Report of the MCAA Legislative Committee

3% Government Withholding Tax

Issue
The withholding requirement, added in the Conference Committee of the 2005 Reconciliation bill, without debate or inclusion in either the House or the Senate bills, is a sweeping mandate on federal, state and local governments to withhold 3 percent of payments for goods and services.

Update
H.R. 3056, the Tax Collection Responsibility Act of 2007, passed the House on October 10, 2007 and was referred to the Senate Finance Committee, where no further action was taken.

Three other pieces of legislation introduced to address the 3% withholding tax and the tax gap problem:

• H.R. 1023, To repeal the imposition of withholding on certain payments made to vendors by government entities (Meek and Herger); referred to the House Committee on Ways and Means, where no action was taken.
• S.777, The Good Government Act of 2007 (Craig); referred to the Committee on Finance, where no further action was taken.
• S. 2394, The Good Government Contractor Act of 2007 (Coleman and Collins); referred to the Committee on Finance, where no further action was taken.

Alternative Minimum Tax

Issue
The Individual Alternative Minimum Tax (AMT) operates parallel to the regular income tax, with different rates and definition of income and deductions. Although the AMT has historically applied to few taxpayers, the tax will grow rapidly over the next decade under current law. By 2010, the AMT will affect 33 million taxpayers - about one-third of all tax returns, up from 1 million in 1999.

Update
The AMT was "patched" in 2007. Due to the amount of tax revenue from the AMT tax, it will be very difficult to ever completely repeal the AMT. It is extremely difficult to find another source of this much revenue or enough reduction in spending.

The AMT was patched again in September 2008 when Congress passed the 2008 Emergency Economic Stabilization Act, which contained another one-year patch to the AMT. The amount of earned income now exempt from the AMT went up to $69,950 for married couples filing jointly and surviving spouses, and $46,200 for single taxpayers and heads of household. The patch also extends the type of nonrefundable personal credits taxpayers can use to avoid the AMT. Among these new credits are dependent-care credits and education credits.

Conclusion
Congress likely will again address the AMT in a 1-year patch until the political will and offsets can be found in a broad tax reform package.

Immigration Reform

Issue
Legislation was introduced in both the House and Senate that focuses solely on employer sanctions and would mandate that employers use Social Security numbers to verify their entire workforce, both existing and new employees.

Update
No immigration reform legislation was passed in the 110th Congress.

Conclusion
While piecemeal legislation will be offered, it is unlikely piecemeal approaches will pass. Efforts will be made to fashion a comprehensive immigration reform bill.

The following statement made by Senator Obama on the Senate floor, May 2007, gives insight into his immigration plan: "The time to fix our broken immigration system is now... We need stronger enforcement on the border and at the workplace... But for reform to work, we also must respond to what pulls people to America... Where we can reunite families, we should. Where we can bring in more foreign-born workers with the skills our economy needs, we should."

Estate Tax

Issue
The estate tax is a tax imposed on the transfer of the "taxable estate" of a deceased person. The masonry industry favors permanent repeal of the estate tax or the establishment of a reasonable exemption that gives employers and workers an opportunity to continue operations.

Update
This issue will have to be dealt with before it expires in 2010. Obama does not support extending the estate tax relief provided in the Bush tax cuts.

Conclusion
The tax cuts that reduced the estate tax are set to expire after 2009. Current law calls for zero estate tax in 2010 and reverting back to the old, pre-tax-cut rules in 2011.

Military Construction

Issue
The U.S. Army Corps of Engineers (USACE) is favoring low initial-cost construction. The present policy, particularly that of the Army Corps, grossly undervalues life-cycle cost and durability as criteria for awarding construction contracts. This policy is costing the government billions of dollars long-term.

Update
The Army, faced with a force structure transformation that is arguably more acute than the Navy's, has been hard at work developing MilCon requirements and practices to ensure that facilities and infrastructure keep pace. Consequently, the Army has embarked upon a policy of entrusting the construction, operation and maintenance of facilities that are supposed to last to civilian designers and contractors motivated to build cheaply. Conversely, the Navy has taken a more long-term view in its choice of materials. For example, it its Gulf Coast post-Katrina rebuild era, the Navy is rebuilding with a broad range of durable materials, including masonry, while the Army is choosing to rely upon modular/stick construction.

