The Ohio Valley Construction Employers Council, Inc. is dedicated to the advancement of the construction industry and the protection of its members and the general public.
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House, Senate pass $1.5 trillion tax reform bill
Dive Brief:
The House and Senate voted Tuesday to pass the final version of a $1.5 trillion tax reform bill, according to
The New York Times
. The House is scheduled to revote Wednesday morning after mandatory revisions are made in accordance with House rules.
The final version of the bill retains both wind and electric credits as well as tax-exempt bond financing of sports venues, according to
Lexology
.
The new bill also retains private activity bonds (PABs), which represent a near-19% of the municipal bond market, or almost $85 billion, and sets a pass-through entity deduction of 20% and a corporate tax rate of 21%.
Dive Insight:
Unlike PABs, which allow private businesses working on public projects to borrow at the same tax-free rate as government agencies, lower tax rates touch all companies regardless of whether they're involved in public or private work.
Aside from the preservation of PABs — which will likely play a role in any significant infrastructure programs — it is likely the pass-through deductions and new corporate tax rate that will have the most impact on construction companies. This is especially true for the pass-through deduction as many small businesses are structured as pass-through entities like Subchapter S corporations and limited liability companies.
Designers and professional consultants still will not be able to take advantage of the pass-through deduction, a point that will continue to rile that segment of the construction industry. Environmentalists are also likely to lodge protests against the energy exploration that will be permitted in the Alaskan Arctic National Wildlife Refuge. According to
Bloomberg
, however, the inevitable environmental reviews and legal challenges could mean it will be years before the energy sector is allowed to begin drilling there.
Source: Construction Dive
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How the GOP tax overhaul could affect construction
Construction companies should brace for change.
The 30-plus-year drought since the last tax code overhaul may be finally over as Congress sets out to vote on and place a now-finalized tax bill on President Donald Trump's desk. The
bill
slashes the corporate tax rate from 35% to 21%, and also includes massive changes to how income earned or kept offshore is treated. Every industry could see effects — including higher education. Here's a 60-second overview of what the bill could change for the construction industry, and where other industries that impact construction stand on it:
IMPACT:
The public construction sector will benefit from the uninterrupted flow of private-activity bond financing, and both the contractors who are structured as pass-through entities and C Corporations will see significant tax relief.
POSITION:
The retention of tax-free status for PABs, as well as favorable treatment of energy-related exploration and tax credits have some segments of the industry breathing a sigh of relief, but potential PAB use limits and the locking out of design professionals from being able to take advantage of the new, lower pass-through tax rate could result in some pushback.
ANALYSIS
: The House GOP tax bill, passed early in November, took aim at PABs – a financing scheme that allows private entities developing public projects to borrow at the same tax-free rate as government agencies do – and eliminated them altogether. The Senate's version restored PABs, possibly driven by the expectation that they will play a big role in financing the president's $1 trillion infrastructure plan, but both chambers call for a termination of another popular finding vehicle, tax-exempt stadium bonds. Some states and municipalities rely on tax-free bonds for their contributions to the new construction and renovation of sports venues – often a condition of being able to snag a professional team – but,
according to the Brookings Institution
, the federal government loses out to the tunes of billions when projects that are financed this way.
Read More...
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Insurance 201: Beyond general liability and workers' comp
It’s safe to say that contractors are familiar with general liability, automobile and workers’ compensation insurance. At the very least, they know they have to have these major coverages in order to do business, even if they can't give a detailed description what each one means.
But often a contractor’s risks go beyond what traditional insurance coverage provides, or there are nontraditional ways of delivering protection to the jobsite that don’t include these standards.
Wrap-up policies
In general, wrap-up policies provide one insurance policy for all contractors on the same project. The theory behind it, according to David Grenier, managing director and principal consultant at
C-Risk
, is that by purchasing one, all-encompassing policy, the project can take advantage of economies of scale versus absorbing brokers' and administrative fees that are included in individual subcontractor and contractor policies. In addition, according to Rob McCarthy with
GRBM Insurance
, wrap-ups avoid the question of whether each subcontractor’s insurance policies have adequate limits.
There are two kinds of general wrap-up arrangements — a contractor controlled insurance policy (CCIP) and an owner controlled insurance policy (OCIP), both of which usually include general liability, workers' compensation, builder's risk or others. After that, Grenier said, coverage is “a la carte” and can vary depending on what the purchaser, or sponsor, wants or what the project dictates.
Of course, that means that contract amounts for subcontractors under a CCIP and subcontractors and the general contractor under an OCIP will not include insurance premium charges in their final contract amounts, at least the ones that the single project-wide policy provides.
Read More...
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Ohio
Lawmakers ended their 2017 deliberations last week before recessing and heading home for the holidays. The General Assembly will not reconvene until mid January.
