April 20, 2021

CT Construction Digest Tuesday April 20, 2021

Officials: Meriden highway interchange project needed to remove ‘choke points’

















Mary Ellen Godin

MERIDEN — A $300 million plan to improve the convoluted traffic triangle at the junction of interstates 691, 91 and Route 15 has been divided into three phases.

After completing its design study, state Department of Transportation engineers split the project into phases. Construction is scheduled to begin next spring.  

The project aims to provide a safer drive through the three arteries with two-lane connections between all major roadways, and separate the weaving connections between I-91, I-691, Route 15 and East Main Street. It also aims to address accidents, providing adequate acceleration, deceleration, and spacing between traffic movements. 

The project has been on the state’s priority list for several years because of numerous merging accidents and traffic backups caused by the poor flow from highway to highway. 

“Pre-COVID-19 we were seeing upwards of 200,000 people travel through our city on these highways surrounding us each day,” Meriden Mayor Kevin Scarpati said at a press conference Monday. “So, we know the need for investment in infrastructure. It was something city officials have talked about… It’s remarkable to see it’s coming to fruition.”

U.S. Sen. Richard Blumenthal joined Scarpati and state Department of Transportation officials and workers to pitch the proposed $2.3 trillion infrastructure package now in the U.S. Senate during Monday’s press event at the Bee Street commuter lot. The federal funding will ensure all phases of the Meriden highway project are completed on time, Scarpati said. 

First phase

The first phase, estimated to cost $45 million, includes making a two-lane connection eastbound from I-691 to I-91 north. It is estimated to take two years. The project involves widening the existing ramp from I-691 east to I-91 north to two lanes and widening I-91 north to accommodate an auxiliary lane from this interchange to the Middletown rest area.

Second phase

 The southbound phase is estimated to cost $145 million and begin in 2025. It is estimated to take four years to complete, but the DOT is trying to accelerate the timeline. 

The project involves widening I-91 south to provide an auxiliary lane from the vicinity of the Middletown rest area to the I-691 west exit, widening the I-91 southbound off-ramp to I-691 west to two lanes, and widening the I-691 eastbound off-ramp to Route 15 south to two lanes. Plans call for relocating the exit from I-91 southbound to Route 15 southbound approximately a half-mile south of its present location. The project would also provide a two-lane ramp from Route 15 southbound to I-91 southbound. Additional improvements include paving of I-91 south to the Wallingford town line.

Third phase

The northbound phase is scheduled to begin in spring 2025 and is estimated to cost $110 million. Plans call for replacing the existing ramp connection from I-91 north to Route 15 north (Exit 17) with a new two-lane off-ramp from the existing off-ramp to East Main Street (Exit 16). This will require widening the Exit 16 off-ramp to two lanes to accommodate the new I-91 northbound to Route 15 northbound connection and the exit to East Main Street.

Plans also call for relocating the connection from Route 15 north to I-91 north approximately three-quarters of a mile south of its present location and widen the existing off-ramp from Route 15 north to I-691 westbound to two lanes.  Additional improvements include paving I-91 northbound to the Wallingford town line. It is estimated to take four years but the DOT is working to expedite the timeline, officials said. 

Disruption, environment

“We would expect that the delays and disruption will be typical and expected of a construction project of this magnitude,” said DOT spokesman Kevin Nursick. “The delays and disruption may be less than normal since many of the ramps are being relocated allowing for ‘off-line’ work to be accomplished without impacting the existing traffic patterns.”

DOT officials said Monday they will utilize all environmental mitigation strategies to protect surrounding water sources. 

A list of those strategies can be viewed at https://portal.ct.gov/-/media/DOT/documents/dpolicy/pamphlets/ENVONSITWEBpdf.pdf?la=en&hash=A958D2AD35EE98572F4B35D83715F9BF.

“It’s a green effort,” Blumenthal said. “The environmental review is going to be quick and simple. In fact, anyone who has sat in traffic you know the emissions coming out. This project is a classically green project, to eliminate traffic, eliminate some of the choke points, stop the emissions and have fewer accidents.”


NEWS CONFERENCE: President's jobs plan includes relief for congested highways

VIDEO FROM YESTERDAYS NEWS COONFERENCE CLICK ON LINK ABOVE


Most contractors won't pay more taxes under Biden's infrastructure plan: CPA

Joe Gousquin

Most contractors won’t pay more in taxes under President Joe Biden’s $2.3 trillion infrastructure proposal, while the infusion of cash to fund more public construction projects would provide a significant upside for their businesses, according to a certified public accountant who leads Ernst & Young's global construction and engineering practice.