Conclusion
To have success on this issue we must continue to work with the applicable House and Senate Appropriations and Authorizations Committees, specifically the MilCon Subcommittees.

We must work to provide a credible definition of life-cycle costs and work to have that definition implemented in appropriate legislation.

National Energy Policy

Issue
Adequate, affordable and reliable supplies of energy - especially natural gas - are essential to the near and long term growth of the U.S. economy.

Update
Since the price of oil has dropped, the dynamic of the energy debate may change, although with a Democrat-led Congress and White House, alternative energy and climate change legislation should be at the forefront of domestic policy.

Conclusion
With a focus on domestic production (and affordable energy prices), Congress will have to balance the use of natural gas with investments in wind, solar, and other technologies. It is possible that an energy plan will pass the 111th Congress.

School Construction

Issue
According to the U.S. Department of Education's National Center for Education and Statistics (NCES), "three-quarters of schools reported needing to spend some money on repairs, renovations, and modernizations to put the school's onsite building into overall good condition."

For those schools reporting to the NCES survey the average investment needed per school was about $2.2 million. The total amount needed nationally is approximately $127 billion.

Update
America's Better Classroom Act (H.R. 2470 and S. 912) was introduced in the House and Senate and enjoyed broad bipartisan support. It was referred to committee and stalled in both chambers.

The 21st Century Green High-Performing Public Schools Act, H.R. 3021, was introduced by Congressman Ben Chandler (D-KY) in July of last year and passed the House on June of 2008. H.R. 3021 approves $6.4 Billion a year for school construction. This bill increased spending for school construction by $20.3 billion dollars. After House passage, the bill stalled in the Senate.

Conclusion
In the economic stimulus package, the Senate bill would expand the "New Markets Tax Credit" for individuals who invest in certain community development projects.

Like the House bill, the Senate draft would create a new class of tax credit bonds for school construction, but it would allow $10 billion worth to be issued, less than half the $22 billion House figure.

Workplace Crystalline Silica

Issue
OSHA continues to designate issuing a workplace crystalline silica regulation as a top agency priority at a time when silica Personal Exposure Limits (PELS) is already in place.

Update
Exposures to crystalline silica are addressed in specific standards for the general industry, shipyard employment, and the construction industry.

Conclusion
We will continue to follow the rule making process at OSHA for crystalline silica regulations.

E-Verify

Issue
E-Verify is an online system operated jointly by the Department of Homeland Security and the Social Security Administration (SSA). Participating employers can check the work status of new hires online by comparing information from an employee's I-9 form against SSA and Department of Homeland Security databases. More than 69,000 employers are enrolled in the program, with over 4 million queries run so far in fiscal year 2008.

Update
President Bush issued an executive order requiring all Federal contractors to use the E-Verify employment verification system once they enter into a contract with an Executive Department or Agency. This rule was proposed in June with a sixty-day comment period. After the comment period closed, the government began considering comments received and addressed them in a final rule.

Conclusion
Federal contractors and subcontractors will be required to begin using the E-Verify system starting Jan. 15, 2009. The new rule implements Executive Order 12989, as amended by President George W. Bush on June 6, 2008.

2008 Election Recap

Senate Synopsis
In the hotly contested Senate races, Democrats gained 8 seats, bringing their total to 59, but still short of a filibuster-proof majority. Republicans hold 40 seats. The Minnesota seat has not yet been decided.

Democrat Senate Seat Pick-ups

Class III: Senators Whose Terms Expire in 2011
Senators in Class III were elected to office in the November 2004 general election. Their terms run from the beginning of the 109th Congress on January 3, 2005 to the end of the 111th Congress in January 2011.

