Report of the MCAA Legislative Committee

In addition to the issues above, we were instrumental in legislative victories over the past few months as well. On May 17th, MCAA attended a ceremony on the South Lawn of the White House at which President Bush signed into law the Tax Increase Prevention and Reconciliation Act of 2005 (H.R. 4297), which extends the tax cut package and provides tax relief for Small Businesses. Furthermore, in 2006 Congress passed Pension Reform legislation which was considered one of the most critical pieces of legislation to be considered by the 109th Congress. MCAA President Frank Campitelli and MCAA's Director of Government Affairs, Jessica Johnson Bennett were in attendance as the President signed this landmark legislation into law.

Tax Relief Reconciliation Act of 2005
As previously mentioned on May 17th the President signed H.R. 4297 into law. This legislation which was strongly supported by MCAA, is meant to put money back into the pockets of individual taxpayers, investors and small business owners. The legislation includes key provisions that encourage small-business owners, such as Mason Contractors, to continue to grow and expand their businesses and move the American economy forward.

Pension Reform Act
The law takes aim at companies that have chronically under funded their plans and will prevent companies with plans that are less than 80 percent funded from promising additional benefits unless they could immediately pay for them. The measure also clarifies the legal status of “hybrid” plans that incorporate elements of defined benefit and defined-contribution pensions, such as 401(k) plans. Hybrids have been in legal limbo since a 2003 court decision found they discriminate against older workers. The bill also imposes non-discrimination rules on those plans and allow financial advisers to offer investment guidance to plan participants without running afoul of conflict-of-interest provisions.

As passed the Pension Reform legislation will apply to all local pension funds. An important aspect for some Mason Contractors, as written, the bill will raise the maximum deductibility level for multiemployer plans and will change funding rules to enhance plan viability. The bill will require annual actuarial certification for plans and will establish additional notification and disclosure procedures. "Endangered" and "Critical" funding status would be determined by a number of tests and would require a Funding Improvement Plan (FIP) for "Endangered" plans and a Rehabilitation Plan for plans in "Critical" status. The FIP's and Rehabilitation Plans have statutory funding benchmarks which will have to be met.

Comprehensive Immigration Reform
In 2006 MCAA was and will continue to be an integral part of negotiations taking place in Congress with regard to Comprehensive Immigration Reform. We have worked closely with others in the Construction Industry to insure that the interests of Contractors are adequately protected. In the months and weeks leading up to the Senates final vote on Immigration reform, MCAA played a key role in negotiations to protect contractors. MCAA together with others was successful in garnering support for language in which mason contractors would be protected and could not be held liable for the hiring practices of their subcontractors. In addition to our part in the negotiations we attended briefings at the White House with Secretary of Commerce Gutierrez as well as Barry Jackson who is a Senior advisor to the President. Also, in addition to the efforts mentioned above we have sent letters to key Members of Congress encouraging a reasonable approach to addressing the problem of illegal immigration.

MCAA again met with members of the Administration on November 13th to discuss steps being taken by the Department of Homeland Security to crack down on employers who hire illegal immigrants.

Permanent Repeal of the Estate Tax
In 2006 MCAA continued to lobby Congress to pass a Permanent Repeal of the Estate Tax. The House of Representatives has passed legislation permanently repealing the death tax with broad bi-partisan support. We will continue to urge the Senate to act in the same manner to either permanently repeal the tax or find a compromise. MCAA is worked with Senator Kyl and others to consider a compromise in an effort to alleviate the pressure on small and family owned businesses. MCAA was also instrumental in soliciting the support of Democratic Senators to support the compromise put forth by Senator Kyl.

Withholding Tax Relief Act of 2006
As previously mentioned Section 511 of Tax Reconciliation Bill (P.L. 109-222 :: H.R. 4297) which was signed into law on May 17th, mandates a 3% withholding on payments to companies for any contract with a government entity of any level. The law requires withholdings at a rate of 3% on all government payments for products and services made by the federal government, as well as State and local governments with contracting expenditures of $100 million or more. In addition, it imposes administrative costs and information reporting requirements, which applies to payments starting in 2011. Furthermore the law is estimated to “increase” revenue by $7 billion from 2011 to 2015, and raises $6 billion in 2011, which is solely due to accelerated tax receipts and not actual revenue increase. Finally the law saves only about $215 million in 2012 and increasing slightly each year thereafter.