Accountant Erin Roberts said that because the majority of construction firms in the U.S. are set up as “pass-through” entities and are not subject to corporate taxes, a proposed increase in the corporate tax rate to pay for the infrastructure package would have limited impact on them, while the trillions of dollars flowing to civil projects presents outsized opportunities to increase revenue in the coming years.

“For the construction industry in general, because of the large number of pass-through firms in the sector, they’re not likely to pay a lot more income tax with this bill,” Roberts told Construction Dive. “On the other hand, given the amount of money we’re talking about here, this could be incredibly stimulative to the sector.”

According to the U.S. Census Bureau, just 16% of nonresidential construction businesses in the U.S. are registered as C corporations, and thus subject to corporate tax rates. The lion’s share of the remaining 84% is comprised of S corporations, sole proprietorships and partnerships that are treated as pass-through entities, where their owners pay taxes on their profits at the individual rate.

Tax implications

In announcing the American Jobs Plan last month, the White House put out a blueprint to pay for it by raising the corporate tax rate from 21% to 28%, and Biden alluded to increasing taxes on individuals making more than $400,000 a year during a speech in Pittsburgh. This proposed bump in individual tax rates could impact owners of construction companies that are pass-through entities. 

Business groups including the Associated General Contractors of America and Associated Builders and Contractors bemoaned the proposed tax increases in the plan.

"Unfortunately, much of the Biden plan ignores ABC’s infrastructure policy recommendations, while proposing tax increases on job-creating construction firms that are still recovering from the effects of the COVID-19 pandemic," said Michael Bellaman, CEO of ABC, in a statement after the plan's introduction. 

But while the administration subsequently issued clear proposals for increasing the corporate tax rate to 28%, including a detailed plan released by the Treasury Department April 7, it has sent mixed signals on its commitment to raising taxes on individuals making more than $400,000 since then and has not yet released specifics on any changes to individual tax rates.

From Roberts’ perspective, backing away from raising individual rates now — a benefit to most construction company owners — could serve as a negotiating tactic in Washington to get the corporate tax passed.

“Raising individual rates wasn't a core part of the pay-for plan that they proposed” on April 7, Roberts said. “Biden himself has said, ‘Look, I'm willing to compromise. I'd like to get a bipartisan deal.’ And so there will be some horse trading over the next few months.”

To be sure, others say that doesn't mean an individual tax rate increase is off the table. In an email to Construction Dive, Matthew Turkstra, director of congressional relations for tax, fiscal affairs and accounting at AGC wrote that individual rate hikes could still be forthcoming. 

"We are expecting that the second tranche of the infrastructure proposal on human infrastructure will include significant increases in S corporation taxes, including raising the individual rate," Turkstra wrote, referring to other measures in the American Jobs Plan to train millions of workers, as well as initiatives to support in-home care for older and disabled Americans so their family members can keep working.

Gains outweigh drawbacks

Still, compared to the amount of potential new revenue that the proposal would bring into construction companies’ coffers, Roberts sees raising the corporate rate as a small price to pay for contractors.

“Based on our analysis, for traditional infrastructure categories such as transit and roads and bridges, the American Jobs Plan looks to propose a nearly 30% increase in annual public spending over historical levels,” Roberts said. “So if you’re in the road and bridge market, that’s coming to you. I think that’s where it can be very accretive.”

That’s particularly true when you consider the current share of construction spending within the public sector. For example, the annualized rate for all construction spending in February was $1.52 trillion, according to the Census Bureau. But public construction accounted for just $351 billion of that number.

While Roberts notes that the American Jobs Plan proposes to spend the money over eight years, he says even parsed out, that’s a significant amount of new cash going into sectors that many feel have been neglected for decades.

“When you put $2.3 trillion of investment into an annual spend of $350 billion, that sector will be directly affected,” Roberts said. “Now, all of the sudden, those numbers start to sound really large.”

Given the possibility of minor tax impacts on the majority of contractors and the potentially outsized gains in revenue from stimulus spending, Roberts said the construction clients he works with have an increasingly positive view of the proposal.

“I would characterize my conversations around the industry with a general optimism and hopefulness around this package,” Roberts said. “When you look at the opportunities, the prevailing idea is that this could be very good for construction.”


