AGC meets with Obama Transportation Transition Team

AGC’s CEO Stephen Sandherr was invited to meet with President-elect Barack Obama’s transportation transition team Nov. 25 to discuss the issues AGC believes the new Administration should address in its first year in office. Obama transition team members that participated in the meeting included: Victor Mendez, Director Arizona DOT; Mort Downey, Deputy Transportation Secretary in the Clinton Administration; and Michael Huerta, Associate Deputy Transportation Secretary in the Clinton Administration. The Obama participants made it clear they were there to listen and offered no indication as to the priorities that the new Administration will pursue.

Sandherr made a strong appeal for inclusion of significant transportation infrastructure investment in the economic stimulus legislation that is currently being drafted and urged that the new Administration move quickly and decisively to avoid a further downturn in the economy. Sandherr pointed out that the reduced highway construction market has already caused substantial employment losses and further layoffs are inevitable unless the market changes. In addition, contractors are not purchasing new equipment. He noted that now is a good time for the government to purchase construction because the increase in the number of firms bidding projects and the decline in construction material prices has resulted in very competitive bids. While this is good for the consumer it has hurt contractors and without a government funding boost, many contractors could be facing bankruptcy. A boost in funding would have an immediate positive impact on the economy because state DOTs have projects designed and ready to award and idled workers have been unable to find employment elsewhere and therefore are ready to go back to work. Sandherr also pointed out that, despite the $8 billion Highway Trust Fund rescue initiative passed in October, the continuing decline in driving could still leave insufficient revenue to fund the federal fiscal year 2009 federal-aid highway program commitments which would further depress the construction market.

Sandherr suggested that the new Administration ask Congress to include in the legislation repeal of tax provisions requiring that 3% of payments from government agencies to contractors be withheld in the future. AGC pointed out that these provisions will have an impact on construction prices because contractors will have to include these costs in their bids. Also state and local government agencies will have increased Administrative costs because this is an unfunded Federal mandate. Sandherr also cautioned, however, that individual projects not be included in the bill pointing out that stimulus legislation passed in the mid-1990s was loaded with funding earmarks for individual projects. If something similar happened in this legislation it would undermine the entire effort. AGC also said that other extraneous provisions, such as project labor agreement requirements, should be avoided as they would delay projects from being awarded.

AGC also used the opportunity to make recommendations for next year’s SAFETEA-LU reauthorization legislation. Sandherr suggested that the program must have a strong national purpose, a vision to fulfill that purpose and the funding to carry it out. AGC suggested that the recommendations of the National Surface Transportation Policy and Revenue Commission be the starting point for next year’s debate.