Monday AM January 29th, 2007

Senator Cornyn introduces two business-related measures…Texas Transportation Commission awards last of nine major Katy Freeway construction contracts…Greater Houston Convention & Visitors Bureau opens office in New York City… U.S. Senator John Cornyn has introduced two measures that could affect the business world. As vice chairman of the Senate Republican Conference, Senator Cornyn has introduced an […]

Senator Cornyn introduces two business-related measures…Texas Transportation Commission awards last of nine major Katy Freeway construction contracts…Greater Houston Convention & Visitors Bureau opens office in New York City…

U.S. Senator John Cornyn has introduced two measures that could affect the business world. As vice chairman of the Senate Republican Conference, Senator Cornyn has introduced an amendment to the minimum wage bill to encourage better, healthier lifestyles in the workforce. Based on the Workforce Health Improvement Program Act, the measure would correct what he calls an inequity in the tax code, allowing employers to deduct the cost of both on and off-site fitness centers on a pre-tax basis. Currently, if this benefit is outsourced, the organization and its employees are responsible for the cost. Cornyn also introduced a measure to repeal the surtax on the Federal Unemployment Tax Act, imposed in 1976 to end a deficit created by a temporary ad hoc supplemental extended employment program. The debt was paid off in 1987, resulting in a growing surplus in the Federal Unemployment Tax Fund.

A legislator from San Antonio has filed a bill to kill Governor Rick Perry’s Trans-Texas Corridor toll road proposal. Perry spokesman Robert Black said the governor will fight the anti-corridor measure. Democratic Representative David Liebowitz says his bill would take away the Texas Department of Transportation’s authority to buy land and do contracts for the project. Liebowitz told WOAI radio that the Trans-Texas Corridor would “destroy rural Texas as we know it.” But Black says we face a serious issue in transportation infrastructure in Texas. Black says you have to “think outside the box and come up with solutions,” which the spokesman says is what the governor has done. Perry in 2002 proposed the Trans-Texas Corridor as a 4,000 mile transportation network using toll roads and rail systems.

Texas is investigating a new fee on Sprint cell phone bills that some state leaders believe is overcharging customers–and may be illegal. Sprint this month began charging the one percent “Texas Margin Fee Reimbursement.” But the company will owe a 0.7 percent tax on their revenue under the state’s new business tax, often called the margins tax. Sprint spokesman John Taylor says the cost of complying with the government action can be passed on as a surcharge. But some Texas leaders believe state law prohibits any business from charging customers a tax–even though it’s called a fee. The tax isn’t due until May of 2008. If Sprint continues to charge the tax through that date, it will have collected nearly a year and a-half worth of fees, but will only owe taxes for the 12-month period prior to the deadline.

AT&T is using its own television service as an inducement to existing and potential new customers. But the rollout of “U-Verse” has been slower than expected. So far, U-Verse has been introduced in parts of 11 markets—leading some analysts to conclude there’s trouble with the Internet-based technology being used. Chief Financial Officer Richard Lindner says the company is adjusting the software made by Microsoft and the way it communicates to the set-top boxes. But he AT&T remains committed to the service. AT&T said that growth in wireless subscribers and in its enterprise businesses helped its fourth-quarter earnings rise by 17 percent. For the quarter, the nation’s largest provider of phone, wireless and broadband Internet services posted net income of $1.94 billion. Operating revenue grew 23 percent from last year’s quarter to $15.9 billion. The results were the first reported since AT&T completed its $86 billion acquisition of BellSouth last month. The largest telecom takeover in U.S. history included some costs associated with the merger.

The Texas Transportation Commission has awarded the last of nine major Katy Freeway construction contracts to Georgia-based Balfour Beatty Construction, submitting the lowest bid of $43 million. Contract G covers reconstruction of 1.65 miles of I-10 from east of the 610/West Loop to west of Washington Avenue. It includes the reconstruction of the Union Pacific bridge that crosses over I-10. Two of the nine construction contracts have been completed. All phases of the reconstruction are set for completion by December 2008.

