The FY 11 spending plan includes a $200 million state-funded local aid component and approaches last year’s $3.6 billion program despite an enormously challenging budget environment. The program reflects Governor Chris Christie’s firm belief that a safe and efficient transportation system drives the New Jersey economy.

“This transportation budget prioritizes safety, state-of-good-repair and congestion-relief projects statewide and funds a robust Local Aid program that takes pressure off of local budgets and property taxes,” Christie said in a press release. “We must continue to invest in our roads, bridges and transit services to ensure that New Jersey retains its competitive edge of a mobile workforce when the economy rebounds.”

“This spending plan targets limited resources to where they are needed most and ensures that all our roads, bridges and transit infrastructure remain safe and sound,” said NJDOT Commissioner Jim Simpson. “The program advances or launches major investments that will benefit commuters, enhance the quality of life for residents and strengthen the state’s business climate for years to come.”

The proposed program relies on $1.6 billion from the New Jersey Transportation Trust Fund Authority (TTFA), $1.72 billion from Federal sources and $220 million from other sources. The proposed program reflects intensive discussions with officials from the state’s three Metropolitan Planning Organizations (MPOs), legislative leaders and others.

NJDOT’s $2.19 billion proposed capital program includes $1 billion in revenue from the TTF and $1.12 billion from the federal government.  NJ TRANSIT’s $1.35 billion proposed capital program includes $600 million from the TTF and $600 million from federal sources.

The TTF will support $200 million in Local Aid grants that help counties and municipalities advance transportation projects without imposing a burden on local taxpayers.  The $200 million matches usual funding levels, excluding last-year’s one-time $50 million boost in support.  Including federal dollars, local systems support in FY 11 will reach $413 million for NJDOT and $471 million overall.

 NJDOT Highlights

• More than $714 million for state and local bridges
• $437 million for congestion-relief program including infrastructure projects and traffic management systems
• $191 million for pavement reconstruction and repaving
• $99 million for multimodal investments supporting maritime, freight and rail initiatives as well as bicycle and pedestrian improvements
• $84 million for safety programs that target high-hazard corridors and a range of pedestrian safety initiatives

 NJ TRANSIT Highlights

• More than $1 billion for state-of-good-repair projects, preventive maintenance, ongoing replacement of almost 1,400 buses, track replacement, signal upgrades, overhead power upgrades and rail and bus station and terminal improvements
• Almost $300 million for ongoing expansion projects including the Mass Transit Tunnel, the Portal Bridge replacement project and the extension of the Hudson-Bergen Light Rail Line to 8^th Street in Bayonne.

An earlier draft of the transportation program conservatively estimated TTF support at $1.43 billion and a total transportation program of $3.23 billion.  At its meeting earlier this month, the TTFA expressed its confidence that the fund will support the full $1.6 billion that has been provided in recent years. An additional $144 million in federal support further boosts the program total, enabling NJD

The entire Proposed Fiscal Year 2011 Capital Program  is available on NJDOT’s Website and is organized by project, county and route.

 Compiled by Tina Grady Barbaccia, News/Digital Editor

AED’s 2010 Government Affairs Survey, conducted during the first two weeks of April, provides important about the impact of the equipment industry depression on AED members, the benefits of recent stimulus legislation, and distributor policy priorities.
Here’s a look at its findings:

Impact of the equipment industry recession
The survey confirms the devastating toll the recent economic downturn has taken on equipment distributors. Since January 2007, AED members have taken difficult and painful steps to keep their companies in business, including the following:

• 75 percent of AED members have laid off workers;
• 68 percent have eliminated positions through attrition;
• 64 percent have reduced salaries and wages;
• 64 percent have sold equipment from their rental fleets at a loss
• 36 percent have reduced health insurance benefits
• 32 percent have suspended participation in a workforce development program (e.g., training partnership with a local community college)
• 21 percent have cancelled the opening of a new facility; and
• 17 percent have closed one or more facilities.

 On average, the survey found that companies that have reduced their workforces have cut employment by 23 percent since 2007. A 2009 IHS Global Insight study estimated that the equipment industry’s workforce had contracted by 37 percent since the start of the recession. A number of factors explain the difference between the AED survey findings and the IHS Global Insight unemployment data.