This far-reaching new requirement was inserted as a last-minute revenue raiser into the Tax Reconciliation Act of 2005 (P.L. 109-222) that was signed by the President in May 2006. Though different versions of this provision have been discussed in the last few years, no committee hearings were ever held, and its inclusion came as a shock to everyone. Its supporters argue that imposing withholdings on non-wage payments made by Federal, State and local governments would improve taxpayer compliance, reduce the tax gap, and promote fairness in the tax system. Several recent Government Accountability Office (“GAO”) reports have also highlighted the issue and noted that many government contractors owe unpaid taxes. However, this will do nothing to address the current issue of the growing tax gap.

In 2006 during the 109th Congress, Senator Larry Craig (R-ID) introduced S. 2821, the Withholding Tax Relief Act of 2006, on May 17, 2006. This important piece of legislation would repeal section 511 of the recently enacted Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222). As previously mentioned this provision is a sweeping new requirement mandating a 3-percent tax withholding on all payments to contractors for goods and services provided to federal, state, and local governments. Congressman Wally Herger introduced companion legislation in the House of Representatives to repeal the provision as well.

However, during the last hours of the 109th Congress Senator's Baucus (D-MT) and Grassley (R-IA), the original authors of this provision proposed using this provision as an off set to pay for a rural schools initiative which is need of immediate funding. Together with Congressman Joe Barton (R-TX) legislation was introduced in the wee hours of the morning, around 2:30 a.m., to accelerate the provision, making it effective January 1, 2007. Using procedural rules, Congressman Barton and others brought this provision to the House floor under a “Unanimous Consent” order, meaning that no matter how many Members were present, so long as there were no objections the provision would pass.

MCAA was instrumental in helping to stop this new requirement, by soliciting the help of the Labor Unions as well as key Democrats in the House, who were unaware of this provision and its damaging implications.

MCAA is currently working with a broad coalition of various associations to bring further attention to this very important matter. In addition, we are working with a smaller group which consists of strictly construction associations to insure that the concerns of the construction industry are addressed specifically.

Workplace Safety and Health Transparency Act of 2006
On June 8th, 2006 Congressman Charlie Norwood (R-GA) introduced a bill to amend the Occupational Safety and Health Act of 1970 and the Federal Mine Safety and Health Act of 1977 to prohibit the promulgation of safety and health standards that do not meet certain requirements for national consensus standards.

Last spring, the House Subcommittee on Workforce Protections heard testimony from industry and union experts on the issue of non-consensus standards, in which regulations carrying the weight of law are written by a single outside group with no oversight, public participation, or input from competing organizations – a violation of federal law by the federal government itself.

The Occupational Health and Safety Administration (OSHA) is required by the Occupational, Safety, and Health Act (OSH) to conduct rigorous examination taking into account the Data Quality Act, the Regulatory Flexibility Act, a small business impact analysis, stakeholder input, and judicial review before being finalizing any new health or workplace safety regulation.

However, the OSHA has devised a clever scheme to overcome this requirement for external review of their rule-writing. What should be consensus standards are now written primarily by the non-governmental American Conference of Governmental Industrial Hygienists, or ACGIH. The hearings revealed that OSHA employees are in fact actively participating as members of ACGIH in writing the standards, bypassing all Congressional safeguards.

The gross errors created by this scheme are magnified by the nation's current regulatory climate. Nearly half of all states have adopted their own safety and health programs in lieu of federal Occupational Safety and Health Administration (OSHA) standards. These states must provide safety and health protection equal to or greater than what is required by OSHA. As a result, many states indirectly rely upon non-consensus standards to match or exceed OSHA regulations.

MCAA supported and will continue to support Congressman Norwood in his efforts. We have submitted a letter to the House Education and Workforce committee and will continue to lobby in favor of this bill. However, we do not expect this bill to be reintroduced during the 110th Congress. If Congressman Norwood chooses to continue his efforts and reintroduce the bill MCAA will continue our support.