Democrat Senators Whose Terms Expire in 2011

• Bayh, Evan (D-IN)
• Boxer, Barbara (D-CA)
• Dodd, Christopher (D-CT)
• Dorgan, Byron (D-ND)
• Feingold, Russell (D-WI)
• Inouye, Daniel (D-HI)
• Leahy, Patrick (D-VT)
• Lincoln, Blanche (D-AR)
• Mikulski, Barbara (D-MD)
• Murray, Patty (D-WA)
• Reid, Harry (D-NV)
• Salazar, Ken (D-CO)
• Schumer, Charles (D-NY)
• Wyden, Ron (D-OR)

Republican Senators Whose Terms Expire in 2011

• Bennett, Robert (R-UT)
• Bond, Christopher (R-MO)
• Brownback, Sam (R-KS)
• Bunning, Jim (R-KY)
• Burr, Richard (R-NC)
• Coburn, Tom (R-OK)
• Crapo, Mike (R-ID)
• DeMint, Jim (R-SC)
• Grassley, Chuck (R-IA)
• Gregg, Judd (R-NH)
• Isakson, Johnny (R-GA)
• Martinez, Mel (R-FL)
• McCain, John (R-AZ)
• Murkowski, Lisa (R-AK)
• Shelby, Richard (R-AL)
• Specter, Arlen (R-PA)
• Thune, John (R-SD)
• Vitter, David (R-LA)
• Voinovich, George (R-OH)

House Synopsis
Many analysts predicted that House Republicans would lose a number of seats, with some predictions as high as the 30-40 seat loss range. In the end, House Democrats gained 20 seats, giving them a 256-177 vote advantage.

Democrate Seat Pick-ups

• AL-2
• AZ-1
• CO-4
• CT-4
• FL-24
• FL-8
• ID-1
• IL-11
• MD-1
• MI-7
• MI-9
• NC-8
• NJ-3
• NM-1
• NM-2
• NV-3
• NY-13
• NY-25
• NY-29
• OH-1
• OH-15
• OH-16
• PA-3
• VA-11
• VA-2

Republican Seat Pick-ups

• FL-16
• KS-2
• LA-2
• LA-6
• TX-22

Presidential Synopsis
The Democratic Obama/Biden ticket convincingly won the 2008 presidential election with 52.9% of the popular vote and 365 electoral votes. The McCain/Palin GOP ticket lost with 45.7% of the popular vote and 173 electoral votes.

To put this in recent historical context, in the 2004 presidential election, Bush/Cheney won 286 electoral votes, while Kerry/Edwards lost the election with 252 electoral votes. In the 2000 presidential election, Bush/Cheney won 271 electoral votes, while Gore/Lieberman lost the election with 267 electoral votes.

Gubernatorial Synopsis
Of the 11 gubernatorial elections, only one state changed party. Democrats picked up the governorship of Missouri, where Attorney General Jay Nixon beat Congressman Kenny Hulshof with 58% of the vote.

Democrats also maintained the open North Carolina seat, where Lt. Gov. Bev Perdue beat former Charlotte Mayor Pat McCrory with 50% of the vote.

2009-2010 Gubernatorial Ratings
Lean Takeover (3 R, 3 D)

• CA Open (Schwarzenegger, R)
• HI Open (Lingle, R)
• RI Open (Carcieri, R)
• KS Open (Sebelius, D)
• OK Open (Henry, D)
• WY Open (Freudenthal, D)

Toss-up (2 R, 4 D)

• Gibbons (R-NV)
• SD Open (Rounds, R)
• MI Open (Granholm, D)
• PA Open (Rendell, D)
• TN Open (Bredesen, D)
• VA Open (Kaine, D) **

Narrow Advantage for Incumbent Party (3 R, 2 D)

• Brewer (R-AZ)
• Douglas (R-VT)
• Pawlenty (R-MN)
• Corzine (D-NJ) **
• NM Open (Richardson, D)

Clear Advantage for Incumbent Party (4 R, 6 D)

• Rell (R-CT)
• AL Open (Riley, R)
• GA Open (Perdue, R)
• SC Open (Sanford, R)
• Quinn (D-IL)
• Doyle (D-WI)
• Paterson (D-NY)
• Strickland (D-OH)
• ME Open (Baldacci, D)
• OR Open (Kulongoski, D)

Currently Safe (5 R, 6 D)

• Crist (R-FL)
• Heineman (R-NE)
• Otter (R-ID)
• Palin (R-AK)
• Perry (R-TX)
• Beebe (D-AR)
• Culver (D-IA)
• Lynch (D-NH)
• O'Malley (D-MD)
• Patrick (D-MA)
• Ritter (D-CO)