Progressives Propose Tripling Housing Commitment in Infrastructure Plan

Emily Cochrane

WASHINGTON — Top liberal lawmakers unveiled legislation on Monday that would pour more than $100 billion over a decade into modernizing the public housing system and starting a transition to renewable energy, as progressives seek to prod President Biden to expand his far-reaching infrastructure plan.

The legislation, led by Senator Bernie Sanders, the Vermont independent, and Representative Alexandria Ocasio-Cortez, Democrat of New York, is the first of multiple proposals from progressives who are trying to shape the president’s $2.3 trillion package, which Mr. Biden has said aims both to overhaul infrastructure and to address climate change and economic inequities.

Its proponents estimate that it would invest at least triple the amount that Mr. Biden has proposed to tackle a large backlog of improvements to the nation’s aging public housing system.

The proposal reflects the fraught politics surrounding the plan on Capitol Hill: To pass his plan, Mr. Biden can probably afford to lose no more than a few Democratic votes given the potential for united Republican opposition. Republicans say they want to compromise on the measure, but have largely panned it as too costly and expansive, and condemned the idea of paying for it through tax increases. Democrats are broadly in favor, but their leaders will have to navigate between the demands of liberals like Ms. Ocasio-Cortez and Mr. Sanders, who want even more spending, and moderates who have signaled they would support a smaller package that could draw some Republican backing.

While the president has outlined the broad contours of his proposal, it is up to lawmakers to reach agreement on the final provisions and details of the legislation, and the package has already spurred a flurry of lobbying from rank-and-file members.

The progressives’ latest proposal, called the Green New Deal for Public Housing Act, is a prong of the broader climate platform that Ms. Ocasio-Cortez and others have long championed to help the United States wean itself from fossil fuels. It would repeal limitations on the construction of public housing and create grant programs to ensure improvements that not only address unsafe and aging housing, but reduce carbon emissions.

“We’re here to make sure the Democratic Party upholds its values and keeps its promises, and to also push and expand the scope and the ambition of the Democratic Party,” Ms. Ocasio-Cortez said in an interview. She and other liberal lawmakers are expected to reintroduce additional parts of the Green New Deal platform this week.

To qualify for the grants, recipients would have to adhere to strong labor standards, such as protection of collective bargaining rights and the use of American manufacturing and products. The legislation would also fund tenant protection vouchers for displaced residents and create apprenticeship programs for residents.

“What’s different now is there really is an opportunity — a once-in-a-lifetime opportunity — to address this backlog and have Congress address the funding that’s needed,” said Diane Yentel, the president and chief executive of the National Low Income Housing Coalition. “This may be the moment, at long last.”

When Mr. Biden outlined his proposal last month, he called for more than $40 billion to improve public housing infrastructure. At an event in New York on Sunday, a group of lawmakers from the state, including Senator Chuck Schumer, the majority leader, pushed for at least double that figure.

“Public housing has been neglected, left to get worse, and we’re not going to stand for it anymore,” Mr. Schumer said. The president’s plan, he added, was “a good start, but it ain’t enough.”

Mr. Sanders, Ms. Ocasio-Cortez and their allies envision their proposal costing $119 billion to $172 billion over 10 years to meet the needs of the country, according to an estimate from the Climate + Community Project provided to The New York Times. It aims to create thousands of maintenance and construction jobs.

While some lawmakers have floated the prospect of splitting apart Mr. Biden’s plan and moving a scaled-back version first in an effort to win the 10 Republican votes needed to overcome the 60-vote filibuster threshold in the Senate, the progressives are pushing for one huge bill that goes even further.

“Probably our best bet would be one bill — and it should be a large bill,” Mr. Sanders said in an interview. “I think it’s just easier and more efficient for us to work as hard as we can in a comprehensive broad infrastructure plan, which includes human infrastructure as well as physical infrastructure.”

Republicans, who have sought to portray the Green New Deal as federal overreach that would harm the economy, have already seized on the climate and housing provisions in Mr. Biden’s plan as far beyond the traditional definition of infrastructure. Mr. Biden is also preparing a second proposal that would focus even more on projects outside what Republicans call “real” infrastructure and could bring the total cost to $4 trillion.

