Menu
Search
ezgif-5-fd6801bf08

2018 in Washington: Infrastructure Investment Tops AED’s Agenda

With one year of the Trump administration in the books, there is still much to be accomplished in Washington in 2018. Despite the congressional midterm elections rapidly approaching, lawmakers and the administration have the opportunity, working across the aisle, to pursue policies that will sustain economic expansion for years to come.

At the top of AED’s agenda is infrastructure investment. The Association welcomes the opportunity to work with congressional leadership and the administration, on a bipartisan basis, to rebuild the United States. Key concentrations will also include improving the new tax law, regulatory reform, workforce development, expanding domestic energy production and promoting international trade.

Rebuild Our Nation’s Infrastructure

The United States’ infrastructure is in desperate need of a major upgrade. According to the American Society of Civil Engineers, America’s infrastructure scores a D+. Whether it’s structurally deficient bridges, dams and levees or inadequate roads, airports and pipes, America’s infrastructure is insufficient, and our leaders in Washington can no longer shun obligations when it comes to required upgrades.

While the last highway bill (the FAST Act) provided near-term certainty to the federal highway program, our nation still faces a $740 billion backlog in much-needed road, highway and bridge improvements. Consequently, Congress must work to identify new Highway Trust Fund revenue sources to restore the program’s long-term fiscal stability and increase investment.

Our airport infrastructure is also falling behind. Estimates are that between 2017 and 2021, U.S. airport infrastructure needs will be nearly $100 billion. It is expected that 24 of the top 30 major airports may soon experience “Thanksgiving-peak traffic volume” at least one day every week. With a $42 billion gap between airport needs and current investment levels, upgrading and expanding our nation’s airports as part of the Federal Aviation Administration reauthorization process should be a top priority.

Government and industry studies have estimated the nation’s water infrastructure needs over the next two decades in the hundreds of billions of dollars. However, the Clean Water and Safe Drinking Water State Revolving Fund (SRF), the primary investment vehicle for water infrastructure projects, has been reduced substantially since 2010. Lawmakers should restore and increase SRF funding levels and explore public-private partnerships to tap into private capital for these important projects.

America’s power grid is operating at full capacity. Most of the U.S. energy system dates to the mid-20th century. The time is long overdue for a major upgrade to our energy infrastructure. Congress must focus greater attention on replacing aging equipment and accommodating increased demand. Additionally, investments are necessary to ensure that broadband infrastructure keeps pace with growing demands for internet access.

Restore Certainty and Predictability

to the Tax Code

While the Tax Cuts and Jobs Act contained many pro-growth policies, including lowering the tax burden for pass-throughs, full expensing of new and used equipment purchases and business interest limitations tied to EBITDA, these provisions are temporary. Congress must work to make these important capital investment incentives a permanent part of the tax code to provide certainty for construction equipment dealers, manufacturers and customers.

Similarly, Congress significantly increased the estate tax exemption levels ($11.2 million per individual/$22.4 million per couple), but the provision expires after 2025. Unfortunately, the lack of permanency will cause businesses to dedicate significant resources to estate planning and estate-tax-related life insurance. Lawmakers must provide long-term certainty to family-owned businesses, ideally through permanent repeal of the federal estate tax.

The Tax Cuts and Jobs Act repealed Sec. 1031 like-kind exchanges (LKE) for personal property. LKE has been a valuable tool for equipment dealers to help manage the tax consequences of buying and selling equipment in their rental fleets and freeing up resources to make new capital investments. While full expensing provides some near-term relief for LKE users, the provision is only for five years, creating enormous business uncertainty. If it’s not extended, many equipment dealers will be in a significantly worse-off position than they are today. Consequently, Congress should restore LKE for personal property as part of the federal tax code.

The speed at which Congress drafted and approved the Tax Cuts and Jobs Act undoubtedly means there will be unintended consequences and technical errors. As a result, AED urges lawmakers to remedy such issues immediately. Additionally, AED encourages the IRS and the Treasury Department to implement the new law promptly and according to congressional intent to provide certainty for business owners.

Protect Equipment Distributors from

Harmful and Unnecessary Regulations

The regulatory landscape in Washington has improved dramatically as the Trump administration has repealed or halted unnecessary and burdensome regulatory mandates from the National Labor Relations Board (NLRB), the Occupational Safety & Health Administration (OSHA), the Department of Labor (DOL), the Environmental Protection Agency (EPA) and other federal agencies.

While the regulatory relief is welcomed, Congress must enact permanent regulatory reforms that will ensure the American people and businesses are protected from onerous regulations in the future. Lawmakers should approve legislation to impose more accountability on regulators and strengthen small business protections during the regulatory process, including enhancing the role of the Small Business Administration’s Office of Advocacy. Federal agencies should also dedicate more time and resources to compliance assistance and outreach.

Invest in the Next Generation of Skilled

Technical Workers

For decades, equipment distributors have identified the technician shortage as a major strategic challenge for the equipment industry. Through The AED Foundation, the Association has a decades-long history of tackling the skills gap by creating partnerships with local technical schools, providing training for the current industry workforce, and promoting equipment industry careers.

A 2016 AED Foundation study found that the shortage of equipment technicians is costing dealers $2.4 billion per year in lost economic opportunity. Lack of skilled workers is hindering economic growth, and Congress must channel resources to educating a new generation of technical workers.

Federal laws should be updated, such as reauthorizing the Carl D. Perkins Career and Technical Education Act, to reflect current workforce needs and to allow greater flexibility for state and local entities, nongovernmental organizations, community colleges and technical schools, and industry to work together to address the skilled worker deficiency.

Congress must also provide additional resources to fund new sector-based workforce strategies that connect employers, schools, and local governments and recognize that short-term skills- and job-oriented training programs can play as significant a role in the education of skilled workers as full-blown college degree programs.

Expand Domestic Energy Production

The United States must continue to develop its energy resources and become an even more significant global energy producer. The federal government should ensure that shale energy development can continue across the country and must recognize that its benefits are best measured and understood at the state level. Additionally, policymakers should explore opening more federal land to energy development.

Congress and the administration should also work together to renew the vitality of other energy sectors – including coal – that have been undermined by federal policy in recent years. Continuing to improve the federal permitting process for the construction of new infrastructure to transport and process energy must remain a priority.

Promote International Trade and Commerce

The United States operates in a global economy. While protectionist rhetoric makes good campaign sound bites, the reality is that American companies rely heavily on free trade agreements and other accords that permit accessible and efficient international trade. Consequently, reforms to NAFTA and other international trade pacts should focus on modernizing these agreements rather than scrapping them altogether.

Congress should work to promote free trade by engaging with Cuba, to ensure the long-term viability of the Export-Import Bank, and to build closer relationships with Canada through greater regulatory harmonization and improving the movement of goods across the United States’ northern border. Additionally, Congress and the administration should reject any efforts to expand Buy America provisions beyond materials used “in” construction projects (steel, iron, cement, etc.) to include equipment used “on” job sites.

Stay Engaged

Last year, the old Washington adage “if you’re not at the table, you’re on the menu” hit home for the construction equipment industry. The new tax law is far from perfect, but undoubtedly the industry would be in a far worse position if not for the engagement of AED and its members.

To push an infrastructure package and AED’s other legislative priorities across the finish line will require a similar effort. Be sure to join your equipment industry colleagues at the 2018 Washington Fly-In on March 20-22. There’s too much at stake not to advocate for your company and the industry.  Register at bit.ly/2018flyin.

 

Related Articles

CECA2020-569x160-webbanner-01