After several long weeks of negotiations, the White House and House Republicans announced in the late hours of April 8 that they have agreed on a $1.208 trillion spending package for the remainder of FY 2011. The package represents nearly $40 billion dollar cut in non-defense discretionary spending for the remainder of FY 2011.
The House passed the bill Thursday with a vote of 260-167, and the Senate is expected to pass the measure later Thursday as well, in time for the president to sign it by midnight on Friday when the continuing resolution expires. In order to get the deal passed through regular order, Congress passed a short-term budget deal that keeps the federal government funded through the rest of the week.
Similar to the cuts provided in H.R. 1 (the original continuing resolution for FY 2011 that passed the House) this latest package appears to have a severe impact on federal construction accounts. Based on a list of cuts provided by the House Appropriations Committee, AGC has determined that funding for federal construction accounts will be cut by $21.9 billion. Among the biggest cuts are:
- Department of Defense Military Construction – $6,237 B
- Federal Highway Administration Contract Authority – $2,500 B
- High Speed Rail – $2,900 B
- Clean and Safe Drinking Water State Revolving Funds – $997 M
- GSA Construction – $638 M
Not all of these cuts will have the apparent impact on the construction industry. For example, the Federal Highway Administration funding cut rescinds $2.5 billion in existing contract authority that had been previously apportioned to states but was never funded. The cut to high speed rail funding disrupts President Obama’s plan for a nationwide network that has yet to materialize. In addition, a major portion of the Department of Defense cuts represent reduced construction activity due to the closeout of BRAC 2005.
Previously, AGC issued guidance to assist contractors engaged in work with the federal government should the government shut down.
AGC continues to communicate to Congress that the planned cuts have the potential to eliminate jobs and will have a real and lasting impact on the entire economy. Before cutting federal construction dollars a thorough evaluation of the programs needs to occur. AGC sent this letter to Congress today, and will continue to advocate for sound investment in our nation’s infrastructure as consideration of the FY 2012 budget commences.