“Republicans are not going to partner with Democrats on the Green New Deal or on raising taxes to pay for it,” Senator John Barrasso, Republican of Wyoming, said at a news conference last month. Senator Mitch McConnell of Kentucky, the minority leader, has repeatedly warned that the infrastructure plan is “a Trojan horse” for liberal priorities, while Representative Steve Scalise of Louisiana, the No. 2 House Republican, declared last week that “it’s a lot of Green New Deal” that would lead voters to turn away from Democrats.

“I think the expansive definition of infrastructure that we see in this sort of ‘Green New Deal wish list’ is called into question,” Senator Shelley Moore Capito, Republican of West Virginia, said on Fox News last week. “I don’t think that the American people, when they think of infrastructure, are thinking of home health aides and other things that are included in this bill.”

A group of Democrats has raised the possibility of breaking off the parts of Mr. Biden’s plan with broad bipartisan appeal — addressing roads, bridges and broadband — and attempting to pass it with Republican votes before Democrats turn to the more ambitious elements the G.O.P. has rejected. Then, they argue, Democrats could use the fast-track budget reconciliation process to bypass the filibuster and unilaterally push the remainder of the package through both chambers.

“I think that if we come together in a bipartisan way to pass that $800 billion hard infrastructure bill that you were talking about, that I’ve been urging, then we show our people that we can solve their problems,” Senator Chris Coons, Democrat of Delaware, said on “Fox News Sunday.”

But there is no guarantee that bipartisan support would materialize even for a more limited plan, and many liberals fear that if it did, the strategy would sap momentum for their more ambitious ideas.

While the progressives’ proposal is largely unchanged from its original iteration in 2019, the political landscape is vastly different, with Democrats in control of Washington. Mr. Sanders now leads the Senate Budget Committee, and a historic investment of federal funds to counter the economic and health effects of the coronavirus pandemic has some lawmakers and voters more open to substantial spending.

“The time has now caught up to the legislation, and I’m really thrilled about that,” Ms. Ocasio-Cortez said. “You have a respiratory pandemic that’s layered on communities that are suffering from childhood asthma, that are already dealing with lung issues, that have pre-existing hypertension, which are all indicated by factors of environmental injustice.”

The Congressional Progressive Caucus, in an outline of five priorities for the final infrastructure product, singled out elements of the housing legislation, including the energy-efficiency standards. But with slim margins in both chambers and a huge lobbying campaign underway to ensure pet policies and provisions are included, it is unclear how Democrats would work this proposal in and whether every member of the caucus would sign on.

Mr. Sanders acknowledged that the path forward for his proposal — and a number of other liberal priorities — could be difficult even with Democrats in control. Even using the budget reconciliation process, which requires only a majority for passage, every Senate Democrat would need to remain united behind the entire package.

“That is not easy stuff,” Mr. Sanders said. “People have different perspectives, people come from very different types of states, different politics, and that’s going to be a very difficult job for both the House and the Senate.”


Big dollars hang in the balance as CT finance panel rushes to finish work

Keith M. Phaneuf

Gov. Ned Lamont kicked off this year’s state budget debate by urging lawmakers to avoid broad-based tax hikes as Connecticut’s economy crawls out of the coronavirus pandemic.

At the same time, though, many of Lamont’s fellow Democrats noted that COVID-19 has battered households as well, and — given the state’s long-term fiscal challenges — it might not be possible to provide relief for some without taxing others more.

But as the legislature’s tax-writing panel wraps its work this week, a wide range of proposals still hang in the balance.

The Finance, Revenue and Bonding Committee must by Thursday decide the fate of proposed tax hikes on digital media ads and health insurance carriers, along with a statewide property tax aimed at high-value homes.

Mixed in with that are several income tax-related bills that provide relief for the poor or increase burdens on the wealthy.

“We’ve just experienced a difficult and historic year, and it was sort of our challenge in the finance committee to meet the moment,” said Rep. Sean Scanlon, D-Guilford. And while the House chair of the panel declined to speculate — with a few exceptions —  on which measures would survive, he predicted the final product would both “address inequalities” and “recognize it’s a fragile economy.”

Despite the havoc COVID-19 has wreaked on business and household budgets, state government, relatively speaking, has fared far better, thanks partly to a robust stock market that has fueled state income- and business-tax receipts.

Lamont’s budget office warned back in February that state finances, unless adjusted, were on pace to run $2.6 billion in the red over the next two fiscal years combined, which could largely exhaust its $3 billion rainy day fund.

