March 25, 2021

CT Construction Digest Thursday March 25, 2021

Biden's Build Back Better plan reportedly includes $1T for roads, bridges, rail and ports

Joe Bousquin

Dive Brief:

Details of President Joe Biden's long-awaited infrastructure package emerged this week as the administration ramps up for its second major legislative push after passing the $1.9 trillion American Rescue Plan earlier this month.

Physical improvements to roads, bridges, rail lines, ports and the electric grid alone could account for nearly $1 trillion of Biden’s forthcoming Build Back Better infrastructure program, according to media reports. But raising taxes to pay for it could negatively impact contractors, Jimmy Christianson, vice president of government relations at the Associated General Contractors of America, told Construction Dive.

The plan, which is expected to total between $3 trillion and $4 trillion, aims to create 5 million new jobs while restoring all the jobs lost in the broader economy during the past year due to the COVID-19 crisis, according to the New York Times.

Dive Insight:

The physical infrastructure portion of the Build Back Better program would be the first of two phases included in an overall spending package, according to the Times. It would also include clean energy upgrades, a stable of electric-vehicle charging stations across the country, development of a 5G telecommunications network, rural broadband deployment, 1 million affordable and energy-efficient housing units and advanced training for millions of workers, the Times reported.  

The second portion will likely focus on what is referred to as “human infrastructure” and would include investments in education and childcare programs. These elements include tax credits to help families afford child care, extending tax cuts to help fight poverty, free community college and universal prekindergarten. 

How it will get paid for, however, is sure to incite more partisan acrimony on Capitol Hill and could necessitate more parliamentary maneuvering by Democrats using the budget reconciliation process, as they did with the American Rescue Act, which passed without a single Republican vote. Biden has proposed raising the corporate tax rate from 21% to 28%, as well as increasing taxes on individuals making $400,000 a year or more, and raising the top marginal income tax bracket from 37% to 39.6%.

Looking ahead

While the items coming into focus in the physical infrastructure plan generally represent good news for contractors who need new projects after many jobs were postponed or canceled due to the COVID-19 crisis, raising taxes to pay for them could be bittersweet for companies in the construction space. 

“That impacts us,” Christianson said. “We have many companies that are taxed at the individual rate that are employee-owned businesses, LLCs or partnerships. That represents a lot of the small businesses in the construction industry.”

Also at risk could be the 20% deduction for pass-through businesses enabled by Section 199a of former President Trump’s 2017 Tax Cuts and Jobs Act, which created parity between corporations and non-corporate taxpayers.

“That’s also on the chopping block,” Christianson said. “So paying for infrastructure through those types of tax changes is obviously problematic to the broader business community.”

Christianson said he expects more details about Biden’s plan to be unveiled in the coming weeks, with the possibility of the president addressing a joint session of Congress in April to sell his Build Back Better program to the country.

White House advisers reportedly are recommending breaking the mammoth spending proposal into two parts to improve its chances of passage, given Democrats’ thin majorities in the House and Senate. But the scope of the proposal alone is noteworthy, lawmakers noted.

“The country has not had a real infrastructure bill since Dwight Eisenhower set up the highway system. This could do more for American manufacturing and blue-collar jobs than anything else,” former Pennsylvania Gov. Ed Rendell, a Democrat, told the Washington Post. “It’s crucial not just for Biden’s legacy but for the legacy of the American government in the next decade. It’s a seminal moment for the country."


Lamont: Climate initiative, truck taxes linked to expanded train service

Ken Dixon

WATERBURY — Gov. Ned Lamont on Wednesday tied plans for major rail improvements in the Naugatuck Valley with his proposals to reduce carbon emissions and create a mileage tax on trucks.

Speaking before about 100 people outside the Metro-North station here, the governor, flanked by a pair of his top commissioners, promised seven more trains a day and two-way rail service to the city and the region, which is growing despite the pandemic.

“Waterbury is happening,” Lamont said. “You see it in terms of everybody rediscovering it, the number of people moving here.”

He added that most of the influx up and down the Naugatuck Valley, to Waterbury, is from New York. “Over the past year, as miserable as it may have been, a lot of people realized Connecticut is an amazing place to be.”

He asked lawmakers and local officials to help him push for his regional Transportation Climate Initiaitive as well as the proposed mileage tax for heavy trucks. Both measures would provide funding for state transit projects and the regional TCI, as it’s called, would aim to reduce greenhouse gas and other emissions linked to asthma and other respiratory ailments that adversely affect city dwellers.

