Arkansas Governor, Lawmakers Hope For A Highway Funding Fix

LITTLE ROCK, Ark. (AP) — Arkansas’ Republican governor and legislative leaders say they’re hopeful they can find a highway funding solution that’s been elusive in recent years. But the two main ideas — raising taxes or tapping into existing tax revenue — still face significant hurdles.

Gov. Asa Hutchinson, incoming Senate President Jim Hendren and House Speaker Matthew Shepherd called highway funding one of the top priorities when lawmakers convene on Monday for this year’s legislative session. So far, no plan has emerged yet on how to close the funding gap for roads.

“That’s probably the biggest challenge we have right now…because there’s not a plan right now,” Hutchinson said last week.

Arkansas officials say the state highway system needs $478 million in additional funding a year just to meet its current maintenance and improvement needs.

Recent efforts to raise more money for Arkansas highways have stalled. Lawmakers in 2017 rejected a proposal to put a 20-year bond issue on the ballot and potentially raise $200 million annually for the state’s highways. The measure failed when some Republican lawmakers opposed an accompanying bill to raise taxes on gas and diesel to pay for the bonds. The state Highway Commission last year dropped an effort to try and put its own highway funding plan on the 2018 ballot.

Hutchinson said he wants to give lawmakers some time to come up with a solution, but said he’s generally opposed to diverting additional existing tax revenue toward roads. A highway funding plan enacted in 2016 to raise an additional $50 million for highways diverted surplus funds and existing revenue.

Hutchinson said diverting more revenue would strain the budget at the time he’s seeking further cuts in the income tax as well as an increase in teacher salaries.

“Unless there are new revenue sources, we’re at our limit as to what can be taken out of general revenue for highways,” he said.

Shepherd, however, said he’d prefer lawmakers look first at existing revenue before discussing any tax or fee increases.

“If you’ve got a need at home and you’ve got certain resources, probably the first place you’d look is: What funds do I have available? How am I spending those funds right now?’ Are there opportunities to maybe move some of those funds toward the need I presently have?” Shepherd said. “I think that same logic serves us well at the state level.”

Hendren said he prefers sending any highway plan to voters

“I would probably tend to say that if I’m going to ask folks to pay more for gasoline or to continue paying a half cent sales tax in order for them to have new four lanes and repaving of roads, I think that’s a decision that is probably appropriate to be passed out to the voters,” said Hendren, who is also the governor’s nephew.

Hutchinson has said one option could include extending the half-cent sales tax voters approved in 2012 for highways. That tax expires in 2023. He said he’d prefer sending any highway funding plan to voters.

“I believe (voters) would support that, but it has to be the right mixture and it has to be a clear plan,” Hutchinson said.

Lawmakers say they’re looking at other ideas for raising additional money. Republican Sen. Bill Sample said he’s working on legislation that would index the current motor fuel tax with inflation costs and imposing a special registration fee on electric and hybrid vehicles.

Democratic Sen. Keith Ingram, the Senate minority leader, said he believes any plan is going to require a mix of funding sources.

“I just find it hard to believe we’re going to be so selfish as to not invest the necessary dollars for our children and grandchildren. The problem gets worse every day,” Ingram said.

Republican Rep. Dan Douglas, who spearheaded the unsuccessful highway funding plan two years ago, said he call for a hybrid approach that includes existing revenue and a tax increase if another proposal doesn’t emerge.

“Everybody knows we need it. Nobody wants to pay for it,” Douglas said.

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