Construction Group Calls for Billions in Federal Aid
WASHINGTON — The largest construction trade association in the United States is calling for the federal government to provide $2.2 billion for improvements to schools and federal buildings to help boost the nation’s economy.
The Associated General Contracts of America predicts that nonresidential construction companies will face a drastic workload decline and workforce reduction in 2009 if steps are not taken by the federal government to boost the economy.
The ACG Stance on Federal Stimulus: • Expand Federal Tax Credits to Support Increased Use of School Construction Bonds. The federal government provides indirect financial support for school construction by exempting the interest on state and local government bonds from federal income taxation. The exemption allows bonds to be issued at lower interest rates that still provide competitive returns. • Continue and Increase Federal Grants for High-Poverty, High-Need School Districts. Increase qualified zone academy bonds for schools based in high-poverty areas. Encourage school districts to explore alternative financing, including lease financing to facilitate construction. • Financing/Ownership/Use Arrangements to Facilitate Construction. In some regions of the country the reliance on tax-exempt bonds backed by local property taxes is not working to fund school construction. Examples of new alternatives for school construction include school infrastructure banks. • Consider Direct Federal Funding for School Construction. The federal government began direct federal funding for school construction in 1950, but since that time direct funding has seen dramatic reductions. Additionally, federal grant programs have been approved, but have not been funded by Congress. |
“Two-thirds of nonresidential construction companies say they are anticipating laying off some portion of their workforce within the next six to 12 months,” Sandherr says.
However, he says President Obama’s proposed economic stimulus plan, which is expect to include hundreds of billions of dollars, will reverse projections and allow companies to get back to work.
“Unless the business climate changes significantly and soon, the construction sector will continue to experience the kind of devastating job losses and crippling declines in business activity that will undermine efforts to end the recession,” Sandherr says.
As of press time, the House Appropriations Committee unveiled a plan that would provide $825 million to improve the economy, with the potential for up to $20 billion to be used for school districts.
Meanwhile, as construction companies wait for a potential bailout, they are pooling their resources and creating efficiencies to avoid layoffs as business slows.
Equipment purchases, which usually cost about $35 million annually, at Sundt Construction Co. were put on hold until the economy improves, says J. Doug Pruitt, chairman and chief executive officer. The company’s five offices previously worked mostly independently, but as work has slowed, they are collaborating more to create business opportunities, Pruitt says.
“Where there is money being spent, we have the expertise to go there and chase it internally with joint-ventures or with contractor friends that we know in the area,” he says.
In some cases, employees at the company are being reassigned to avoid layoffs.
“We are really trying to hang onto our people as best we can,” Pruitt says. “If we have a superintendent who has a craft skill, we may put them to work as a craft worker.”
Tartlon Corp., a St. Louis-based general contractor, has used the down time for training, especially in green building and energy efficiency, two topics that are also a priority for the Obama administration.
“When we have projects that are put on hold and are idling, it is a fantastic time to train,” says Tracy Hart, president of Tartlon. “It’s a short-term opportunity, but at least it makes lemonade out of lemons.”