On Nov. 7, voters turned control of the U.S. House of Representatives and Senate to Democrats for the first time since 1994. The election also made history as Congresswoman Nancy Pelosi (D-Calif.) became the first female house speaker.




On Nov. 7, voters turned control of the U.S. House of Representatives and Senate to Democrats for the first time since 1994.

The election also made history as Congresswoman Nancy Pelosi (D-Calif.) became the first female house speaker.

In her Jan. 4 inauguration speech, Pelosi said that the 2006 election was “a call for change - not merely to change the control of Congress, but for a new direction for our country.”

Many political pundits say that growing public dissatisfaction with Republican President George W. Bush and the war in Iraq were the main reasons many GOP members were voted out.
 

But with them went a lot of legislators who supported top priorities for groups like the Air Conditioning Contractors of America and the Plumbing-Heating-Cooling Contractors National Association.

The ACCA’s political action committee contributed to the campaigns of 45 candidates.

Ten of those candidates did not get re-elected.

“We lost some friends,” said Charlie McGrudden, director of government relations for the ACCA.

One of those “friends” was Jim Talent (R-Mo.), who was defeated by Democrat Claire McCaskill.

Talent was one of several candidates up for re-election who supported bills the ACCA believed would help contractors and small-business owners. One such bill supported by Talent dealt with so-called “association” health plans.

These plans would have allowed contractors and other small-business owners to band together across state lines in an effort to buy health insurance at a lower cost. The idea was to let small businesses get the same breaks on health care costs that large corporations receive because they have hundreds or thousands of workers.


Stan Kolbe, director of legislative issues for SMACNA, said immigration reform is an important political issue with the association.

Stalled

The legislation has passed the House of Representatives several times, but not the Senate. Some Democrats and health groups opposed the legislation, saying they believed it would pre-empt state-mandated coverage for procedures like mammograms. (See “Hurting for a health plan,” October 2006 Snips.)

Talent argued for small-business health plans on the Senate floor. In one speech, he mentioned a Missouri ACCA member who struggled with skyrocketing health care costs.

But with Talent and other plan supporters now gone, ACCA officials believe that this issue will now lose momentum.

Also taking a back seat is a repeal of the estate tax, also known as the “death tax.” This federal tax is imposed on new owners of a business the time of the previous owner’s death.

For many HVAC associations, which represent many small-business owners, repealing the tax has been a legislative priority for years.

McGrudden said that many Republicans who voted to repeal the estate tax will not be returning to the 110th Congress. He said that the issue will probably not even be brought to a vote, let alone be passed.

And according to Dana Thompson, assistant director of legislation for the Sheet Metal and Air-Conditioning Contractors’ National Association, the estate tax can be very hard for small businesses, including family-owned businesses.

Thompson said that when it comes to the estate tax, SMACNA has a more positive outlook. She believes that SMACNA can work with Democrats in Congress to find middle ground on the issue.

Instead of lobbying to abolish the tax all together, SMACNA will turn its efforts toward protecting family-owned businesses from it and find ways to ease the transfer of businesses when the prior owner dies, she said.


Charlie McGrudden, director of government relations for the ACCA, said the association lost some political allies in the recent election.

New directions

Thompson said that even with Democrats in control of Congress, SMACNA’s legislative priorities are not going to change much.

“Union contractors are in a unique position in Congress,” she said.

SMACNA has always worked with moderate Republicans and Democrats, Thompson explained.

“As an association in the legislative office we’ve made friends on both sides of the aisle,” she said.

So while SMACNA also lost some political allies in the last election, “we’re not biting our nails,” she said.

For SMACNA and many of the other HVAC associations, the new Congress just means shifting priorities. In fact, these associations may have an easier time passing other important issues with Democrats controlling Congress.

Thompson said her group will begin working on more environmental building and energy-efficiency initiatives, issues which she thinks will not see opposition from Democrats.