First, Global Insight examined employment at all tiers of the industry (including manufacturing and independent product support), not just equipment distribution. Second, and perhaps most significantly, only active AED member companies were asked to participate in our recent survey. [Note: The survey does not account for companies that have closed their doors entirely (and where, presumably, 100 percent of the jobs have been lost) or that are otherwise no longer AED members.]

Fundamentally, AED says the  survey results reinforce IHS Global Insight’s original determination that the economic downturn has taken a devastating toll on equipment distributors and their employees.

Impact of the Credit Crisis

Eighty percent of survey respondents report losing revenue over the past year because a qualified customer (or customers) was unable to get credit to finance equipment purchases.

Forty percent report losing more than $1 million in revenues. By an extremely conservative estimate, survey respondents have together lost $75 million in revenues because of customer credit issues.

When the results are projected across AED’s entire U.S. distributor membership, equipment distributors have conservatively lost more than $475 million in revenues over the past year because equipment purchasers could not find financing. By combining the results of this survey and last year’s (which asked the same question), AED estimates that its members have lost more than $1.2 billion during the past two years because of credit issues.

The credit crunch has not just affected equipment markets; it has made it more difficult for distributors to run their companies, AED says. Fifty-nine percent of respondents have seen an increase in credit costs over the past year, and 40 percent have had difficulty securing credit.

Stimulus: What Worked and What Didn’t
The survey asked AED members a number of questions about the impact of the 2009 American Recovery and Reinvestment Act (ARRA), more commonly known the stimulus bill.

The results suggest that the stimulus bill’s infrastructure spending had some impact on equipment sales, as well as on equipment rental and product support business. However, the most benefit came from the capital investment incentives (50-percent depreciation bonus and increased Sec. 179 expensing levels), AED reports. Twice as many members report sales attributable to the capital investment incentives as to ARRA’s infrastructure spending, according to AED.

AED points out these statistics specifically:

• 36 percent of respondents said the ARRA’s 50-percent depreciation bonus and increased Sec. 179 expensing levels motivated equipment purchases at their companies last year;
• 29 percent said the ARRA’s infrastructure spending created product support business at their companies;
• 29 percent said the ARRA’s infrastructure spending resulted in increased equipment rentals at their companies
• 19 percent said that ARRA’s infrastructure spending resulted in used equipment sales at their companies; and
• 18 percent said the ARRA’s infrastructure spending resulted in new equipment sales at their companies.

Infrastructure, credit critical to industry recovery
Members were asked to rate the beneficial impact of the various policy solutions AED is advocating to help distributors recover from the industry depression. Based on average ratings on a five-point scale (1 being no impact and 5 being very beneficial), survey respondents prioritize our public policy objectives as follows:

• Enacting a new, multiyear highway bill that increases investment in roads, bridges, and transit (average score of 4.18);
• Improving access to credit for distributors, contractors, and developers (4);
• Enacting a new multiyear water infrastructure bill that increases investment in sewers and drinking water systems (3.99);
• Reinstating the 50 percent depreciation bonus for new equipment purchases (3.85);
• Resolving the uncertainty surrounding the estate tax (3.81);
• Creating a new tax credit for the purchase of clean diesel equipment. (3.39); and
• Increasing federal investment in broadband infrastructure (3.06).

Beneficial impact of a multi-year highway bill
Enacting a multi-year surface transportation bill that increases highway and bridge funding would create jobs in the equipment industry and increase demand for equipment (which would help ailing manufacturers).

Some specifics follow:

• 69 percent of respondents said they would add equipment to their rental fleets if Congress enacts a new multiyear highway bill that increases road and bridge investment;
• 46 percent would rehire laid off workers;
• 37 percent would add new positions;
• 4 percent would open a new facility (or facilities); and
• 2 percent would reopen a closed facility.

Distributors highly skeptical about new health care law
Consistent with the surge in grassroots opposition from AED members prior to the enactment of the new health care reform law, AED says its members are very concerned about the law’s negative impact:

• 85 percent believe the new health care law will undermine the quality of health care, increase costs and taxes for their companies, and make it harder for them to provide insurance to their employees;
• 11 percent think that the new law won’t have much impact, whether positive or negative; and
• 4 percent think it will improve health care, reduce insurance costs, and make it easier to provide insurance to employees.