The state and national foreclosure statistics from RealtyTrac indicate Texas has the highest aggregate total of any state, with a total of 156,876 foreclosure filings. That equals one foreclosure filing for every 51 households—making Texas the state with the fourth-highest foreclosure rate. Colorado posted the highest rate. The Houston region ranks 18th, with a foreclosure rate of one filing per 43 households. Nationally, more than 1.2 million foreclosure filings were reported in 2006. That’s a 42 percent jump from 2005 figures. RealtyTrac says homeowners who took out adjustable-rate and sub-prime mortgages are getting hit with higher monthly payments.

The Texas economy would benefit from an additional $31 billion in wages if high school students graduated on time, according to the Washington, D.C.-based Alliance for Excellent Education. The non-profit organization notes that the average annual income for a high school dropout in 2004 was about $9,000 less than a high school graduate. The group says graduates benefit the state and nation with increased levels of consumer spending and higher tax receipts.

The Commerce Department says December orders to U.S. factories for big-ticket manufactured goods is seeing the biggest gain in three months. The 3.1 percent increase was paced by a huge jump in demand for commercial aircraft as well as the largest rise in orders for cars and trucks in more than two years. Orders for commercial aircraft jumped more than 26 percent. There also were gains in a number of other industries.

The Greater Houston Convention & Visitors Bureau has opened an office in New York City. The office will focus mainly on pharmaceutical accounts, as well as corporate and association accounts in the northeast, southeast and south central regions of the country. The GHCVB has offices in Washington, D.C., Dallas and Chicago. There are also public relations offices in Mexico City, Hanover, Germany and Japan. The New York office will identify clients who have or have not been to Houston, as well as meeting planner for possible events in Houston.

Knowledge Systems is adding offices in the United Kingdom and Australia, according to the Houston Business Journal. The Sugar Land-based firm provides software and services to the oil and gas industry.

Subsidiaries of McDermott International have been awarded the KG-D6 field development project offshore India, and will supply and install a control riser platform for Reliance Industries. Construction will be done at several company sites to meet the implementation deadline, according to the Houston Business Journal.

The Pentagon says Turkey is the latest nation to sign up for the production and support phase of building the F-35 stealth fighter jet. The plane’s main contractor, Lockheed Martin, is assembling and testing the jet at its Fort Worth plant. Turkey joins the U.S., Great Britain, Canada, the Netherlands and Australia in agreeing to move beyond the current development and demonstration phase of the F-35.

The Costambar Property Owners Association in Puerto Plata, Dominican Republic is critical of pollution from the Smith & Enron power plant, according to Dominican Today. In a letter to the Environment Minister Max Puig, the association welcomed a recent decision to close down a regional coal deposit, but says the Smith & Enron plant exceeds noise levels stipulated by the World Bank. The group says high pollution levels affect residents and tourists in several towns, hotels, spas and tourist sites.

An independent board says the biggest problem facing the IRS is the tax gap. The tax gap is the difference between what taxpayers owe every year and what they pay. It totals an estimated $290 billion. The head of the IRS’ oversight board calls the gap “an injustice to honest taxpayers,” who ultimately have to pick up the tab. The oversight board praised the IRS for stepping-up enforcement, including on small businesses and millionaires. In fiscal 2006, enforcement revenues rose to almost $49 billion. But the board says there’s no one silver bullet for solving the tax gap problem. Democrats, who now control Congress, say improving compliance is central to their aim of spending more on their priorities while reducing the federal deficit.

Accounting firm KPMG has agreed to be placed on probation for three years and pay a $96,000 fine to avoid losing its license to practice in Texas. The agreement comes after an investigation into fraudulent tax shelters. The company and the Texas State Board of Public Accountancy said that they reached an agreement under which KPMG’s license was suspended for five years but the sanction was blocked while the firm is on probation. KPMG was also fined the maximum $1,000 for each of the 96 violations of the state accountancy law. The case stems from admissions the firm made to federal officials who investigated tax shelters that helped rich clients avoid billions in taxes. William Treacy, executive director of the State Accountancy Board, said KPMG’s license to practice in Texas would be suspended if it fails to comply with terms of its deal with the Justice Department.

