section of the HEROES bill, AGC, along with the Associated Builders and Contractors, American Consulting Engineers Council, National Electrical Contractors and many other business organizations, opposes language rolling back a CARES Act provision that allows firms to “carry back” losses recorded in 2018, 2019 and 2020 and use the losses to offset income for the past five years, resulting in refunds. The HEROES bill would only allow the carryback to apply to three years, not five.
Paycheck Protection Program
The legislation also adds flexibility for recipients of forgivable loans under the Paycheck Protection Program, which was created under the CARES Act.
The HEROES bill allows the loan proceeds to be spent out over a period of 24 weeks instead of eight weeks under current law. It also removes a Treasury-Small Business Administration regulatory provision mandating that for a company to get the loan fully forgiven, that borrower must use 75% of the loan amount solely on payroll expenses.
Engineering and construction groups also point to items that aren't in the HEROES Act that they would like to see in a later version, if one shapes up.
Feenstra says ASCE would have liked to see some funding directed to water utilities, which, she says, have lost “tens of billions of dollars” because of the pandemic’s impact on ratepayers.
AGC’s Sandherr wants recovery legislation to include language to protect employers “from limitless litigation” related to the coronavirus.
A liability shield for companies is McConnell’s number-one priority in a new relief-recovery bill. Thus it almost surely will be in the final version, if such a measure does pass.
An opening proposal
Looking ahead, Pelosi, in a May 16 letter to her Democratic colleagues, called the HEROES bill “our proposal to lead to negotiation.”
Overall, ASCE’s Feenstra says the HEROES bill is "definitely" an opening proposal from Democrats. She says, "It’s clear that a final package would require a lot of negotiation to be accepted by the Senate.”
She adds, “Regardless, it’s essential that Congress come to agreement on a bill to provide much-needed emergency relief to state and local agencies managing critical infrastructure services and to Americans relying on those services.”