May 2000

• AED members must unite to ensure strong vote for estate tax repeal

• House to vote in early June on HR 8

• Idaho drops out of multistate purchasing initiative; amendment to bid request imminent

• Government proposes new regulations for motor vehicle operators

• House subcommittee votes to fully fund highway, airport construction programs in 2001

• Election Outlook 2000: AED PAC and ImPACt will be a winning recipe for November

• Capitol Club membership grows to record numbers

A few years ago, AED partnered with Kennesaw State University to conduct a survey of AED members. The goal: to determine the estate tax's impact on the equipment distribution industry.

The results of the study were compelling. As of 1995, equipment distributors alone had spent more than $6.6 million on lawyers and accountants to design estate plans that ensure the survival of their family businesses after the current owner dies. We found that AED members were spending more than $5 million annually to buy insurance policies that provide heirs with cash to pay the tax when it came due. The survey also examined the impact on minority entrepreneurs and found that many were unprepared to deal with the estate tax and risked everything being destroyed by the government upon the current business owner's death.

The survey results served as a wake-up call to Congress about the damaging impact of the tax on family businesses. The tax forces sophisticated business owners to redirect capital that might be used to grow the business and add employees into estate planning and insurance. The alternative to this is knowing that all or part of your business must be sold to pay the tax after you die.

During the past several years, AED has made repealing the estate tax one of its highest legislative priorities. In 1999, we came closer than ever before to achieving that goal when both houses of Congress passed a massive tax bill with a provision that would have eliminated the tax. Although President Clinton eventually vetoed the bill, passing the bill through both the narrowly divided House and Senate was a victory.

The inclusion of estate tax repeal in last year's tax bill was significant, but next month your elected representatives will cast the most important vote yet on the issue when the House takes up a "stand-alone" estate tax bill. That bill, the Death Tax Elimination Act (HR 8), was introduced jointly by Reps. Jennifer Dunn (R-Wash.) and John Tanner (D-Tenn.) in 1999 and would repeal the estate tax during a 10-year period by gradually drawing down tax rates.

Although support for estate tax repeal was traditionally split along partisan lines, during the past few years AED and our allies have worked to educate members of Congress in both parties about the devastating impact of the tax on family businesses. It looks like those efforts have paid off: the Dunn-Tanner bill has 235 co-sponsors, many of whom are Democrats.

When you consider that only 218 votes are needed to pass a bill through the House, next month's vote should be a home run. But there's still a lot of work to guarantee a strong showing in our favor. The bad news is that the politics of the election year are working against us. Both parties are trying to use the legislative process to define their stance in the voters' eyes. If the estate tax becomes a partisan issue again, it's likely that most Democrats (and even a few Republicans) will jump ship. It would be tragic if an opportunity for members of Congress to go on the record for such an important issue as estate tax repeal were lost to partisan bickering.

In the upcoming weeks, AED's Washington team will continue building support for estate tax repeal on Capitol Hill-but we need your help!

"I want to urge each member of the Associated Equipment Distributors to contact his or her member of Congress to build support for repealing the unfair death tax that hurts family businesses and farms. Every call is crucial, as I anticipate a vote on this measure as early as June. Your one phone call will play an important role in ending the punitive death tax," Rep. Jennifer Dunn, the primary sponsor of the Death Tax Elimination Act, told AED.

We couldn't say it better. Now is the time to call, write, fax and e-mail your members of Congress and tell them why the estate tax should be repealed. Tell them that the issue is important to you and that you want your members of Congress to overcome partisanship and unite on this important issue. And be sure to point out that this is an election year and you'll be watching what they do.

Two down, four to go! Last week, AED was informed by purchasing officials in Oregon that Idaho has withdrawn from the multistate equipment bidding initiative it launched earlier this year along with Oregon, Utah, Nevada, New Mexico and Arizona. Utah withdrew from the program earlier this spring after AED members in that state brought substantial political pressure on the Utah Department of Transportation.

AED has regarded the multistate purchasing initiative as a thinly veiled attempt by the states in question to bypass equipment distributors and purchase directly from manufacturers. As a practical matter, no single distributor can service a market as large as the proposal envisions, and distributors are generally confined as a legal matter to sell only inside their agreed-upon areas of primary responsibility.

