February 24, 2009 by Michael Weisbrot
The stimulus package is absolutely gigantic. So much so, I thought I would create a list of pros and cons related to the construction industry pertaining to the bill. Many of the cons are items that the industry was pushing for, but did not get.
Overall, the bill looks like a victory for the construction and surety industries. See below for details.
| PROS: | CONS: |
|---|---|
| The biggest investment in infrastructure for 50+ years | |
| No specified amount for school construction | |
| Passed with $8 billion towards high-speed rail (previous Senate version included $2 billion, while previous House version included $0) | |
| “State fiscal-stabilization� funds cannot be used for new construction of schools, only modernization | |
| General Stimulus: $110.7 billion (35%) is appropriated for projects in 2010 | General Stimulus: Only $34.8 billion (11%) of the $308.3 billion will be spent on “shovel-ready� projects by 9/30/09, the fiscal year end for 2009 |
| Infrastructure Stimulus: 50% of funds spent on work to be started within 120 days of the enactment | |
| “Use it or lose itâ€? policy for DOT, a 50% expenditure for within 120 days | “Use it or lose itâ€? policy is not in force for the following departments, but they must report to Congress on how they are spending their funds: DOD & VA – 30 days GSA – 45 days |
| “Build America� tax-credit bonds can be issued by local and state governments in 2009 & 2010 | |
| Small businesses may deduct income up to $250K of capital expenditures as well as a 50% deduction on depreciable assets (e.g. construction equipment) | |
| Businesses can carry 08’ operating losses to offset profits from previous years | Only companies with less than $15 million in revenue can qualify |
| A bill that requires public companies to withhold 3% of their contracts will no longer be effective for 2011 | The bill will be effective for 2012 |
