02/15/2017 BUSINESS UPDATES
Legislation Introduced in the House to Repeal the Davis-Bacon Act
Legislation was introduced in the U.S. House of Representatives to repeal the prevailing wage requirements of the Davis-Bacon Act on Jan. 30 by Rep. Steve King (R-Iowa). The bill, H.R. 743, was referred to the House Committee on Education and the Workforce.
ABC has long supported full repeal of the archaic 85-year old Davis-Bacon Act. The prevailing wages from the law are administered through an unscientific and fundamentally flawed survey process by the U.S. Department of Labor and the Congressional Budget Office has estimated that the Davis-Bacon Act will raise federal construction costs by $13 billion between 2018 and 2026.
The Davis-Bacon Act also discourages small contractors from bidding on federal construction projects due to the enormous compliance burdens imposed by the law and stifles contractor productivity by raising project costs and imposes rigid craft work rules that ignore skill differences.
California Republicans ask Trump administration to block bullet train funding
California’s House Republicans have asked the Trump administration to block a pending federal grant that will ultimately support the state’s high speed rail project until an audit of the project’s finances is completed.
The letter, signed by all 14 members of the state’s GOP delegation, including House Majority Leader Kevin McCarthy, was sent to Transportation Secretary Elaine Chao. It cites cost increases, reductions in the project’s scope and its failure to attract private financing.
Dated Jan. 24, the letter asks Chao to stop approval of a $650-million grant that the Transportation Department could make to the Bay Area’s Caltrain commuter rail agency as early as next week as part of an effort to install an electrical system. The bullet train would eventually use the same line from San Jose to San Francisco.
This latest effort to at least temporarily derail the multibillion-dollar project comes at a particularly tense political moment. President Trump on Sunday told a Fox News host that “California in many ways is out of control” and has vowed to cut funds to the state over immigration issues. But he has also said he will massively increase the nation’s infrastructure spending. Providing additional funding at this time to the (high speed rail) authority would be an irresponsible use of taxpayers dollars.— GOP letter to Transportation Secretary Elaine Chao
Trump’s and Chao’s view on the bullet train, the nation’s largest infrastructure project, is largely unknown. The unified position against further federal funding by the state’s own Republican representatives will be an early test of the new administration’s direction.
California Democrats quickly countered the Republicans’ letter with one of their own, asking that the grant be approved, and charging that the Republican’s letter misstated the fact that the grant was being sought by the rail authority, rather than the Caltrain joint powers board.
A spokesman for House Minority Leader Nancy Pelosi (D-San Francisco) issued a statement Monday, saying the Republicans’ letter was rife with “inaccuracies and innuendo” and arguing that blocking the train would cost California thousands of jobs and make commuting between San Francisco and Silicon Valley, “dirtier, slower and more crowded.”
Rep. Jim Costa (D-Fresno), an early and staunch supporter, called the idea that the project is a waste of tax money “false,” adding: “The positive impacts of High Speed Rail construction can be seen in my district and throughout the Central Valley.”
The rail authority said in a statement that rail modernization, including the bullet train, will improve mobility in the state. “The electrification of the Caltrain Corridor is an important component of that and of the advancement of high-speed rail in California.”
If the administration cuts off related money for the bullet train and attempts to enforce stricter controls on existing multibillion-dollar grants, it could cause significant stress on a project that is already facing increasing costs and schedule delays.
Ultimately, California may have no other choice than to increase its commitment of state tax money to Gov. Jerry Brown’s signature project, even as the state faces a projected budget deficit.
The letter notes that the original cost of the bullet train was estimated about $33 billion for a system that would run from San Diego to Sacramento. Since then the cost has risen to $64 billion, while the scope of the project has been sharply curtailed.
It also cites a risk analysis by the Federal Railroad Administration projected a potential $3.5-billion increase in cost for the first segment of the project from Merced to Shafter. The analysis was made public last month by The Times. The positive impacts of High Speed Rail construction can be seen in my district and throughout the Central Valley.— Rep. Jim Costa (D-Fresno)
The GOP congressional letter, which was obtained by The Times, says “providing additional funding at this time to the authority would be an irresponsible use of taxpayers’ dollars. In light of the new revelations from the confidential FRA report, we request no further monies be granted to the [California High-Speed Rail] Authority or the state of California for high speed rail until a full and complete audit of the project and its finances can be conducted and those finding be presented to the public.”
Rep. Jeff Denham (R-Turlock), chairman of the House rail subcommittee, has said repeatedly that serious problems in the project were not made public by the Obama Administration and has vowed to stop any future federal funding for a project that he had branded as a fiasco.
The Republican letter did not specify who would conduct the requested audit, but House staffers said it could be the Transportation Department inspector general or the Government Accountability Office. Such wide-ranging audits often take many months and once completed could be subject to congressional review or hearings that would take additional time.
The grant in question is a key part of the $2-billion electrification project, which would convert Caltrain’s system from diesel locomotives to electric-powered cars. It was put into motion in the Obama Administration’s closing days. It requires a 30-day notice to key members of Congress before it can be approved. That window closes Feb. 17.
If the grant is not funded sometime this month, it would have potentially devastating effects on the Caltrain’s electrification project, said Seamus Murphy, the rail system’s chief communications officer.
The rail system, operated by a joint powers agency on the Peninsula, already has signed contracts that pledge to give a formal notice to begin work by March 1. If the agency fails to provide that notice, it could incur penalties “so severe that we might not be able to do the project,” Murphy said.
If the project is not completed, the bullet train agency might have no choice but to electrify the line itself in future years at a cost of about $2 billion. Murphy called that a “doomsday scenario” that would deny commuters improved service and greater capacity for years.
The argument between Democrats and Republicans pivots on the arcane issue of whether the grant is solely for Caltrain electrification. “It is not a grant associated with high speed rail in any way,” Murphy said.
But Republican staffers say the California High-Speed Rail Authority is putting up about $713 million for the electrification, money that is supposed to come from bonds specifically earmarked for high speed rail. So in their view the electrification grant does support high speed rail — and therefore should be held up until completion of an audit on the bullet train project.
Pelosi’s office said it is “unfortunate” that the Republicans, by sending their letter, “chose to take Caltrain electrification hostage.”