Arkansas officials look for long-term road funding solutions

By Keith Goble, Land Line state legislative editor | Tuesday, November 14, 2017

The state of Arkansas is working through plans to help address highway funding needs throughout the state. A solution could still be a couple of years away.

The Arkansas Department of Transportation has indicated that additional state funding is needed to fully maximize available federal funds. The federal government typically requires states to come up with a 20 percent match for road construction.

Highway officials have said the state has $9.3 billion in road needs over the next decade. At this time, there is only about $4.5 billion in expected revenue.

A specific funding plan to resolve a shortfall in long-term funding is not known.

Efforts to come up with plans to cover highway funding needs is not a new topic at the statehouse.

During the 2017 regular session a two-bill package called for raising the state’s tax on gas and diesel by 6.5 percent to pay for a highway funding plan that relied on bonds. The plan sought to raise about $210 million annually for state and local road work.

Arkansas already collects a 21.5-cent-per-gallon tax on gas purchases and a 22.5-cent tax on diesel.
The proposed sales tax was estimated to increase fuel rates by about 10 cents.

Voters would have made the final decision on the tax. Gov. Asa Hutchinson supported the effort, which failed to gain the support necessary to clear the statehouse.

The Republican-led Legislature ultimately approved a bill to boost highway funding with revenue already available to the state. The deal is estimated to raise $250 million annually for the next five years.

The additional revenue for highways will be accessed from a mix of sources that includes a one-time transfer of $40 million from the state’s rainy day fund. In 2018, another $20 million will be transferred from investment earnings collected by the state.

Additionally, a portion of diesel taxes paid by truckers will no longer be used for nonroad purposes. As a result, the practice of shifting $4 million each year in fuel tax revenue for general revenues will be nixed.

Also, the state’s highway account will receive 25 percent of the state’s budget surplus each year.

The GOP governor has not advocated for a specific fix to long-term funding needs. He recently announced, however, that he would “vigorously oppose” any plan to once again divert general revenue.

In the meantime, the highway agency is considering a 2018 ballot measure to ask voters to approve a plan to raise more than $400 million for highways.

Arkansas voters recently backed a plan to borrow to pay for transportation work. In 2012, voters approved a one-half cent sales tax increase for highways. The tax increase covered a $1.8 billion bond issue that expires in 2022.

ARDOT officials could also opt to wait until the 2019 regular session to put forward a plan to raise road revenue.

DOT Director Scott Bennett anticipates submitting a project list before the end of the year to the state Highway Commission that could benefit from additional funding.

To view other legislative activities of interest for Arkansas, click here.

 

 

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