The TCI, raising prices for petroleum products wholesalers and hiking gasoline prices, is estimated to bring the state about $1 billion for transportation projects by 2032 as part of a multi-state initiative. The highway use tax is projected to raise $1 billion over five years.

The state needs that money, Lamont said, to pay for improvements such as the Waterbury train line.

“This is bipartisan,” Lamont said. “This is an initiative where we can make an enormous difference together. Look, I love steak and fries, but there is no such thing as a free lunch and we do have to find a way to pay for it.”

He said the initiatives would also address racial equity because urban children are disproportionately affected by air pollution.

“I think racial disparities or health care disparities are part of the public-health emergency,” Lamont said, stressing that COVID-19 makes it even more dangerous. “We see it in the numbers that Black and brown people are particularly hard hit.”

There are currently 15 daily trains servicing the Waterbury line. Lamont’s budget proposal includes seven more a day at an initial cost of about $1.2 million. There is currently a $116 million capital project underway, including new signals, bridge repairs and the construction of extra tracks to eventually accommodate two-way train traffic.

Waterbury Mayor Neil O’Leary said that while the pandemic caused a more than 80-percent drop in ridership along Metro-North’s New Haven line, Waterbury line riders have remained at about 1,000 people a day, about 40 percent of capacity. The city led the state in January home sales, O’Leary said.

O’Leary said the train line from Waterbury to Bridgeport is a key to future development in the 19-town region. He’s hoping for freight train traffic to return in the not-to-distant future. “There are so many people traveling to and from New York City here to the city of Waterbury, and the region, every day,” he said.

State Transportation Commissioner Joseph J. Giulietti noticed that the finished stone-and-paving plaza around the platform is not longer a dirt lot. “We recognize the importance of transportation,” he said to an assembled crowd.m

Nearby, the reconstruction of the Interstate-84 and Route 8 cloverleaf, called the “mixmaster,” created a late-morning din.

Katie Dykes, commissioner of the state Department of Energy and Environmental Protection, said the initiatives are aimed at fighting climate change and providing cleaner air, not just raising money.

“These are solutions that are helping us to address environmental justice, racial inequality in our public health environment,” she said, stressing that the TCI would force the petroleum industry to help pay for cleaning the pollution caused by the combustion of gasoline and diesel field, and help the state move toward more electric transit options.

“Right here in Waterbury the air quality here is 17 percent worse than our suburban communities,” Dykes said. “It’s 44 percent worse than in our rural communities in this state. So this is an environmental justice issue and an opportunity as well.”

More than a third of the $1 billion anticipated from the TCI would go to cities such as Waterbury, Bridgeport, New Haven and Hartford, which have experienced the brunt of the state’s air pollution problems, she and Lamont said.


Westport looks to hire firm for $100M school maintenance plan

Katrina Koerting

WESTPORT — School officials are looking to hire a capital program manager to help oversee the $100 million maintenance plan over the next decade and provide more oversight to the district’s facilities.

The proposal calls for an outside firm to be used as needed for the projects and paid based on the work it completes, rather than on a retainer.

Officials maintained this was not a slight to the facilities department, which does a good job overseeing the district’s buildings, but more an issue of capacity given the staff’s existing workload.

“We’re looking to leverage what we have internally with external resources,” Superintendent Thomas Scarice said at a recent meeting, adding Fairfield and Norwalk have similar approaches.

While Scarice was hesitant to give an exact figure for what that would cost — because they plan to go out to bid for it — an estimate of $50,000 to $100,000 was floated during the board’s discussion.

Board members generally supported the idea, saying the cost is still less than adding someone to the staff once salary and benefits are factored in.

“We need it,” said board member Lee Goldstein. “To me, this seems like a no brainer to outsource this part of the work.”

Scarice said the facilities plan might have been the biggest issue facing the district prior to the COVID pandemic, especially since the board is also looking at creating a master plan as well.

He said the maintenance plan is incredibly complex due to all the sequencing, the state reimbursement process, managing and the pre-construction work needed for these projects.

“It’s a very high-stakes process the board has engaged in,” he said.

This firm could also help oversee the implementation of any capital improvement or modernization projects that arise as the district creates a master plan. These projects would go beyond maintaining the existing facilities, which is already in the works, and instead outfit the buildings or other capital needs to meet changes in instruction, culture or enrollment.

An additional firm could be brought on for the larger projects, such as the Coleytown Middle School one that just wrapped up. Officials would create a set of criteria to determine when an individual project manager would be needed, such as project scope or dollar amount.

Whichever firm is selected to be the capital program manager would not be allowed to create the master plan, Scarice said.

“We want to have that capital program manager to be purely acting in our interests and not be able to respond to the master plan,” Scarice said. “We want to have them asking questions and guiding us through that plan, not also bidding on it.”