Halliburton reports its fourth-quarter profit fell 40 percent. The quarterly earnings came in at $658 million. The Houston-based oil industry services provider attributes the fall largely to a year-ago gain. Last year’s fourth-quarter profit benefited from $540 million of income related to a reduction in a deferred tax asset valuation allowance. Chairman, President and Chief Executive Dave Lesar says Halliburton expects demand to remain strong throughout 2007. Quarterly revenue rose eight percent to $6 billion, $20 million dollars on more activity in Halliburton’s Energy Services Group. That was partially offset by lower revenue from its KBR engineering subsidiary due to decreased activity on government services projects for the military. Halliburton partially spun KBR off in 2006, but it still owns an 81 percent stake in it.

Union Pacific’s 64 percent jump in fourth-quarter profit may have pleased investors–but it didn’t definitively settle the question of which railroad is the nation’s largest. The Omaha, Nebraska-based railroad said it earned $485 million. UP and Fort Worth-based rival Burlington Northern Santa Fe have sparred for years over which should be known as the nation’s largest railroad. Earlier this week, Burlington Northern renewed the argument when its earnings report revealed it was the nation’s largest railroad by freight revenue in the third quarter of 2006. Union Pacific held the edge in fourth-quarter freight revenue. Burlington Northern’s claim also doesn’t consider total revenue, where Union Pacific also holds the fourth quarter edge. But Union Pacific spokeswoman Kathryn Blackwell said those revenue figures shouldn’t matter. She said the railroad bases its claim on the 32,400 miles of track it operates. Burlington Northern remains close there, too, with about 32,000 miles of track. The rest of the U.S. railroad universe includes CSX, Norfolk Southern and Canadian National Railway.

Atlanta-based Boral Bricks will shut down its Macon, Mississippi, plant on March 31st–idling 79 workers. The decision to shut down the plant, made at headquarters in Atlanta, is in response to a slowdown in the national brick sales market. Boral Bricks has 23 manufacturing facilities in nine states, including Texas, as well as Georgia, Alabama, Tennessee, South Carolina, Oklahoma, North Carolina and Indiana.

Texas thieves are bucking a national trend by stealing more pickup trucks than small imports such as Honda Civics and Toyota Camrys–cars that typically top the national lists of most stolen vehicles. Last year, six of the top ten stolen vehicles in Texas were pickups or SUVs, with Ford, Chevy and Dodge pickups occupying the top three spots. That’s according to figures released by the Texas Department of Public Safety. Part of the reason, of course, is that Texans drive more pickups than anyone else, says Michelle Lanham, a program manager with the Texas Automobile Theft Prevention Authority. Recent statistics from the Automotive News Data Center show the top-four selling vehicle models in the state were Ford F-series pickups, Chevrolet Silverado pickups, Dodge Ram pickups and Chevrolet Tahoes. Also in the top ten were Ford Explorers, Chevrolet Suburbans and Ford Expeditions. Nationally, the three most stolen cars in 2005 were Honda Accords, Honda Civics and Toyota Camrys, according to the National Insurance Crime Bureau’s most recent statistics.

The Super Bowl will come in clearer than ever for fans this year, as more people watch the game on high-definition television. According to the Retail Advertising and Marketing Association, 2.5 million people will buy new TVs before Super Sunday. That estimate is an increase of 47 percent from last year, when the group expected 1.7 million would be sold. While the survey doesn’t break down what percent of purchases are expected to be HDTVs, electronics retailers report double-digit increases in sales of the high-end sets in recent months. The Consumer Electronics Association of America estimates that sports fans buy almost 60 percent of all HCTVs. In a study last month, the group found the Super Bowl is responsible for 13 percent of sales, the most of any sporting event.

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