Capitol Hill Update: FY2023 Budget: Chaos Again With No Final Budget

Given the political uncertainty leading up to the midterm elections in November, congressional leaders are unlikely to strike a bipartisan spending agreement before current funding runs out, necessitating a continuing resolution to keep the government funded for a few more months.   

The House has passed one government funding package consisting of six spending bills for the fiscal year that begins on Oct. 1. But the remaining six measures — including the two biggest bills, Defense and Labor-HHS-Education — won’t see any floor time until later in the year.    
  
Fall Weeks in Congress: Limited Time, More Priorities 
Having passed the CHIPS and Science Act and the reconciliation package (Inflation Reduction Act), the fall agenda remains focused on passing a FY23 budget resolution, a tax reform and extender package and countless nominations on the Senate side. Other high-profile targets will be the SAFE Banking Act, Section 179 bonus depreciation extension, and change order reforms. The final Davis-Bacon and PLA are expected in final form and a new draft rule boosting enforcement against independent contractor cheating in construction is coming soon.  

The newly enacted Inflation Reduction Act (IRA) legislation includes more than $369 billion in commercial, residential, industrial and commercial energy efficiency projects and retrofits, $300 billion in deficit reduction, negotiates some prescription drug prices and extends Affordable Care Act subsidies through 2024. It adds to revenue by collecting due but uncollected federal taxes estimated at $1 trillion outstanding and growing monthly, by increasing IRS oversight.

Adding the IRA’s massive retrofit tax credit incentives to the historic infrastructure law signed last year to the $60 billion in CHIPS and Science tax credits for prevailing wage, registered apprenticeship contractors, it is easy to see a flood of high-value contracts coming soon. In addition, federal contractors will soon be using SMACNA-endorsed rules for PLAs and largely reformed Davis-Bacon Act regulations for the coming five years or more to boost even more demand for union contractors in the marketplace. 

SMACNA Endorses Looman for Director of WHD
SMACNA contacted the U.S. Senate with a strong and enthusiastic endorsement for Jessica Looman to serve as Administrator of the U.S. Department of Labor’s Wage and Hour Division (WHD). SMACNA rarely endorses a nominee for federal office. However, we make a special exception to support Jessica Looman to be WHD Administrator due to years of appreciation for her dedication and ability, as well as our first-hand experience viewing her fairness, judgement and professionalism at the state and federal levels. Our member corporations have appreciated her work up close, from her service as Minnesota Commissioner of Commerce, Assistant and Deputy Commissioner of the Minnesota Department of Labor and later as Executive Director of the Minnesota State Building and Construction Trades Council.

Looman has made significant progress on important goals most labor and management organizations support, from expanding construction career pathways to including greater diversity and inclusion in the construction industry to protecting the physical and financial health of the construction workforce. In addition, in Minnesota she worked to increase private and public investment in construction infrastructure, an effort benefitting contractors and workers alike, as well as the Minnesota taxpayer. During tenure at the Minnesota and U.S. DOL, she actively supported increasing construction workforce training quality, public project safety and productivity. Three high-priority policies for our member corporations and skilled workers include: reforming the nation’s prevailing wage laws, enforcing construction worker misclassification rules, and reforming and enforcing registered apprenticeship standards. On these long-ignored regulatory matters she has earned the trust of our industry and introduced policy proposals important to our firms and their highly skilled construction trades employees.

SMACNA Supports Administration PLA Reforms
The Biden administration proposed a new rule that would require Project Labor Agreements (PLAs) on federal construction projects valued at $35 million or more. The new regulation comes after President Biden’s executive order requiring PLAs on nearly all federal projects. Earlier this year, the Biden Administration issued a Presidential Executive Order #14063 requiring federal construction projects of $35 million or more be issued under a PLA with certain exceptions. Under certain circumstances the EO allows PLAs under $35 million but are not required. 

An estimated $262 billion in federal construction contracts and around 200,000 construction workers are expected to be impacted by projects under the Executive Order. As part of the process on Aug. 19, the Federal Acquisition Regulatory Council (FAR Council) released their proposed regulations for a 60-day public comment period. SMACNA submitted detailed comments in general support of the proposed new rule. SMACNA continues to champion the use of PLAs on all federal projects where appropriate. 

PLAs routinely clarify expectations between all involved parties while also ensuring that a project is completed in a manner that delivers maximum value to the taxpayers in conformance within budget and timing parameters. PLAs are most often found on private projects of significance where quality and expertise are highly valued by building owners and developers, but to date have not been frequently issued on federal projects. That should quickly change once the new PLA rules are in place.