Governor gets highway funding options | Arkansas Blog

Governor gets highway funding options


It's a day for recommendations. First came a rubberstamping by the governor's task force of his preferred method for continuing Arkansas's version of Obamacare Medicaid expansion, with some cosmetic changes intended to punish poor people sufficiently so that the plan is  more palatable to Republicans.

Now comes the group he appointed to work on highway funding, led by top Hutchinson aides. The governor's office said he would review the recommendations and make recommendations by mid-January.

First goal, $110 million in new money annually for the Highway Department over the next one to three years as intermediate relief and then $140 million for a couple of years after that and then still more. That means the state must come up with $160 million in the first three years, if the traditional 70-30 split between the state and cities and counties and off-the-top money for constitutional agencies is deducted. Continued work will be needed for long-term solutions, the report said. These could include potential "public-private partnerships" and revenue not strictly tied to gas consumption.

Key ideas:

Proposition 1

Has some interesting ideas, but sounds too much like a tax increase plan for this governor.

* Index the motor fuel tax to allow for up to 2 cents increase a year indexed to a standard measure. The report points out this doesn't amount to an increase, merely a way to make sure the tax doesn't lose ground to inflation and other factors, presuming the changes are small.

* Increase the diesel tax by 5 cents a gallon. Truckers support it because they know they are getting away with murder, destroying the high-dollar interstates while paying a small portion of the cost.

* The big lick. Phase in a transfer of general revenue to highways from vehicle sales taxes. This would grow from a $43 million to a $360 million hit on other government operations in seven years. Believe growth will offset the loss? Sure. It's Christmas. Santa Claus is real until Dec. 26. Thanks to Duncan Baird for noting that 65 percent of general revenues goes to education.

* Another tax increase, sort of. Get voters to reduce the current "temporary" sales tax for highways from 1/2-cent to 3/8-cent but make it permanent, after 2023.

Proposition 2

This is called "revenue neutral." Incidentally, that's what the governor has been demanding.

* It would redirect some relatively small sums now going to general revenues to highways, including sales taxes on highway construction materials.

* The big lick? Recapture the $70 million spent annually on Pulaski County school desegregation for highways when the payment ends. The freeing of this money was supposed to remove the last small state sales tax on groceries. The proposal doesn't say this specifically, but there's no way but magic to pay for it otherwise. Tax groceries to build highways. Does that make sense? But whatever you do, make sure the highway department continues to spit on mass transit, which many poor people paying those taxes ride to work.

Proposition 3

It's sensible and overdue, so it's dead on arrival, I'd guess. It would phase in fuel tax increases.

Proposition 4

Another good idea and so, again, likely a non-starter. It would end the sales tax exemption on fuels. Thus, the effective tax would slide with the price of gas.

The report says:

The Working Group recognizes that elements of some of these proposals do not generate new revenue for highways, but instead, shift existing funding away from other state priorities. As such, we suggest that these proposals only be considered in conjunction with more comprehensive state budgeting deliberations. A comprehensive approach would ensure that the funding shortfall contemplated by these recommendations is not simply transferred from one state agency to others. 

Reality: There's no making up shortfalls without additional money. The governor has ruled that out. If he's to have a highway plan, everything else is going to suffer unless he gets real or prosperity rushes down on Arkansas in a mighty stream. Perhaps it will. Maybe techies will rush to locate new information age jobs here since the legislature and governor are standing four-square for employment discrimination against certain types of people.

The study says other areas need study: new fees for hybrid vehicles and compressed gas as those alternatives further decrease regular fuel tax income; cutting back highway money outlays to cities and counties; increasing car tags closer to the average of surrounding states (again, not revenue neutral, though sensible); requiring counties to assess the full 3-mill county road tax before sharing in state turnback (amen to that).

I'm betting on revenue neutral and transfer of existing revenue sources to highways with a promise that Asa's lean, mean budget cutting machine will make the fund transfer painless to all those affected.

Note: We could cover several years of money needs by scrapping the 30 Crossing project in downtown Little Rock.

Noted also: The working group appointed by Hutchinson numbers 20. I think it includes three women and one black person.

Comments (4)

Showing 1-4 of 4

Add a comment

Add a comment