Passage Expected Before Christmas
On Wednesday, Congressional leaders released a $1.1 trillion omnibus appropriations bill that will fund federal agencies and programs for the remainder of fiscal year (FY) 2016. Overall, the bill includes mostly good news for construction accounts, as many see increases compared to FY 2015 levels and others receive significantly smaller cuts than Congress initially wanted. The omnibus bill provides nearly $121 billion for federal construction accounts as tracked by AGC. This is an increase of approximately $8 billion from fiscal year 2015 and $15 billion less than the administration’s fiscal year 2016 budget request. To give time for passage of this final spending package, Congress passed another short-term funding bill—called a continuing resolution—that will fund the government through Dec. 22. The House is expected to pass the omnibus bill on Friday, with a vote in the Senate to follow shortly thereafter.
In addition to construction funding, the bill includes a number of policy riders that impact various federal programs. The bill includes a host of non-construction related policy riders that were subject of intense negotiation, including one that increases background checks for travelers who participate in the visa-waiver program and another that ends the 40-year ban on exporting U.S. oil. AGC and our coalition partners in the Energy Equipment & Infrastructure Alliance (EEIA) have been pressuring Congress to lift the decades old ban which studies have shown would stimulate as much as 2 million barrels per day of additional production. EEIA has done an analysis on the impact of supply chain employment (including construction) based on potential increased production for every state and congressional district. A copy of the analysis can be found here.
Below is a summary of the construction-related provisions in the bill.
- Affordable Care Act: The bill includes a two-year delay for the excise tax on high cost employer-sponsored health coverage—referred to as the Cadillac Tax—and the ACA’s annual health insurance tax (HIT) on insurance companies will be suspended for one year.
- Local Hire/Hours of Service Limits: AGC fought and won the inclusion of two provisions on this topic. One provision that would restrict the use of local hiring requirements on highway and transit projects that have federal funding and another that requires states and local recipients of U.S. DOT funding assistance to certify that, if they intend to require contractors to hire a percentage of local residents, that these individuals have the requisite skills for the project, that the contractors current work force will not be impacted and that any additional costs will not delay the project or keep it from moving forward. For more information on these provisions please see below.
- Electronic Union Election Voting: The bill contains a policy rider that prohibits the use of electronic voting in union elections. This prohibits any NLRB regulations that would allow employees to vote through electronic means in determining representation in union organizing elections. Off-site, electronic voting for union certification elections would remove the privacy workers have in secret ballot elections.
- Training and Education: The bill contains funding for a variety of training and education programs overseen by the Departments of Labor and Education that are critical to workforce training and educating the future workforce. Some of the highlights include a boost to funding for programs under the Workforce Innovation ad Opportunity Act (but below authorized levels), increased flexibility for states and $90 million in new funding for competitive grants for apprenticeship programs. Unfortunately, the bill does not include any additional funding for the Perkins Act career and technical education state grants.
- Renewable Energy Tax Credits: The bill includes a provision that extends the 30 percent solar investment tax credit and a credit for solar-powered energy-efficient properties for three years before phasing it down in the final two.
Transportation & Utility Construction Funding
The 2016 Omnibus appropriations legislation fully funds the authorized levels contained in the recently-enacted FAST Act, resulting in a 5.5 percent increase in highway funding and a 10 percent increase in transit funding over FY 2015 levels. The obligation limit from the Highway Trust Fund for the highway program is $42.361 billion, including $39.727 in formula funding to states, $275 million for the TIFIA program and $800 million for the new Nationally Significant Freight and Highway Project competitive grant program. In addition, the omnibus includes $500 million in funds for the TIGER grant program. While the TIGER grants were not included in the FAST Act, DOT had already solicited applications for these funds and awards are pending. It is unclear if TIGER funding will be provided in future years. Transit formula funding from the Highway Trust Fund transit account was at the FAST Act level of $9.348 billion. New start capital grants, however, was set at $2.177 billion in the omnibus – less than the $2.302 billion contained in the FAST Act.
The omnibus bill sets FY 2016 funding levels for the Clean Water State Revolving Fund at $1.39 billion, and the Drinking Water State Revolving Fund at $863 million, which represents a total cut to the SRFs of 4 percent. Earlier this year in both the House and Senate versions of the standalone Interior/Environment appropriations legislation (which contains funding for the EPA and its SRF programs), the SRF programs received deep cuts (25 percent and 23 percent respectively).
