This Week in Washington

The Week Ending May 31, 2001

This weekly report is written by the American Society of Civil Engineers' Government Relations staff. If you have questions or comments about any items in this report, please contact Brian Pallasch, Michael Charles, Martin Hight, Austin Fulk, or Liz Hermsen or call 202/789-2200

Inside This Week:

1. Congress Finishes Work on Tax Bill
   
2. ASCE Executive Director Appears on C-SPAN Show to Discuss Water Infrastructure
   
3. Bush Seeks Environmental, Property Rights Protections
   
4. EPA Clears New Rule to Ensure Cleaner Drinking Water
   
5. EPA Approves Grants to Protect Beaches
   
6. State Government Relations Update
   
7. ASCE Congressional Fellow?s Report, May 2001
   

   
1. CONGRESS FINISHES WORK ON TAX BILL
Working with remarkable speed over the weekend, Congress completed work on the $1.35 trillion tax-cut package, H.R. 1836, on Saturday, May 26. The House of Representatives approved the conference report agreement reached by House and Senate conferees by a vote of 240-154. The Senate finished its work a couple of hours later by a vote of 58-33. The President is expected to sign the bill during the week of June 4. A break down of the voting and the bill text can be found on the web at http://thomas.loc.gov by doing a ?Bill Number? search on HR 1836.

Among the general provisions of the legislation is the creation of a new 10 percent tax cut for the first $6,000 of taxable income for single taxpayers, $10,000 for single heads of households, and $12,000 for married couples. Tax rates will be reduced beginning July 1 when the current 15, 28, 31, 36 and 39.6 percent rates drop to 15, 27, 30, 35, 38.6 percent respectively. In 2004, all rates but the 15 percent rate would drop another percentage point. In 2006, the rates would drop again. The marriage penalty would be phased-out over five years beginning in 2005. The child tax credit would double over ten years. The legislation will also phase out the estate tax over ten years.

Beginning in 2002, taxpayers will be able to increase from $500 to $2,000 the amount set aside in educational savings accounts. Contributions are not tax deductible, but the interest earned is when spent on education.

For budgetary reasons, the entire package, with a few exceptions, will expire on December 31, 2010. At that point, barring further Congressional action, the tax rates would revert to the current rates.

ASCE supported several provisions in the tax bill. Here is how each of those provisions fared:

SECTION 127 -- Employer-paid educational assistance: The legislation would make permanent, beginning in 2002, the $5,250 exclusion from employees? taxable incomes for employer-paid educational expenses for both graduate and undergraduate education. This provision has been long sought by ASCE and other professional organizations.

RESEARCH AND DEVELOPMENT TAX CREDIT -- One casualty of the House and Senate conference committee was the research and development (R&D) tax credit. Despite strong support in both the House and the Senate, the permanent extension of the R&D tax credit was dropped from the final bill. The Republican leaders decided to sacrifice those provisions that did not provide individual tax relief. The current extension will expire in 2004.

PENSION REFORM -- Also part of the tax bill were several provisions designed to expand Individual Retirement Accounts and reform pension provisions of the Internal Revenue Code. The legislation:
1) Expands contribution limits for traditional and Roth IRAs from the current $2,000 a year to: $3,000 in 2002 through 2004; $4,000 in 2005 to 2007; and $5,000 in 2008;
2) Authorizes additional "catch-up" contributions to traditional and Roth IRAs for individuals 50 and above by $500 in 2002 and by $1,000 in 2006;
3) Increases allowable contribution limits to 401(k), 403(b) and Section 457 state and local government plans from the current $10,500 to: $11,000 in 2002; $12,000 in 2003; $13,000 in 2004; $14,000 in 2005; and $15,000 in 2006;
4) Increases allowable contributions to SIMPLE plans from the current $6,000 to: $7,000 in 2002; $8,000 in 2003; $9,000 in 2004; and $10,000 in 2005;
5) Authorizes additional catch-up contributions to all plans other than Savings Incentive Match for Employees (SIMPLE) plans by: $1,000 in 2002; $2,000 in 2003; $3,000 in 2004: $4,000 in 2005; and $5,000 in 2006. SIMPLE plan catch-ups will be 50 percent of catch-ups applicable to other plans;
6) Establishes a non-refundable income tax credit for elective contributions by certain low-income individuals to IRAs and qualified plans (sunsets at the end of 2006);
7) Establishes a tax credit for new retirement plan expenses incurred by small businesses (100 or fewer employees) for the first three years of the plan;
8) Reduces cliff vesting requirements for employers? matching contributions to defined contribution plans from the current 5 to 3 years;
9) Improves portability by facilitating rollovers to and from qualified retirement plans, 403(b) tax-deferred annuities, Section 457 plans and IRAs; and
10) Strengthens notification requirements for plan amendments that will result in a significant reduction in future plan benefit accruals.

