Arkansas special session expected to address road revenue

By Keith Goble, Land Line state legislative editor | Friday, May 13, 2016

Arkansas state lawmakers are expected back at the capitol in the next week to work out a deal to pay for road and bridge work throughout the state.

The regular legislative session wrapped up recently without state lawmakers addressing transportation funding. In hopes of coming up with a plan moving forward, Gov. Asa Hutchinson next week is expected to call a special session to raise revenue for highways.

Citing opposition to a fuel tax increase, the Republican governor has called for ultimately raising $135 million annually through spending state reserves and general funds. The action would increase the state’s match for federal highway funds this fall.

Despite the governor’s opposition to a tax increase to aid infrastructure improvements, a group of Senate Republicans are likely to bring up for consideration a plan to increase the state’s fuel tax rates by 8 cents.

The state now collects 22.5 cents per gallon on diesel purchases and 21.5 cents on gas. The tax rates, which are higher than any of Arkansas’ six neighboring states, raised $442 million a year ago.

According to reports, the legislative proposal would raise rates by a nickel in fiscal year 2018 and another three cents the following year. The rate increases would raise $100 million and $60 million, respectively.

The state Highway Department would get about $110 million annually via the additional $160 million raised through the tax increases. Cities and counties would get the rest.

The tax rates would revert back to their current levels in 2022. At that time, lawmakers could ask voters about how to replace the fuel tax increase.

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.

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

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