During the past several months, AED's Washington office has coordinated local groups' efforts in the affected states to bring the multistate purchasing plan to their elected officials' attention. In addition to sending correspondence to the governors of each state expressing the industry's concern about the plan, AED has distributed copies of the bid to all AED members in the various states.

Oregon's attorney general is also reviewing a proposed modification to the original bid request, which may permit distributors to bid only on their state's portion of the contract. If that's the case, we question why the purchasing officials in the participating four states want to proceed jointly, when it's obvious that the bids are best handled at the state level. We have requested a copy of the modification and will make it available to AED members after we receive it.

The newly created Federal Motor Carrier Safety Administration this month published proposed regulations that would change the hours of service requirements for commercial motor vehicle operators. The goal of the proposal is to tie drivers to a 24-hour cycle that corresponds more closely with natural sleep cycles, thereby reducing fatigue-related accidents. Although all CMV drivers are affected by the proposal, the regulations will especially affect AED members with field service technicians and long-distance delivery operations.

To understand how the regulations will affect you, it's important to understand the work cycles of your employees who drive while on-duty. The proposed regulation would create five categories of drivers as follows:

Type 1.

Drivers who are away from their normal work reporting locations for three or more consecutive days.

Type 2.

Drivers who are away from the normal work reporting locations overnight but fewer than three consecutive days.

Type 3.

Drivers who operate a commercial motor vehicle during two separate duty periods on the same day, who return to their normal work reporting locations and are released from work within 15 consecutive hours of first beginning work, and whose two duty periods are separated by at least a three hour off-duty period during the workday.

Type 4.

Drivers who return to their normal work reporting location and are released from work within 12 hours of beginning work.

Type 5.

Drivers for whom driving is only incidental to other primary work activities, who return to their normal work reporting locations within 15 consecutive hours of beginning work, and whose driving duties do not exceed five hours in a workday.

Based on the type of driver, the regulation would impose maximum on-duty times and minimum off-duty times. Type 1, 2, 3 and 4 drivers would be allowed on-duty for no more than 12 hours within a consecutive 14-hour period; type 5 drivers could be on-duty for no more than 13 hours with a consecutive 15 hour period. Type 1 and 2 drivers would be required to be off-duty for at least 10 consecutive hours each workday. Type 3 and 5 drivers would have to be given nine consecutive hours off. And type 4 drivers would have to be off for 12 consecutive hours.

Comments on the regulation are due by July 31, 2000. AED's Washington office is gathering information about the driving habits of distributor employees and about fatigue-related driving accidents in the industry to assist in developing comments on the industry's behalf. Look for an AED survey on these issues and more information about the proposed regulation during the upcoming weeks. You can view the regulation at http://www.fmcsa.dot.gov/hos/hos.htm

The House Transportation Appropriations Subcommittee on May 8 approved its version of the FY 2001-transportation appropriations bill. Most significant, the bill would increase highway funding by $2 billion over FY 2000 levels and set spending for the road program at $29.6 billion, the amount guaranteed by the budget firewalls in the Transportation Equity Act for the 21st Century. The bill also provides $3.2 billion for airport construction, the full amount promised in the recently enacted Aviation Investment and Reform Act for the 21st Century.

The House Appropriations Committee is expected to act on the subcommittee's bill during the week of May 18, after which it will go to the House floor. Although prospects for the legislation in the House are generally favorable, there is concern about what the Senate version of the bill will look like due to internal budget politics within that chamber. Transportation advocates must maintain pressure to ensure that the letter of TEA-21 is complied with.

The 2000 elections will be the most important in recent memory. The White House and the House of Representatives are up for grabs. And if you listen to a few optimistic Democrats, you might believe that the Senate is also in play. AED wants to ensure that the equipment industry is positioned to have a real impact on activities this November and that AED members play an active part in helping to expand the pro-growth majority on Capitol Hill.

There are two essential parts to AED's election year activities. The first is AED's political action committee, the entity that allows our association to be involved in elections. The PAC receives personal contributions from individual AED members and then makes contributions to congressional candidates on the industry's behalf. It allows AED members to speak loudly with a common voice in the political process.