The ACCA is also looking at energy-efficiency regulations as a primary political goal for 2007, McGrudden said.

“You have to look at this as an opportunity and not as a crisis,” he said of the party shift in power. “This is also an opportunity for associations to raise awareness with members.”

Passage of the Cool and Efficient Buildings Act is the ACCA’s “signature legislative goal for 2007,” he said. The bill would accelerate the depreciation of heating and cooling systems from 40 years to 19 years. The idea is that the new schedule would reduce taxes and help lead to more energy-efficient buildings.

This bill also has the support of SMACNA and the Air-Conditioning and Refrigeration Institute.

Besides accelerating the depreciation of systems, the bill would also provide incentives for building owners to upgrade their heating and cooling systems to more energy-efficient ones.


Lake Coulson, vice president of government relations for the PHCC, said the new Congress brings new opportunities.

Priorities

Another big issue for the ACCA will be immigration reform. McGrudden said that any immigration reform bill must not penalize contractors who unknowingly hire illegal workers.

The PHCC agreed. Lake Coulson, its vice president of government relations, said contractors need to be protected.

“We want to see a comprehensive (immigration bill),” he said. “Any bill that comes through, (contractors) must be exempt.”

Coulson explained that earlier immigration bills carried stiff penalties for contractors who unknowingly hired an illegal alien. He even said that earlier bills suggested fining a general contractor for unknowingly hiring a subcontractor with illegal workers.

Coulson said the PHCC supports an immigration bill that would allow for a temporary worker visa. He said that the association is not in favor of a bill that “would deport millions.”

Immigration reform is also on SMACNA’s political radar. In an e-mail, Stan Kolbe, director of legislative issues for SMACNA, said that President Bush’s idea for a guest-worker program has a good amount of support in Congress. He also said that a provision requiring such workers to earn the same “prevailing” wage as union workers who are U.S. citizens could reduce hiring by employers who are only seeking illegal workers to cut wages and benefits.

Kolbe said he believes that immigration issues are difficult because of the government’s lack of enforceable border controls.

“Now it is harder to resolve,” said Kolbe. “The numbers involved are large and the crisis makes policy deliberation difficult.”

Another priority for both the ACCA and the PHCC is the abolishment of a 3 percent tax-withholding requirement. Set to go into effect in 2011, it pertains to any business providing services to federal, state or local governments.

For contractors that work on a government project, this means that 3 percent of their total payment will be automatically deducted for tax purposes.

“This would be very harmful to contractors,” said McGrudden. “It’s the smaller companies that would not be able to absorb that.”

The PHCC is against the requirement because officials say it would seriously reduce contractors’ profit margins. The group was recently able to stop a move to change its start date to last January.


Opportunities

There is a sense that perhaps the shake-up in Congress could have some positive effects for the sheet metal and HVAC industries.

The PHCC is hopeful the new Democratic majority will help members with the struggles many have had with utility companies. Coulson said that more utility companies are competing with traditional HVAC and plumbing companies. These gas and electricity providers have strong advantages over small contractors, including built-in customer bases.

Coulson said that some utilities have begun offering their customers heating, cooling and plumbing services, and allowing them to pay for work on their monthly utility bills.

“Our members are not in the position to compete with the utility,” said Coulson.

In 2003, a bill was introduced that would put restrictions on energy providers entering the appliance repair business. The bill would have required a utility to create a new and separate company to offer HVAC or plumbing services. It would have also required the utilities to undergo federal investigations before providing the services.

Coulson said that when the bill was brought up for a vote, all Democrats voted “yes,” but it failed by two votes due to Republican senators who opposed it. Coulson said he believes that with Democrats now controlling Congress, a similar bill has a good shot at passing.

 “You have to be successful and reach out, whatever party is in control,” he said. “This is an opportunity to forge new alliances.”

For reprints of this article, contact Jill DeVries at (248) 244-1726 or e-mail devriesj@bnpmedia.com.