The board expects to vote on sending out requests for proposals at its next meeting and select a firm this spring.

Scarice also proposed sending out a bid to get a firm to craft the master plan so they could have it before next year’s budget process starts. But board members said it might be too soon for that, and it should instead come after the educational strategic planning happens this summer.

School and town officials will start discussing the approach to facilities.

“These capital assets are incredibly valuable and incredibly important to the community,” Scarice said.


Heavy truck tax could add $500 to yearly grocery bills

Paul Hughes  

State lawmakers were told Wednesday that a proposed heavy truck tax is going to add almost $500 to the annual grocery bills for many Connecticut families.

Gov. Ned Lamont is anticipating raising $90 million annually from taxing trucks weighing more than 26,000 pounds for the number of miles driven in the state once the proposed tax fully takes effect.

The proposed highway user tax was a focus of a legislative hearing Wednesday on the nearly $3.4 billion revenue package supporting the two-year, $46 billion budget plan that Lamont presented to the legislature in February.

The Lamont administration is estimating the truck tax will allow for capital investments of $1 billion over the next five years for funding needed safety, traffic congestion and modernization projects.

“Large and heavy vehicles, as we know, do the most damage to our roads,” said Melissa McCaw, the state budget director.

A trade association representing the state’s traditional grocery stores provided an estimate on the potential cost of the new truck tax to the Finance, Revenue and Bonding Committee.

“We estimate that the truck tax will cost an average Connecticut family of four almost $500 more annually for food,” said Wayne Pesce, president of the Connecticut Food Association.

He testified that estimate also reflects the costs of what Lamont has called a small carbon tax targeting large gasoline and diesel suppliers that the governor’s office estimates will add 5 cents to the cost of a gallon of fuel to start in mid-2023.

Bozzutos Inc. is a leading wholesale distributor of food and household products to retailers in New England, New York, New Jersey and Pennsylvania.

The Motor Transport Association Association of Connecticut submitted an estimate Wednesday from Bozzutos that the proposed tax will cost the Cheshire-based company $1.3 million annually.

MTAC President Joseph Sculley also disputed the administration estimate that the highway user tax will generate $90 million annually because compliance is voluntary.

Rep. Gale L. Mastrofrancesco, R-Wolcott, was skeptical, too, after she pressed McCaw on collection rate assumptions for the proposed self-reporting tax.

“Collections is going to be in terms of this honor-based concept and the extent to which there is going to be compliance, you know, I’ll be very honest with you, that is an open item,” McCaw said.

Mastrofrancesco said this big unknown calls into question the accuracy of the $90 million estimate for her.

“So, we don’t really know if that number is accurate because we’re basing that number on an honor system,” she said.

McCaw said the revenue estimate is based on collections in Oregon and New York state, analyses of state tracking data on the weight ranges of trucks traveling through the state and the miles driven, and the assumed Connecticut rates.

“We know that trucks drive over a billion miles in a given year throughout our state,” she said.

McCaw said records of state weighing stations were used to determine the percentage of trucks in various weigh ranges that drive through Connecticut.

The proposed highway user tax targets tractor-trailers weighing more than 26,000 pounds to spare lighter commercial vehicles such as box trucks that many small businesses use, she said.

The envisioned rates range from 2.5 cents per mile to 10 cents for trucks weighing 80,000 pounds, and trucks weighing more 80,000 pounds will pay an additional 7.5 cents per mile.

The governor’s office estimated it would cost a truck $20 to traverse Connecticut, with most paying between $2.50 and $11.50.

Sculley, the president of the state trucking association, predicted many out-of-state companies are not going to pay the voluntary tax, either through deliberate evasion or ignorance of the self-reporting requirement. He said in-state businesses will pay the brunt of what gets collected.

The president of the Connecticut Lumber Dealers Association said 10 of his Farmington lumber company’s 20 trucks weigh more than 26,000 pounds.

The proposed highway user tax will add to the already high costs of fuel and other taxes, vehicle charges and registration fees, and insurance for the family-owned company, said Robert Sanford, president of Sanford and Hawley Inc.

“The Special Transportation Fund should not be funded the backs of small businesses.,” he said. “Our members cannot absorb these added cost, especially as we continue to work through the hardships created by COVID.”

Unlike other businesses, the Connecticut Farm Bureau Association warned that dairy farmers are going to be unable to pass on the cost of the proposed highway user tax.

“This tax will come directly out of the pockets of Connecticut dairy farmers at a time when this industry is struggling to survive,” said Jane Nichols, the association’s executive director.