Addressing Contractors' Top Legislative Concerns

January 9, 2002
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What are some of the key national legislative issues of 2002 that will have an impact on hvacr contractors? The News asked the Air Conditioning Contractors of America (ACCA) to find out what Congress is (or is not) addressing.

ELECTRICITY DEREGULATION

Craig Silvertooth, manager of federal relations for ACCA, said that electricity deregulation will continue to be a priority.

Representative Joe Barton (R-TX), chairman of the Subcommittee on Energy and Air Quality in the House Commerce Committee, has signaled that he is intent on taking up electricity deregulation and was hoping for action in December. Markup of the House bill is now expected in February.

“We will be pushing for language that will prohibit cross-subsidization,” said Silvertooth. “We’ve made some inroads,” he noted, with some of the association’s language included in draft text. “We’ve also been working on the Senate side very closely with Senator Jeff Bingaman’s (D-NM) staff” regarding possible wording in the Senate energy bill.

This work “puts us in a very good position to advance this issue in 2002,” he said. “The opposition is extraordinarily well funded — and that’s the utilities — so this might be a rather difficult fight.”

Silvertooth added, “We don’t expect that the Democrats would allow a bill to proceed on the Senate side without some type of prohibition against cross-subsidization.”

If electricity deregulation is enacted, he said he believes that a cross-subsidization ban would be included, “or at least, at the state level, the utilities would be required to open up their books to prohibit those types of market abuses.”

SKILLED WORKFORCE ENHANCEMENT ACT

Another priority, stated Silvertooth, is the Skilled Workforce Enhancement Act, but he doesn’t expect much activity at this time.

“The reason is that this act is a tough sell in an era where you have high unemployment, because this is basically a full-employment bill.”

The act is designed to retrain workers who are underemployed in order to move them into skilled positions, such as hvacr technician jobs. And it’s difficult to convince Congress to provide “tax credits for businesses to attract new workers into their industries when legislators see that the unemployment rolls are full.”

So it would be very surprising to see action on this issue. “But there is still a tremendous shortage of skilled workers to make the case that something needs to be done on the training front,” despite higher unemployment.

ACCA’s ongoing effort, he said, has been to get a tax credit for small businesses, to get them involved in taking younger or underemployed workers with a mechanical or mathematical aptitude and training these people to enter the hvacr industry.

ENERGY EFFICIENCY

“We’re optimistic that we’ll see some action on our efficiency initiatives,” remarked Silvertooth. “We’ve gotten a good response out of the Senate and also out of the House.

“The first initiative is that we’ve supported several pieces of legislation that would encourage retrofitting of existing buildings with more energy-efficient technologies such as better ventilating systems and better temperature controls, and also the inclusion of such equipment in new buildings.”

The second item on ACCA’s agenda is “to get language that would direct the Secretary of Energy to provide a public education campaign to the general public about the benefits of getting your hvac system maintained on a regular basis.

“The reasoning is that we want these systems to be operating at peak efficiency as much as possible, to encourage savings and decrease the drain on the national power grid.”

The third item is to provide consumers with a tax credit for getting a clean and checkup with a local contractor.

Silvertooth noted that the public education campaign provision was included in the House version of the energy bill. It directed the Energy Secretary to set aside $5 million for this program. However, he said, it’s too early to tell how these efficiency measures will fare when the final energy bill is worked out with the Senate.

ECONOMIC STIMULUS BILL

There are two elements of proposed economic stimulus legislation that ACCA would like to see passed. “One is an increase in direct expensing pursuant to Section 179 of the Internal Revenue Code,” he stated. What’s been included so far is an increase in the expensing level from $25,000 to $35,000 for one year. This would then sunset (expire), but the issue could be revisited by Congress next year.

The second element is leasehold depreciation. Right now, if you’re a commercial building owner and you make changes to accommodate a tenant, you must depreciate and recover these costs over a 39-year period. But nationally the average tenant stays in a particular space for 10 years. “So there’s a tremendous disincentive for a building owner to retrofit older buildings,” said Silvertooth, “because it’s expensive and you can’t recover the cost” through depreciation.

ACCA has been lobbying to decrease the recovery period to 10 years. House legislation allows for a 15-year time period, and there was broad bipartisan support for this, he declared.

There’s a good chance that this change will go through. “It dovetails nicely with many of the recovery efforts in the Northeast corridor.” Also, “It would stave off an upturn in construction unemployment.” This could be “a great revenue stream for hvacr contractors because, to build out spaces for tenants, they’re going to have to work on the duct systems.”

ASSOCIATION HEALTH PLANS

Another priority is to make sure that Congress considers the issue of association health plans.

Currently, association health plans and medical savings accounts have been included in the House version of the Patient’s Bill of Rights. This bill has been put on hold for now because it is believed that “There is going to be a very contentious debate on the Senate side,” Silvertooth said.

Although it’s on the back burner, ACCA has been highlighting that there are 43 million uninsured Americans and approximately 80% are in households where the primary wage earner is employed by a small business. So health care coverage “really needs to be tackled at the small-business level.”

It’s much more difficult for small companies to secure health care coverage because they don’t have the benefit of ERISA (the Employee Retirement Income Security Act), which covers only large companies and labor unions.

Labor unions are allowed to offer national health care plans to their employee members, pointed out Silvertooth. But associations cannot, because they are subject to state jurisdictions. “Having a national health care plan under an association would help to drive the costs down for small businesses and make it more affordable.”

In addition, ACCA is pursuing 100% health care deductibility for small business. Currently, a small- business owner can deduct 60% of health care costs. A large company can deduct 100%.

“We’ve supported legislation to allow small businesses to fully deduct the expense of their health care costs,” he said.

A new initiative that the association recently inaugurated is working with chapters on the development of model licensing laws and also looking at building codes. Input is being collected from chapters.

As the year goes on, other issues may move to the forefront. ACCA will be watching closely as the House and Senate introduce and address various bills.

Publication date: 01/14/2002

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