Will Mike Beebe's little severance tax on natural gas really produce enough highway construction to make it worthwhile, as a few of the Republican critics ask? Beebe said today he probably will propose a $575 million bond issue at the 2010 general election, possibly backed by the severance tax revenues, presuming that the legislature enacts the tax next week.
The proposition would mirror the 1999 Interstate bond issue, the so-called GARVEE bonds, which pledged the state's allotment of federal highway matching funds and motor-fuel taxes. Since his proposal, unlike the Huckabee proposal that voters rejected in 2005, would limit the Highway Commission's bonding authority to the $575 million, Beebe was confident voters would go along. It would not entail higher taxes.
But he was not sure that the severance tax revenues, since they would be linked to the volatile market price of gas, would make the bonds salable. Investors want certainty. But there should be no problem. Just pledge other highway revenues and the state's school funds, if need be. It was not widely circulated but the last bonds had a little caveat: general revenues would be used if highway-user monies were short.