Tuesday, April 26, 2011

Recap of Hispanic Construction Association's legislative day

Reflections on Second NHCA Federal Legislative Conference in Washington D.C.
By Peter Fontanes, NHCA

WASHINGTON DC - In the spacious and ornate Senate Caucus room, many Hispanic American and migrant business owners, professionals, managers and even workers attended the Second Annual National Hispanic Construction Legislative Breakfast and Symposium.

We had the pleasure of having a blue ribbon panel of legislative experts such as Marco Giamberardino, Senior Director, Federal and Heavy Construction Division at Associated General Contractors of America, and Jim Tobin, Staff Vice President for Government Affairs at National Association of Home Builders. They pointed out that there were serious concerns about the way the economy has battered the industry but there was room for cautious optimism.

The AGC has now officially declared themselves opposed to government mandated Project Labor Agreements which is understandable considering they represent the nation's merit shop contractors.
  • The Government Neutrality in Contracting Act would ensure fairness in the federal procurement process. Efforts that would impose or favor the use of government mandated project labor agreements (PLAs) on federal and federally funded construction projects should be opposed.
  • PLAs effectively compel both union and open shop contractors to alter their hiring practices, work rules, job assignments, and benefits in order to compete for or to perform work on publicly funded projects.
  • There is no reliable evidence that project labor agreements improve the performance and they can even give rise to jurisdictional disputes that would not otherwise occur. 
  • They are calling on elected officials to cosponsor the Government Neutrality in Contracting Act to keep in place the well-settled patterns of labor-management relations in the construction industry and the cost-effectiveness of public works. 
  • They also supported an extension on the Highway-Transit Program. The latest extension of highway and transit program authorization expired on March 4, 2011. Failure to have passed an extension by that date would have resulted in a shutdown of the Federal Highway Administration (FHWA). The FHWA shut down would have resulted in:
    • Stopping Federal reimbursements to states for ongoing highway and bridge construction contracts.
    • Forcing states to stop or slow payments to contractors for completed work.
    • Forcing states to shutdown ongoing construction projects.
    • Preventing states from putting any additional contracts out to bid.
    • Slowing down decisions on and payment for change orders.
    • Necessitating that states borrow funds in order to meet their contractual obligations to contractors to make progress payments.
    • Undermining state bond ratings if they have borrowed funds with repayment contingent on the receipt of future federal payments.
Finally, the AGC are seeking a repeal of the excessive 3% withholding on government contracts. In 2012, a new law will require federal, state, and local governments to withhold 3% from all payments for goods and services as a guard against possible business tax evasion. The law: 
  • Requires withholding of 3% on all government payments for products and services made by the federal, state, and local governments with total expenditures of $100 million or more
  • Affects payments for goods and services under government contracts as well as payments to any person for a service or product provided to a government entity (e.g. Medicare, certain grants)
The AGC feels that most construction contracts average about 3 percent profit, government will overwithhold by 200-300%, tightened cash flow will restrict bonding capacity and ability to pay for labor and suppliers and the law places an undue burden on pass-through entities and joint ventures. The AGC is encouraging us to ask our representatives in Congress to cosponsor and pass H.R. 674 and S. 89 or S. 164.

The NAHB recently won a great victory in Congress when the Senate recently approved legislation supported by the organization to repeal a burdensome tax paperwork requirement thatcould cost small businesses thousands of dollars each year. The bill now goes to President Obama for his approval. During the past several months, NAHB has led the effort along with other industry groups to strike all new expanded IRS Form 1099 reporting requirements for small businesses and owners of rental real estate.

The position of NAHB has been that the failure to overturn these rules would kill jobs and place a major paperwork and cost burden on homebuilders. Under the Patient Protection and Affordable Care Act approved last year, starting in 2012 businesses would have to file an IRS Form 1099 for each vendor from whom they purchase more than $600 in goods over the course of the year.

The annual $600 threshold applies to all vendors, so that businesses could find themselves sending out 1099 forms for such mundane purchases as coffee, fuel and office supplies. Rather than hiring additional workers to expand and grow, small businesses would be spending money on accountants and bookkeepers in order to keep up with these new requirements.

To prevent small businesses from drowning in these onerous paperwork requirements, the Senate by a vote of 87 to 12 passed the Small Business Paperwork Mandate Elimination Act of 2011 (H.R. 4), legislation previously approved by the House. In addition to repealing expanded 1099 requirements in the healthcare law, H.R. 4 also repeals an unfair provision in the Small Business Jobs Act of 2010 stipulating that independent landlords as of Jan. 1, 2011 must submit 1099s to firms to which they give more than $600 for services. Going forward, businesses will still have to comply with long-standing reporting requirements for the purchase of services.

We also were graced with the prestigious presence of representatives from Congress such as Puerto Rico's Representative Pedro Perluisi and our winner of the First Cesar Chavez Construction Industry Award and Chair of the House Immigration Committee, Chicago's Rep. Luis Gutierrez. Congressman Pierluisi gave a brief rundown on the state of Puerto Rico's Economy and its impact on the construction industry. He was positive about the ability of the administration of Puerto Rico's Governor Luis Fortuno to move the economy on the island forward to a positive and brighter future. Congressman Pierluisi has been a special friend to the NHCA and has supported us from the inception of the group.

Rep. Gutierrez gave an impassioned speech that defended the need for comprehensive national immigration policy reform (See article below). He also mentioned the need for this nation to come forward on the Dream Act which would allow a path to citizenship for children of undocumented migrants who serve in the military or go on to finish college. He was given a standing ovation before and after his presentation.

Leo Sanroman, the Special Assistant to the Director Office of Small and Disadvantaged Business Utilization (OSDBU), Peter C. Gibbs - Deputy Director US Small Business Administration, Beatrice Hidalgo - White House Small Business Initiatives Coordinator also participated in presenting opportunities in the Federal Government for Contractors.

Steven Denlinger, NHCA Washington Representative, announced that a national survey of Hispanic Contractors will be conducted to study aspects of the Bonding surety issues confronting them on a local and national basis. He also outlined some of the issues outlined in a recent questionnaire affecting the local NHCA chapters with Immigration being uppermost on the list with contract procurement and payment requisitions following close behind.

We thank all the different chapters and their members who attended along with all of our guests. We will see you next year, as we get bigger and stronger.

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