Tax issues greatest threat
AED members were asked to assess the negative impact on their companies of pending tax, labor, and environmental policy proposals on a scale of one to five (1 meaning no impact and 5 meaning very negative impact). Respondents prioritized the threats as follows:

• Increasing capital gains tax rates (average score of 4.44);
• Allowing the new 3 percent tax on government contractors to go into effect as planned in 2012 (4.36);
• Increasing marginal tax rates (4.34);
• Unilaterally imposing limits on U.S. carbon emissions through climate change legislation or new EPA regulations (4.31);
• Allowing the National Labor Relations Board to alter current policies to make it easier for unions to organize (4.25);
• Eliminating right to secret ballots in union organizing elections (card check) (4.23);
• Imposing binding arbitration on union contract negotiations (3.97); and
• Repealing LIFO (3.08). [LIFO is the term used for the last-in-first-out (LIFO) method. Under this method, according to AED, it is presumed that the most recent purchases of inventory are sold first. This is based on the notion that during periods of inflation dealers are reinvesting money into their business by purchasing inventory at current market prices rather than saving money by selling older, less expensive inventory, AED says. In order to value ending inventory, a dealer utilizing LIFO must establish a “reserve” that essentially represents the amount reinvested into inventory by the dealer, according to AEM].

The survey results are consistent with several prior surveys showing that between 30 and 40 percent of AED members used LIFO. In this survey, 41 percent rated the threat of LIFO repeal as a 4 or 5 on the five-point scale. Based on past analyses suggesting that LIFO repeal would cost AED members alone more than $900 million in retroactive liability, AED will continue to play a leadership role in this issue.

Survey Methodology
The Association of Equipment Distributors (AED) explains how it conducted the survey and compiled the results.

AED says that multiple e-mails requesting participation in the survey were sent to the primary contact at each U.S. distributor member company. Ultimately, 81 members participated, the association says, and the survey respondents were highly representative of AED’s membership. Fifty-eight percent of respondents had between 20 and 99 employees and 69 percent had between $5 million and $75 million in revenues. Based upon AED’s current U.S. distributor membership, the association calculated the survey’s margin of error at 10 percent, making it a highly reliable snapshot of our industry.

The Senate version, “Toxic Chemicals Safety Act” would shift the burden of assessing chemical safety away from EPA and into the hands of the producer or manufacturer, according to the Asphalt Pavement Alliance (APA).

Currently, TSCA requires EPA to assess or test only a few hundred of the approximately 80,000 chemicals currently in commerce.

The proposed legislation, similar to what is occurring in Europe under the REACH program, shifts the assessment burden to the producer of chemical materials, to ensure these materials are deemed safe within certain commerce constraints, APA says.

The Senate has already passed the legislation, but it was amended by the House and now goes back to the Senate for another vote set for Tuesday, March 16. The highway program is currently operating under a 30-day extension. For bill provisions previously passed by the House and Senate, which were not the subject of any changes made by the House, are the following, according to the National Stone, Sand and Gravel Association (NSSGA):

The House voted 221 to 202 in support of the bill, however, with the majority of Republicans opposing it, according to the Washington Watch report from the National Stone, Sand & Gravel (NSSGA) report. Also included in the package are the $64.4 Commerce-Justice-Science bill, the $24.2 billion Financial Services bill, the $163.6 billion Labor-HHS bill, the $78 billion Military Construction-VA bill and the $48.7 billion State-Foreign Operations bill.

According to the NSSGA report, President Barack Obama is expected to sign the bill this week.

The remaining spending bill — the Defense bill — is expected to carry legislation that would extend SAFETEA-LU for two months, as well as raise the debt limit, extend a tax-exempt products provision by a year and extend unemployment benefits, according to the NSSGA report.

In the spending bill, the core highway program received $41.07 billion — the same as provided in the House and Senate bill. According to the NSSGA report, another $650 million from the general fund will be allocated to the states via the standard apportionment formula and subject to the usual 80-20 match, as well as an additional $240 million in earmarked projects. Another $739 million in mandatory spending from the Highway Trust Fund was also included in the conference report, according to NSSGA. –by Tina Grady Barbaccia