The second part of our election activities is the ImPACt program, through which AED works with local groups around the country to hold fundraisers for congressional candidates. ImPACt has proven an outstanding way to build bridges between our industry and your elected representatives on Capitol Hill. It has also helped to ensure that AED influences the process on Capitol Hill with key issues such as the Environmental Protection Agency's anti-road campaign, the gray market and the estate tax.

ImPACt 2000 is officially underway. Last week, AED's Washington office sent letters to each AED local group president asking for their help in arranging an ImPACt event in their area. We want to make 2000 the most successful year yet for the ImPACt program. Local group leaders interested in getting their groups involved in ImPACt 2000 should call AED's Washington office.

We're happy to report that, as of April 10, a record 34 AED members had joined the Capitol Club-a special group of AED members who contribute $1,000 annually to AED's PAC. That number includes five new Capitol Club members. Their participation is essential, because without AED member support for our PAC, the ImPACt program and other "PACtivities" would be impossible.

The following industry leaders have joined the Capitol Club for the 2000 election cycle, helping to ensure that AED PAC has the resources to defend, strengthen and build the pro-growth majority in Congress. Note that the number in parentheses indicates the number of years the individual has been a Capitol Club member; new members are indicated with an asterisk.

Kerry Walsh, Andress-Walsh Co., Houston (4)
Alvin Richer, Arnold Machinery Co., Salt Lake City (4)
Walter Berry, The Berry Companies, Wichita, Kan. (2)
Fred Berry, The Berry Companies, Wichita, Kan. (2)
Jay Paradis, Brandeis Machinery & Supply Co., Louisville, Ky. (4)
Travis Burch, Burche-Lowe, Atlanta (4)
Lee Walters, The Carlton Co., Albany, Ga. (3)
Edward I. Weisiger, Carolina Tractor and Equipment, Charlotte, N.C. (4)
Robert K. Henderson, Cummins Interstate Power, Hilliard, Ohio (4)
Patrick McGahan, Cummins South Inc., Atlanta (2)
Earl Harbaugh, Ditch Witch of Illinois/Wisconsin Inc., Carol Stream, Ill. (2)
Roger Poulson, Faris Machinery, Commerce City, Colo. (4)
Roy Hunt, Hunt Tractor, Louisville, Ky. (4)
John W. Burress, III, J.W. Burress Inc., Roanoke, Va. (4)
Lamar Light, L.B. Smith Co., Camp Hill, Pa. (1)*
Dale A. Leppo, Leppo Inc., Tallmadge, Ohio (4)
Glen Leppo, Leppo Inc., Tallmadge, Ohio (1)*
Chris MacAllister, MacAllister Machinery Co., Indianapolis (4)
P.E. MacAllister, MacAllister Machinery Co., Indianapolis (4)
Jerry Jung, Michigan CAT, Novi, Mich. (1)*
Michael Soley, Sr., Miller-Bradford and Risberg, Sussex, Wis. (3)
John Harnish, NC Machinery Co., Seattle (1)*
Kenneth Taylor, Ohio Machinery, Broadview Heights, Ohio (3)
James Close, Pacific American Commercial Co., Seattle (1)*
Roy Gaylor, Power Equipment Co., Knoxville, Tenn. (2)
Lance Ringhaver, RPC Inc., Tampa, Fla. (3)
Robert O. Mullins, ROMCO, Dallas (4)
Robert G. Mullins, ROMCO, Dallas (3)
Charles Clarkson, ROMCO, Dallas (2)
J. William Pullen, Whayne Supply Co., Louisville, Ky. (4)
Paul Campbell, Wheeler Machinery Co., Salt Lake City (3)
Robert Campbell, Wheeler Machinery Co., Salt Lake City (4)
Robert McNutt, Wolverine Tractor & Equipment Co., Detroit (2)
Jim Stephenson, Yancey Brothers Co., Atlanta (4)

AED PAC accepts contributions only from principals of AED member companies that have, in accordance with the Federal Election Campaign Act, given written permission to be solicited for PAC contributions. If you are interested in getting involved in the Capitol Club, contact AED's Washington office.