 

But since then, state officials learned Connecticut is getting $2.6 billion in federal stimulus to help with the next two-year budget, and analysts project the state budget will close on June 30 with an extra $800 million left over.

In other words, the projected deficit — while significant — looks eminently manageable.

Two bills Scanlon expects the committee to adopt would deliver hundreds of millions of dollars in state income tax relief to low- and middle-income households.

One involves creating a new child tax credit. The second would expand the state Earned Income Tax Credit. Aimed at the working poor, the state EITC currently set at 23% of the federal income tax credit of the same name, delivering $101 million annually to the working poor here. Scanlon didn’t say how much it might be increased, but one proposal before the panel would boost it by more than one-third, to 30% of the federal credit.

Fonfara launches tax fairness debate

But the finance committee’s other chairman, Sen. John Fonfara, D-Hartford, wants to take the tax fairness debate much farther.

Fonfara introduced several proposals in one omnibus measure last week, including an income tax surcharge on the capital gains earning of Connecticut’s richest households — singles earning more than $500,000 per year and couples topping $1 million.

He also proposed a new “consumption” tax that — despite its name — is tied directly to income, and not to purchases. The basic concept is that households with higher earnings can purchase more and therefore should pay a higher sales tax.

But while Connecticut does apply special luxury sales tax rates in a few areas, such as expensive jewelry and cars, the state charges the same 6.35% to rich, poor and middle-income alike on the overwhelming bulk of goods and services. 

Fonfara told the CT Mirror last week that the state sales tax and the municipal property tax are the linchpins in a combined revenue system that asks too much from those least able to pay. Legislators must begin to chip away, he added, at “this gross inequity, this incredibly regressive burden [placed] on the least able in our communities.”

Fonfara’s proposal, which is one of several bills going before the finance committee at a 9 a.m. live-streamed hearing on Tuesday, would establish six tax rates, ranging from 0.1% to 1.5%, to be applied to individuals making at least $140,000 per year. 

For example, a person earning $150,000 annually would be taxed at 0.1%, and pay $150. Someone earning more than $13 million annually would face the top rate and owe $195,000.

Nonpartisan analysts hadn’t completed their review of Fonfara’s proposals late Monday, but a similar capital gains surcharge proposed two years ago was estimated to generate more than $200 million in annual revenue.

Both proposals are likely to draw opposition from Lamont, who consistently has opposed increasing state taxes on the wealthy to finance relief for the poor and middle class, arguing this would drive Connecticut’s biggest taxpayers to leave the state.

“I’ve always said, we don’t need more taxes, we need more taxpayers,” Lamont said in his budget address back in February.

The Republican minorities in both the Senate and House likely also would oppose these and other tax hikes.

And Sen. Henri Martin of Bristol, ranking GOP senator on the finance committee, noted the list of proposed tax increases doesn’t stop at capital gains and the consumption levy.

Retailers push back against digital media ads tax

Many House and Senate Democrats have voiced support for a proposed tax on digital ads, generating hundreds of millions of dollars annually from online giants such as Google and Facebook.

Also still in play before the committee is a proposal from Senate President Pro Tem Martin M. Looney, D-New Haven, for a statewide tax of 1 mill aimed at homes with market values of more than $430,000.

Looney has said the tax hike could finance a Democratic legislative pledge to bolster non-education grants to cities and towns by $135 million per year.

But Martin said it’s not that simple.

“I don’t believe that they [Democrats] are being sensitive at all” to the economic damage caused by COVID-19, Martin said. “I think the reality hasn’t sunken in. … People are getting out of their house and starting to go back into the community.”

The Connecticut Retail Merchants Association teed off Monday on the digital media ads tax, predicting it would stymie any effort to get the state’s economy moving.

Tim Phelan, president of the association, said that while is well-intended, “the timing on this couldn’t be any worse.”

Stephanie Do with the Council on State Taxation said Connecticut would become a national outlier.

Only one state, Maryland, has a similar tax, and that measure, enacted this year, is being challenged in state and federal courts, said Do, senior tax counsel with the Washington, D.C.-based taxpayer advocacy and policy group.

“It sends a very strong signal, or a very negative signal,” added Phelan, who predicted advertisers would pass the costs on to already struggling businesses, some of whom would channel those expenses onto consumers.

Besides Tuesday’s hearing, the finance committee also has scheduled meetings for Wednesday and Thursday to finish action on proposed bills.