Turmail said, "We hope and expect Congress and the administration will now spend the next several weeks working to address the broader spending issues, especially entitlement spending, that put the nation's infrastructure and broader economic health at risk."
American Institute of Architects President Mickey Jacob said in a Jan. 2 statement that the delay in the sequestration spending cuts, though brief, "is good news for the economy and for the design and construction sector if Congress and the White House can come up with a more cohesive way to cut wasteful spending—and continue to make smart investments in the nation's infrastructure."
The measure’s construction-related provisions include one that affects the estate tax, long a prime legislative focus for an industry that has many family-controlled firms.
The new law raises the top inheritance-tax rate to 40%, from the current 35%. But it continues to exclude from that levy estates valued at up to $5 million ($10 million for couples). The Obama administration had sought a higher rate and a lower exclusion level.
Construction firms that rely on federal funding will dodge the sequester’s 9% cut for defense programs, and 8% reductions for non-defense line items, but only until March 1.
Among the major defense accounts subject to the 9% defense sequester are military construction and Dept. of Energy defense environmental cleanup. The 8% nondefense cut is to hit programs such as Environmental Protection Agency aid for wastewater treatment and drinking-water projects. Accounts financed by trust funds, including much of the federal-aid highway program, are exempt from sequestration.
The fiscal cliff statute also extends popular business-related tax incentives, including 50% bonus depreciation and the Section 179 expensing of capital purchases. Continuing those breaks could stimulate business for construction-equipment makers.
Renewable-energy companies will benefit from the legislation’s one-year extension of the wind power production tax credit and investment tax credits and a change in the tax incentive for geothermal energy.
The American Wind Energy Association praised the tax credit provision and noted that it means the credit can apply to all wind power projects on which construction starts in calendar 2013. The Geothermal Energy Association noted that the bill allows geothermal projects to qualify for the tax credit if they are under construction before Jan. 1, 2014. The association's president, Karl Gawell, said the change could spur projects in up to a dozen states to advance this year.