Federal Agency Construction Funding
The omnibus appropriations bill provides a host of good news for federal construction agencies. Compared to FY 2015 and the sequestration years prior, FY 2016 includes no losers for the major construction agencies, as the U.S. Army Corps of Engineers, Naval Facility Engineering Command, Air Force Civil Engineer Center, General Services Administration and Department of Veterans Affairs all see increases in their overall funding levels in FY 2016. However, the biggest winner and surprise in the omnibus bill is the General Services Administration, as Congress includes $1.6 billion for new construction—mostly for courthouses—where the House had previously suggested $0 and the Senate $181 million in FY 2016. With this increase in funds, contractors expect to hear more details on agency construction plans in February or March 2016. As is often the case with omnibus bills, federal agencies generally take 60 to 90 days after passage to interpret the language of the text and compile their work plans.
The omnibus appropriations bill funds the total military construction program at $6.650 billion for FY 2016, which is basically in line with the president’s budget request and a considerable $1.88 billion—or 39 percent—increase compared to FY 2015 funding levels. The primary military construction accounts for the Army, Navy and Air Force see considerable increases in FY 2016 as compared to FY 2015, with funding for the Navy seeing the largest increase—$650 million—of those accounts. The Army figure for FY 2016 is $663.2 million, the Navy figure is $1.669 billion and the Air Force figure is $1.389 billion. When adding the Army National Guard and Army Reserve Accounts to the primary Army military construction account, the figure for FY 2016 is $974.1 million.
There are a number of notable bits of information in the bill’s explanatory text when it comes to military construction. First, Congress is committed to supporting the Department of Defense’s Pacific Realignment with realigning resources in Okinawa, Guam, Hawaii and Australia. Secondly, and most interesting to general contractors, the explanatory text includes the funding amounts for specific military construction projects. To see which projects receive funding, you can access the explanatory text by scrolling through it and clicking here.
Army Corps Civil Works
The U.S. Army Corps of Engineers (USACE) Civil Works program fared well, receiving $5.898 billion for FY 2016, an increase of more than $500 million from the FY 2015 enacted levels, and more than $1.25 billion over the president’s FY16 request—a 27 percent increase. Construction receives $1.862 billion, and authority for 6 new starts, 5 of which the majority of benefits derived are from navigation and flood control. Operation and maintenance nets $3.137 billion, Mississippi River and Tributaries is funded at $345 million. Overall, the bill provides $2.6 billion for navigation, including $1.25 billion from the Harbor Maintenance Trust Fund and full use of the $405.6 million in estimated revenues from the Inland Waterways Trust Fund, and $1.7 billion in support of flood and storm damage reduction activities. To see which projects receive funding, you can access the explanatory text by scrolling through it and clicking here.
General Services Administration
Perhaps the biggest winner in the FY2016 federal construction funding arena is GSA. The House and Senate versions of the FY 2016 appropriations bills included little construction funding for GSA—$0 and $181 million, respectively—new construction. The omnibus appropriations bill provides $1.608 billion for the construction account—which more than triples the FY 2015 figure of $509.7 million—and $735.3 million for the repairs and alterations account—a slight decline from FY 2015 levels. Of note from the construction account, $341 million is for the consolidation of the Department of Homeland Security at St. Elizabeth’s; $948 million is for federal courthouses; and $75 million is for a new Federal Bureau of Investigation headquarters. For more information on GSA funding in FY 2016, you may access the explanatory text by scrolling through it and clicking here.
Department of Veterans Affairs
Despite the controversy this year, the omnibus increases funding for the overall Department of Veterans Affairs’ construction program. The major construction program—which funds projects above $10 million—is funded at $1.242 billion in FY 2016, a $682 million or 121 percent increase compared to FY 2015. The minor construction program—which funds projects at or below $10 million—is funded slightly below FY 2015 levels at $406 million in FY 2016. However, these figures do not tell the complete story. As you may recall, Congress passed an AGC-supported VA construction reform in September that requires the U.S. Army Corps of Engineers—or other federal construction owner—to execute VA construction projects over $100 million. To ensure that the VA enters into an agreement with USACE—as that negotiation process is well underway—the omnibus withholds $649 million from the FY 2016 major construction account until the VA enters into an agreement with USACE to serve as the design and/or construction agent for each major construction project with a total estimated cost of $100 million. The agreement must be made for the seven projects for which that withheld funding would go, which are located in Alameda, CA; American Lake, WA; Livermore, CA; Long Beach, CA; Louisville, KY; San Francisco, CA; and West Los Angeles, CA. To see which projects receive funding, you can access the explanatory text by scrolling through it and clicking here.
For more information, please contact Jimmy Christianson at email@example.com or (703) 837-5325.