These pension reform provisions have been strongly advocated by our friends at the Institute of Electrical and Electronics Engineers and the American Society of Mechanical Engineers. ASCE has also advocated many of the provisions.

   
2. ASCE EXECUTIVE DIRECTOR APPEARS ON C-SPAN SHOW TO DISCUSS WATER INFRASTRUCTURE
James E. Davis, ASCE?s Executive Director, appeared on C-SPAN television?s Washington Journal program on May 31 to discuss the need for greater federal investment in wastewater and drinking water treatment plants. Davis said the federal government is spending a fraction of what needs to be spent to provide the nation with clean and safe water.

The Bush administration is requesting about $8 billion for all water infrastructure construction projects in Fiscal Year 2002, he said. Only about $3 billion will be available for wastewater and drinking water facilities, however.

In March, ASCE released its Report Card for America's Infrastructure (/reportcard) that gave poor marks to the nation's wastewater and drinking water infrastructure. Both types of systems are examples of aged systems that need to be updated. Some sewer systems are 100 years old. Aged drinking water systems are structurally obsolete. The annual shortfalls of $11 billion for drinking water and $12 billion for wastewater do not even take into consideration the demands of a growing population.

   
3. BUSH SEEKS ENVIRONMENTAL, PROPERTY RIGHTS PROTECTIONS
In a move that seems likely to provoke environmentalists, President Bush is urging an environmental policy that respects nature and private-property rights. During a speech in California on May 30, the president also said the federal government has been too intrusive at times and that state and local officials have a major role in environmental protection.

"We must protect the claims of nature while also protecting the legal rights of property owners," the president said. "Our duty is to use the land well, and sometimes, not to use it at all."

Saying that many national parks have been neglected, Bush said the federal government will spend $5 billion over five years to upgrade the country's national parks.

   
4. EPA CLEARS NEW RULE TO ENSURE CLEANER DRINKING WATER
On May 30, the Environmental Protection Agency (EPA) approved a final rule that will provide an estimated 35 million Americans with cleaner drinking water provided by more than 4,600 drinking water systems. The final rule establishes requirements to ensure that "filter backwash recycle" practices do not compromise the ability of a treatment plant to provide safe drinking water.

Drinking water plants that filter water before sending it to consumers must periodically clean their filters to remove the particulates that have been captured. Water is pumped backwards through the filter to remove these particulates through a process known as "filter backwashing." The resultant filter backwash water may contain significant levels of microbes such as Cryptosporidium, the spore-like substance that has caused 12 waterborne disease outbreaks since 1984, including a major outbreak in Milwaukee in 1993 that sickened 400,000 people and resulted in more than 50 deaths.

Many systems return spent filter backwash water to their treatment plants. This recycling, when performed improperly, may increase the risk of waterborne pathogens entering treated water. Recycle practices have been identified as possible causes for three of the more recent Cryptosporidium outbreaks.

   
5. EPA APPROVES GRANTS TO PROTECT BEACHES
The Environmental Protection Agency (EPA) is making $2 million in grants available to eligible states to protect public health at the nation's beaches. The grants are available to coastal and Great Lakes states to develop programs to monitor water quality at the beaches and to notify the public when water quality problems exist.

