Congress recently passed the "Jobs and Growth Tax Relief Reconciliation Act of 2003," which contains immediate reductions in individual tax rates, depreciation, dividends and capital gains, and also sends $10 billion to states and local governments that can be used for infrastructure or other spending, plus $10 billion for medicaid. Unlike the Senate version, the final bill contains no revenue raisers.

Of specific benefit to construction, the bill cuts individual tax rates retroactive to Jan. 1, 2003; reduces the tax on both dividends and capital gains to a maximum of 15 percent starting in 2003; expands the "30 percent bonus depreciation" to an immediate write-off (expensing) of 50 percent of the cost of new equipment bought after May 5, 2003 and before Jan. 1, 2005; and permits firms that buy up to $400,000 of equipment to expense $100,000 in 2003-2005 (vs. limits of $200,000 and $25,000 under current law). To fit within the Senate's cap of $350 billion of relief, the bill "sunsets" many of these provisions after a few years.

In corporate news relevant to retail construction, Lowe's and Home Depot confirmed this week that they still intend to open 130 and 200 new stores, respectively, in 2003.

Federated Department Stores said yesterday that it will spend $100 million on renovations. But Gap Inc., which expanded its square footage under Gap, Old Navy and Banana Republic signs by 1 percent last quarter compared to a year ago, plans to shrink square footage by 2 percent in the next year, closing 80-90 of its 4,241 stores.

Finally, the Energy Information Administration reported that the average on-highway diesel fuel price fell 0.1 cent this week to $1.443 per gallon, while the average gasoline price rose for the first time since March, to $1.498, up 0.7 cents from last week.