IAPMO’s view of the Hill, and the industry — 2/17/17

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Dain HansenDain Hansen is vice president of Government Relations, The IAPMO Group. He lends his frequent perspective of Capitol Hill, and the plumbing industry.

Here is an edited version of his update February 17, 2017

Administration Update

Small Business and Tax Reform. Many questions have arisen about how small businesses will be treated if tax reform legislation is enacted. For starters, Republicans do not want to leave small businesses at a tax disadvantage to corporations. While the current plan is to reduce the top individual income tax rate to 33% and the corporate rate to 20%, there is recognition among most lawmakers that this gap will have to be narrowed (most small businesses pay at the individual tax rate). One leading option is to have a top tax rate of 25% on the distributive share of “active business income” of an individual owner, with the proviso that owners take a “reasonable compensation” in order to avoid the creation of a loophole. Additionally, small businesses will likely get relief from other provisions, notably the limitation on interest deductibility. At this time, there is no clarity on how these provisions will apply to entities like REITs and MLPs. Hansen: The bottom line is that Republicans intend to reduce the tax rate on small and large businesses in a way that will be impactful and not favoring the latter. 
Obamacare Replacement Moving Slowly. Both the House and Senate held hearings this week on alternatives to Obamacare. There is still no single plan that congressional Republicans are rallying around, which makes the repeal and replacement of Obamacare more challenging. It is certain that Obamacare will be repealed next month, but replacing it will be much more difficult. Despite the lack of solid support behind any comprehensive Republican alternative, a variety of individual proposals seem to be coming together as the nucleus of the likely replacement package. These proposals include an expansion of health savings accounts, a tax credit for lower-income individuals to purchase health insurance, removal of barriers that prevent the sales of health insurance across state borders and block granting of Medicaid funds to states. The challenge Republicans will have is from voters who want the impossible: less expensive health insurance, lower deductibles and more policy benefits and protections. This expectation plagued Obamacare and could plague any Republican replacement bill. 

Industry Update

Michigan Orders Flint Hospital To Address Legionella Risks. Michigan this week ordered a Flint hospital to immediately comply with federal recommendations that were issued due to its association with a deadly Legionnaires’ disease outbreak, saying the hospital’s water system is unsanitary and a possible source of illness. The order, which was issued by the state Department of Health and Human Services, said McLaren Flint has insufficiently demonstrated compliance with recommendations made by the Centers for Disease Control and Prevention in the fall. The state cited a report from December 2014 in which a company that tested McLaren’s water said it seemed that the municipal water was not contributing to the hospital’s Legionella bacteria issues and the issues instead were “likely internal to the hospital system.” The state said it will appoint a monitor, conduct independent water testing and force the hospital to cooperate with all requests for information. Michigan has allocated $253 million toward resolving the emergency. Criminal charges have been brought against 13 current or former government officials, including two emergency managers who were appointed by Snyder to run the city. The Republican governor is asking the GOP-led Legislature for nearly $49 million for the next budget year for more filter cartridges, continued health and other services, and to bolster a reserve fund for future needs such as lead pipe replacements. 

A Lesson From Oroville…Water Strategies Will Have to Change. This week the country turned its attention to California’s Oroville Dam as it threatened to break. Neglect of infrastructure has played a clear and primary role – with homes being evacuated because of signs that the dam’s emergency spillway is failing to safely carry even a portion of the overflow it’s licensed to handle. Environmental groups warned in 2005 that the dam’s emergency spillway needed reinforcement, for example. Operational procedures at dams are also due for an update in the face of climate change, experts say. Dam managers are constrained in their flexibility to adjust to changing realities posed by a warming world. The managers follow so-called “rule curves” set by the US Army Corps of Engineers that indicate when to draw down or fill up reservoirs, which take into account flood control, water supply, and endangered species requirements. In many cases, the rule curves are a result of negotiations between water districts and communities that rely on dams to provide their many services. The larger the dam, the harder it is to break from those rule curves, but those rule curves are increasingly out of whack with modern precipitation patterns and usage. Oroville Dam, the tallest in the US at 770 feet, is mainly used for water supply in southern California.

Minnesota Efficiency Push Could Spawn 15,000 Direct Jobs by 2030. A new report by the BlueGreen Alliance estimates a push to reduce energy use by 20% in some Minnesota buildings could create up to 15,000 direct jobs by 2030, with two-thirds of those jobs blue collar. The efficiency projects would be completed in so-called MUSH sector: municipal buildings, universities, schools and hospitals. The alliance, a group which focuses on both the environment and labor and economic issues, said in addition to employment gains, the increased efficiency would avoid using more than 36,000 GWh and save consumers $3.1 billion. In 2015, a report by the Minnesota Commerce Department concluded the state’s Conservation Improvement Program was generating at least $4 in benefits for every dollar spent, as well as producing $5.9 billion in new economic output and nearly 55,000 job years.

 All of Dain Hansen’s full updates can be seen in their entirety in the RPA newsletter. Become a proud member of the RPA and reap the many benefits it provides for the radiant and hydronics industry. For more information, please visit http://www.radiantprofessionalsalliance.org/Pages/Join.aspx


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