For many in the construction industry, the advent of a new administration in Washington, D.C., has raised new hopes and presented new questions, especially during an economic downturn and lingering pandemic. What sort of legislation will the Biden administration introduce and promote that could impact building codes and standards? Will energy efficiency take precedence over all other considerations of building design? Will Congress and the White House continue their enduring stalemate that stalls any change in the built environment? And—perhaps most importantly—what funding will be available to building owners and contractors as they emerge from one of the toughest times this generation of businesses has experienced? Even as the Biden administration begins to make its mark on the ways of Washington, there are still more questions than answers surrounding these issues.
A coalition of roofing industry organizations banded together during the early stages of the pandemic to protect their members’ employees and ensure these businesses remained operating. After achieving this goal, the coalition now is supporting a federal tax credit that would stimulate construction—residential and commercial. A close look at this potential tax credit may help illuminate what could be down the federal road as far as legislation to support the construction and design industry.
First, some background on how the roofing coalition came to fruition:
The Start of Something Big
Last spring, as the COVID-19 pandemic threatened the health of workers and shutdowns devastated the economy, a group of roofing construction association leaders based in Washington, D.C., joined forces, committed to working together to help keep their employees safe and keep companies in business. (View the list of organizations on page 2.) Their approach was unique: This was the first time the participants could remember forming a coalition to tackle challenges of the scope they mutually faced. As Jared Blum, Washington counsel of the EPDM Roofing Association remarked, “There was a realization that all the different segments of the roofing industry have a lot more in common than differences.”
The work of this COVID-19 task force, as it came to be informally called, was laser- focused on specific issues that threatened to negatively impact their member industries.
As the pandemic increased in ferocity, several states, including New York and Washington, listed construction as “nonessential” activity, meaning all work on existing sites had to stop and no new construction could be initiated. The task force worked with the Cybersecurity & Infrastructure Security Agency to ensure the construction industry had adopted risk-management tactics to guarantee essential status. With that in place, the COVID-19 task force contacted governors in key states, as well as other regional and local officials, to ensure the essential guidance was mandated nationwide, meaning construction activities could continue unabated.
Additionally, the COVID-19 task force launched a campaign targeted at easing the skyrocketing national unemployment rate and, at the same time, helping to rem- edy the industry’s labor shortage. The campaign, called “Back to Work on America’s Roofs” pointed out the roofing industry employs more than 1 million American workers and the “industry has developed guidelines that will safeguard buildings while also mitigating the risk of spreading COVID-19 among our workforce”.
With these efforts underway, in early July 2020, the coalition was presented with another opportunity to help the industry, this time by shaping tax policy. The proposal, from a coalition of home improvement, roofing manufacturing and construction industries, detailed a 30 percent refund- able tax credit for home improvements and qualifying business property improvements. The proposed tax cut was designed to “help stimulate the economy and get Americans back to work by investing in homes and businesses across the country.” After discussion of the proposal, individual members of the COVID-19 coalition agreed to sign letters to key members of Congress and the administration in support of the tax cut.
Where the Tax Credit Stands Today
Fast forward to January 2021 and the 30 percent tax credit is being considered in a markedly different environment from even six months ago. The federal deficit, absorbing the more than $3 trillion spent in 2020, now stands at $27 trillion. Duane Musser, vice president of Government Relations at the National Roofing Contractors Association, points out this is a record-setting statistic: “Even before COVID, we were entering deficit-spending territory we have not seen since World War II. That is the only time in our nation’s history that the government debt program was worse than it is now.”
Whether the specific 30 percent refundable tax credit will survive is open to debate. Given a Republican-controlled Senate, there will most likely not be much enthusiasm on Capitol Hill to increase federal spending, and any proposal to add to the federal debt will be scrutinized by the red side of the aisle. Although the tax credit would most likely stimulate more business, a refundable tax credit would be shown as an immediate loss to the Treasury without factoring in any future gains. This structure will make it an even tougher sell to a spending-wary Congress.
There is one point of agreement on Capitol Hill that is potentially good news for construction: Both parties would like to see passage of an infrastructure bill. President Biden included a $1.3 trillion large-scale infrastructure package in his transition planning; this would include what is viewed as “traditional” infrastructure, such as roads, bridges, transit facilities, as well as airports, schools and other public buildings. Some of this would be new construction, some targeted for retrofitting.
However, Biden’s plan includes key parts of his clean-energy agenda, and that is where agreement in Congress ends. Republicans and Democrats may all see the need for an infrastructure bill, but there is no foreseeable consensus on what should be included and how to pay for it. House Democrats have already passed the Moving Forward Act—with a $1.5 trillion price tag—in a vote last July that was strictly along partisan lines. This legislation had been discussed with the Biden campaign and has been seen as a starting point for negotiations on an infrastructure package. Although President Biden was renowned for his coalition-building skills when he was a senator from Delaware and as vice president, it is hard to imagine any “Green New Deal” elements will pass Mitch McConnell’s Senate.