Small Business Health Plans
Unfortunately, Small Business Health Plan Legislation was again defeated by the Senate in 2006. However, MCAA continues to lobby Congress to pass legislation that would allow associations to offer affordable group health care coverage which will provide small businesses the opportunity to provide access to health insurance for their employees and family members at reasonable rates. The House of Representatives passed SBHP legislation a record 8 times and we remain hopeful that the Senate will follow suit in the 110th Congress.

Senators are continuing to have discussions as to how to make changes that would get 60 votes for the Small Business Health Plans legislation in the Senate. However, these efforts appear to be at an impasse, with some Democrats continuing to insist that there be a compromise with the Durbin/Lincoln legislation be forged before they will support anything. Grass roots efforts with Democratic Senators back in states during the August recess do not appear to have made tangible inroads in terms of getting any new commitments from Democrats to vote for the bill with or without changes.

Silica
MCAA continued to work in 2006 with OSHA and the Department of Labor to undertake greater efforts to enforce the existing exposure standard through outreach, research, education and compliance assistance. Last spring MCAA met with officials at OSHA to deliver the Silica Best Practices Document for review. We have received positive feedback from OSHA and will continue to work with OSHA staff to insure that the best interests of our contractors are protected by using sound science and a transparent process.

DHS No Match Letters
In June 2006 the Department of Homeland Security ("DHS") announced the proposal of two federal regulations aimed at: 1. improving worksite enforcement; 2. preventing the use of fraudulent Social Security numbers by illegal aliens; and 3. assisting employers in verifying the employment eligibility of workers.

As characterized by DHS, a brief explanation of the regulations are as follows:

1. Improving Employment Verification: The first proposal would permit U.S. businesses to digitize their I-9 employment forms, which are used to verify eligibility to work in the United States. Employers have expressed their frustration with being required to keep paper forms, while electronic forms can be more easily searched for quality and inspection purposes.

2. Providing Guidance to Employers: The second proposal would improve the ability of employers to ensure that they are not employing aliens who are not authorized to work in the U.S. The rule would set forth guidance for U.S. businesses when handling "No-Match" letters from the Social Security Administration concerning submitted employee Social Security numbers or from DHS concerning documents submitted by employees during the I-9 process. It would also provide safe-harbor procedures for employers who perform due-diligence, to ensure that they are not found in violation of their legal obligation.

These proposed regulations are part of a larger DHS initiative intended to strengthen the border and enhance interior enforcement. These regulations are only a first step in what will likely prove to be a series of changes proposed by the Department.

MCAA together with the Associated General Contractors, the Associated Builders and Contractors, the National Roofing Contractors Association and the Plumbing Heating and Cooling Contractors Association, submitted comments for the record stating our concerns with the current proposed rule. In addition, we will be meeting with Administration officials on November 13th to further discuss the impact of this regulation and the effects on the masonry and construction industries. Our efforts received attention from National press outlets where MCAA was mentioned by name.

OSHA Alliance
On August 21, 2006, MCAA President Frank Campitelli and Occupational Safety and Health (OSHA) Assistant Secretary Edwin Foulke Jr. extended the OSHA Alliance between the our organizations for another two years. The Alliance continues to play an integral role in strengthening the image of the masonry industry in the eyes of OSHA staff and personnel.

In addition in 2006 MAC PAC became more involved with fundraising efforts by co-hosting several fundraisers for candidates from across the country. MAC PAC also increased it's contributions to federal candidates, Democrat and Republican, and supported the winner more than 90 percent of the time.

MAC PAC is an essential component of MCAA's legislative agenda. By contributing personal dollars on a voluntary basis, members provide the resources needed to expand the base of pro-construction allies in the House and Senate. With this support, pro-construction candidates are given the opportunity to advance MCAA's legislative priorities in Congress. An association with a strong PAC demonstrates that it has a strong grassroots network, effective leadership, and a committed membership - in short, people who can positively influence public policy.