As the House and Senate head for the end of their lame-duck session, must-pass tax and appropriations bills are advancing. The final versions of both measures will have a major impact on construction.

An $858-billion tax bill on Dec. 14 was sent to the Senate for final passage. The bill extends 2001 and 2003 individual rates, offers alternative-minimum-tax protection for many and cuts employees’ Social Security payroll taxes to 4.2%, from 6.2% for one year. Those provisions would help small design and construction firms taxed at individual rates as partnerships or S Corporations.

Family-owned firms would get a boost from a provision exempting estates of up to $5 million from the federal inheritance tax and setting a new rate of 35%. Under current law, the exemption would be $1 million and the tax rate 55%. House Majority Leader Steny Hoyer (D-Md.) says, “There’s much consternation in the House about the estate tax [provision].” If House Democrats change the estate-tax language, the amended bill would go back to the Senate, where it could run into trouble.

Other provisions would give construction additional help, including a one-year extension of a break for renewable-energy projects, such as wind and solar. But the Senate did not extend the federally subsidized Build America Bonds, which fund public works. The program expires on Dec. 31.

Final 2011 spending totals remain up in the air. Senate Appropriations Committee Chairman Daniel Inouye (D-Hawaii) on Dec. 13 rolled out a $1.11-trillion bill that has a mix of hikes and cuts for construction accounts. The House on Dec. 8 approved its $1.09-trillion catch-all package. Both bills would fund agencies through Sept. 30, when fiscal 2011 ends. Both bills also would extend surface-transportation and aviation authorizations through Sept. 30. Their current authorizations lapse on Dec. 31.

For highways, Inouye’s bill “has a modest bump over where the House is,” says David Bauer, American Road and Transportation Builders Association senior vice president. He says a nine-month reauthorization would provide some certainty for 2011’s construction season but doesn’t substitute for a multiyear bill.