Engineering Inc. - July/August 2008 - (Page 7)

suspension, or “holiday,” from the federal gas tax. ACEC and its industry allies voiced strong opposition to the proposal, which was offered by Sen. Jon Kyl (R-Ariz.) on behalf of Sen. John McCain (R-Ariz.), who initially advocated the suspension on the campaign trail. Kyl withdrew the amendment in the face of opposition from his Senate colleagues and industry organizations. The proposal, however, may Sen. Jon Kyl (R-Ariz.) be an indication of additional efforts in the future to target the gas tax in response to rising gas prices. Kyl’s amendment sought to reimburse the Highway Trust Fund from the General Fund an estimated $9 billion in lost revenue. In a letter to the Senate, ACEC President Dave Raymond said the suspension of the tax was exceedingly bad policy at a time when gas tax revenues are necessary to keep pace with critical transportation needs. Raymond added that there is insufficient assurance of repayment and said the precedent would create worse problems down the line, including lower transportation investment. “If adopted, it would seriously disrupt repairs, risk fatalities and do harm to the nation’s economy,” said Raymond. “There also is no guarantee that reducing or eliminating the gas tax would result in savings passed on to the consumer.” acec condemns 3 Percent Withholding to treasury; dod study cites enormous mandate cost ACEC submitted comments in response to a Treasury Department request that strongly criticized the 3 percent withholding mandate approved by Congress and raised significant questions about how it will be implemented. “The new requirement will hamper our work on behalf of the public,” said ACEC Chairman John Hennessy. “While the provision was designed to deter tax evasion, it will clearly penalize honest taxpayers such as the Member Firms of ACEC and create hardships for companies that contract with governmental agencies.” The law is scheduled to take effect in 2011. The House approved legislation that would delay implementation until 2012. Senate approval of the measure, however, remains uncertain. ACEC and a large industry coalition are working with Congress to repeal the provision. (See Cover Feature on page 8.) In related news, a Department of Defense (DoD) study concludes that implementing the 3 percent withholding mandate will cost DoD more than $17 billion in the first five years. DoD is particularly concerned that complying with this mandate will reduce the number of companies willing to contract with the government, leading to a loss of competition in bidding and diminished access to new technologies. Budget Blueprint Boosts Funding for Key transportation, environmental Programs A budget plan adopted by Congress in June would address a number of key industry priorities, including restoring the funding shortfall in the Highway Trust Fund in 2009 and boosting funding for key environmental cleanup programs. The budget resolution adopted by the House and Senate sets total revenue and spending targets for the coming fiscal year and establishes the parameters for congressional consideration of tax and spending bills. Of particular importance to the engineering industry is full funding provided for the highway, transit and safety programs at the levels authorized in the Safe Accountable Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) for 2009 ($41.2 billion for highways and $10.34 billion for transit programs). In recommending full funding of SAFETEA-LU’s highway investment level, the resolution would accommodate subsequent legislation to correct a projected Highway Trust Fund revenue shortfall of $3.7 billion in F.Y. 2009. On environmental and energy issues, House and Senate budget leaders indicate that the plan would restore cuts proposed by the White House to EPA, U.S. Army Corps of Engineers and Department of Energy programs, including critical programs that fund water infrastructure and environmental cleanups. House and Senate appropriations committees will make specific allocations. The budget resolution directs Congress to approve a one-year Alternative Minimum Tax (AMT) “patch” for 2008 to protect middle-income taxpayers from additional taxation. Of concern to ACEC and other business organizations, the budget resolution assumes over the long term that taxes will increase by $1.2 trillion over five years, primarily by allowing most of the 2001 and 2003 tax changes to expire in 2011. This would lead to reinstatement of the so-called “death tax,” increased tax rates on capital gains and dividends and increased income tax rates in the middle and upper brackets, which would significantly increase taxes on S corporations and other pass-through entities. Congress is now working on the next step in the process to pass individual appropriations bills, which provide the actual funding levels for specific government programs. With congressional elections and the race for the White House in full swing, it is unlikely that Congress will complete action on the spending bills before the end of the year. For more neWs BrEndAn SmiAlowSki/GEtty imAGES For weekly legislative news, visit ACEC’s Last Word online at www.acec.org. JULY / AUGUST 2008 ENGINEERING INC. 7 http://www.acec.org

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Engineering Inc. - July/August 2008 Table of Contents From ACEC to You News & Notes Market Watch Legislative Action Congressman Kendrick Meek Going Global 2008 Professional Liability Insurance Survey Bridging the Gap 2008 Convention Wrap Up 2008-2009 Executive Committee 2008 Fall Conference Primer Business Insights Members in the News One on One

Engineering Inc. - July/August 2008

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