The General Assembly was hoping to address the substantial reserve shortfalls in the state’s Unemployment Compensation Trust Fund. Unfortunately, legislators and stakeholders are having a difficult time finding a compromise that is acceptable to all parties. Labor and business leaders have pledged to continue to meet and negotiate on HB 382, sponsored by Representative Kirk Schuring, Speaker Pro Tem of the Ohio House of Representatives. This proposed bill is the legislative vehicle which will be used to reform the broken system. The Unemployment Trust Fund, although technically solvent, does not have enough reserves to cover future obligations should an economic downturn develop. Schuring has indicated a willingness to help broker a deal that might lead to a successful compromise.
The General Assembly is scheduled to meet less in 2018 than previous years. The biggest reason for its shortened schedule is the looming 2018 primary and general elections. Ohio voters will be nominating candidates for every statewide elective office, including the successor to Governor John Kasich who is term limited after next year. Given the political stakes and reelection pressures, lawmakers will be spending more time in their respective districts than Columbus.
I
t looks like the highly anticipated “cracker” decision by PTT Global might be delayed into 2018. State officials have indicated that the Taiwanese company is still conducting its perfunctory due diligence and continuing its negotiations with Flour and Bechtel over budgets and construction costs. State development officials, although disappointed in the expected delay, remain optimistic that PTT is committed to building the game changing petrochemical plant in Belmont County.
West Virginia
Lawmakers are gearing up for the 2018 legislative session which is scheduled to begin on Wednesday, January 10. This is also the date that Governor Justice will deliver his state of the state address and deliver his budget document for FY 2017-18.
Although the revenue picture has improved significantly, tax collections have not yet reached a level where surplus dollars can be spent on new programs and enhanced agency funding. We can expect another legislative push in 2018 to reform the tax code and alter the existing means of tax collection. There will be renewed calls for higher sales taxes, lower coal severance taxes and the elimination on the property tax on business equipment and inventory. This inventory tax is considered by development officials as the biggest hurdle in luring new investment and capital into the state.
We will have to remain vigilant that lawmakers don’t revive last year’s shortsighted scheme to eliminate the direct use sales tax exemption on construction services. This would have significantly added to construction related costs and forced developers to look at adjoining states as better site locations.
In the political realm, Governor Justice has incurred a great deal of skepticism by bringing former WV Media CEO, Bray Carey, into his administration in an “advisory” role. Although Carey will not receive a salary, many pundits and legislators are raising concern over Carey’s position as member of natural gas giant EQT’s Board of Directors. For the last few years, EQT and other gas producers have been advancing a mineral efficiency concept called cotenancy. It would allow companies to produce gas when they have achieved a super majority of signed leases. Current state law compels producers to gain leases from all mineral owners before production can begin. Many fear that Carey’s two positions might create potential ethical conflicts and questions of special interests being served by government policy decisions.
I have been told by state development officials that there are currently 1,000 construction workers toiling at the Shell petrochemical facility in Monaca. Shell officials estimate that there will be approximately 6,000 construction workers needed by the third quarter of 2018! A mind boggling statistic and great news for the construction trades.
OVCEC Consultant Pat McCune
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TAX CREDITS AVAILABLE FOR CONTRACTORS IN WEST VIRGINIA
You can receive tax credits for employing apprentices with WV Tax Credits for Apprentices. (Schedule ATTC-1) Rev. 3/13.
Tax credit of $2.00 per hour x total number of hours worked by an apprentice during the tax year, not to exceed the lesser of $2,000 or 50% of the actual wages paid for the apprenticeship. The training program is to consist of at least 2,000 hours, but not more than 10,000 hours of on-the-job training. The tax credit offsets the business franchise tax, corporate net income tax and personal income tax.
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Are you a manager or a leader? Managers give orders and gain - at best - robotic compliance. Leaders influence people to their way of thinking and gain enthusiastic cooperation. If you want to be the kind of leader companies want today you need to attend
How to Win Cooperation and Influence People.
At this dynamic half-day seminar you will learn to use Dale Carnegie’s human relations principles made famous in How to win Friends and Influence People - to make people glad to do what you want to do. This is not a seminar in how to manipulate people. Rather it shows you how to build trust in the workplace, create a collaborative work environment and get buy-in because employees support directions they help create.
These are exactly the skills you need to make it in today’s business environment where teamwork has replaced the old command and control structure. Often, in these team situations, you have no direct authority over the members yet you are expected win their support and get everyone pulling in the same direction. How to win Cooperation and Influence People will help you learn how to use your credibility and positive image to influence people to your point of view and create alignment so you can get the results you want.
Don’t miss this opportunity to acquire the skills you need to step up to the leadership role you know you deserve. Register for How to Win Cooperation and Influence People today.
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Registration Fee: $100
Offered by: OVCEC & Dale Carnegie Training®
Seminar Location: OVCEC • 21 Armory Drive
Schedule: Half-Day Seminar
Date: Thursday, January 25, 2018
Time: 8 am to 12 pm
For more information, ovcec@ovcec.com
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Ohio Valley Construction Employers Council
Ginny Favede, Executive Director
21 Armory Drive Wheeling West Virginia 26003
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