Individual awards are expected to range between $50,000 and $60,000, depending on the number of applicants. States eligible for the grants are those that have coastal and Great Lakes recreational waters adjacent to beaches or similar points of access used by the public.

   
6. STATE GOVERNMENT RELATIONS UPDATE
ASCE provides updates on individual state government matters affecting civil engineers. For more information on the following item(s), or any other state government relations matters, please contact Austin Fulk, ASCE?s Manager of State Government Relations, at (202) 789-2200 or via email at afulk@asce.org.

State Legislative Update
The following bills were recently introduced in state legislatures across the country. If you have questions about particular legislation, please contact Austin Fulk, ASCE's Manager of State Government Relations. These bills affect the civil engineering profession, but ASCE National has not taken a position on them unless otherwise noted.

Gas Tax in New Mexico
Representative Dan Silva, chair of the New Mexico House?s Transportation Committee, is supporting increasing the state?s gasoline tax by $.05 per gallon to fund up to 20 additional road projects across the state. If passed, the tax would bring in an estimated additional $100 million annually.

Transportation Districts in Washington
By a 26-20 vote, the Washington Senate passed S.B. 6140, which would establish ?regional transportation investment districts? in several parts of the state. Within these districts, voters would be able to vote to approve higher taxes or fees to fund transportation projects. The bill is now awaiting action in the State House?s Transportation Committee.

   
7. ASCE CONGRESSIONAL FELLOW?S REPORT, MAY 2001
The big news in the Senate this month is that the Democrats have become the majority party. Senator Jim Jeffords of Vermont defected from the Republican Party to become an Independent. Senator Kennedy will more than likely be propelled back to be Chair of the Health, Education, Labor and Pensions Committee. This post would put him at the center of landmark battles over patients? rights, prescription drugs, health care coverage, and education reform. Other heated issues in the Senate focused on the tax cut bill, education reform, and President Bush's anti-missile strategy and energy policies.

Senator Kennedy's office saw some major changes this month. The chief-of-staff left to become political director of the Democratic National Committee. Our new chief-of-staff is Mary Beth Cahill. The political director was promoted to deputy chief-of-staff. We "upgraded" our computer server. Last, my small group moved our location and is still in flux (i.e., working out of boxes).

As usual, we had numerous meetings and briefings on issues and with constituents. Much of the focus is on appropriations, energy and the environment, such as the roadless ruling. The Roadless Area Conservation Rule was developed after a three-year process during the Clinton administration. This rule prohibits road building and most logging in the last-remaining undisturbed areas of national forests in the U.S.

We met with the environment and public works committee, the energy and natural resources committee, and a number of science advocates, including those from the Massachusetts Institute of Technology, the American Geophysical Union (AGU), the American Chemical Society, and many others. I met Senator Barbara Mikulski (D-MD) at an IEEE reception promoting engineering and more funds for basic science research for NSF, NASA and DOE. I was happily surprised to find that I am actually taller than a member of the Senate.

I gave several talks, both on my own and with other Congressional Fellows. Venues included AGU, the Federation of Animal Science Societies, the American Society for Microbiology and the National Science Foundation. Also, I helped interview applicants for next year's ASCE Congressional Fellowship.

As part of the AGU Spring meeting in Boston, I organized tours to the Big Dig and Boston Harbor Clean up for AGU policy committee members and current AAAS fellows.

I attended the glamorous ASCE OPAL awards banquet, where prominent civil engineers are recognized for lifelong contributions. I was pleased to congratulate awardees Ralph B. Peck, (foundation engineering), for his Education contributions and Ben Gerwick for his Construction contributions. Peck has enjoyed an accomplished career. In his inspiring acceptance speech, he encouraged younger engineers to both practice and teach and challenged us to make breakthroughs in new engineering technologies.

Respectfully submitted,

Yumei Wang, P.E.
2000-2001 Fellow for Senator Ted Kennedy (D-MA)