Highways taking back seat to tax cuts this session


LITTLE ROCK — During a meeting with reporters in January, the leaders of the House and Senate identified their top priorities for this year’s session: Medicaid and tax cuts.

Finding a new revenue source for maintaining the state’s highways apparently was lower on the list. Now some are saying that the emphasis on cutting taxes may stand in the way of getting anything done for highways this session.

On Thursday a bill to divert general revenue from vehicle sales taxes to highways failed in the House Public Transportation Committee. Witnesses who testified on both sides commented on the difficulty of simultaneously cutting taxes and creating a new revenue stream for highways.

“We ought to be sitting at the table together up here … and that coalition should be talking to this group about how we don’t have the ability to cut taxes right now because we have obligations of government that the people expect and we need to pay for,” Robert S. Moore Jr., a member of the state Highway Commission, said while testifying in support of the bill.

“That’s what I’d be doing; that’s not what we’re doing,” said Moore, who was House speaker during the 2011 regular session and the 2012 fiscal session.

Moore did make highway funding a top priority when he was speaker, but he was only partially successful. At his urging, lawmakers referred two tax proposals to voters in 2011: A half-cent sales tax increase to finance a $1.8 billion project to construct a four-lane highway system connecting all parts of the state; and a 5-cent diesel tax increase aimed at raising $1.1 billion to maintain existing highways.

The half-cent sales tax passed in November, but Gov. Mike Beebe has not called the other election because the Arkansas Trucking Association withdrew its support for the diesel tax despite initially agreeing to support it.

As an alternative to the diesel tax, Rep. Jonathan Barnett, R-Siloam Springs, filed House Bill 1418, which was defeated in committee on Thursday. He said he was not sure whether he would try again with the bill this session.

Under the bill, revenue from sales taxes collected on the sale of new and used vehicles would be distributed as follows: 70 percent to the Arkansas Highway and Transportation Department, 15 percent to the County Aid Fund and 15 percent to the Municipal Aid Fund.

The money received by AHTD would have to be used for highway construction and maintenance, but the money received by counties and cities would not be limited to road projects. The transfers would not begin until after total sales tax collections for one year exceed $2.25 billion. The bill would be phased in over a 10-year period after that.

Using general revenue to maintain highways was a suggestion of the Arkansas Blue Ribbon Committee on Highway Finance, which released a list of recommendations in 2010 for dealing with an estimated $19 billion in highway needs over the next decade. The committee concluded that new revenue sources are needed because the fuel taxes that support highways have been flat while highway needs have increased.

Rich Huddleston, executive director of Arkansas Advocates for Children and Families, testified Thursday that legislative leaders’ announced plans to cut about $100 million in taxes this session, combined with Barnett’s proposal to use general revenue for highways,“represent a perfect storm that could really hurt the future funding base for things like education, health care, public safety and services for vulnerable children and families.”

Barnett attributed the bill’s failure in the House Public Transportation Committee to opposition from Gov. Mike Beebe and the lobbying efforts of colleges and universities. He said he did not believe that the focus on tax cuts had hurt his bill’s chances, noting that the measure would be phased in gradually.

“If there was a problem with it in the future, it could have been dealt with fairly easily,” he said.

Eighty-eight legislators have signed onto Barnett’s bill as co-sponsors. The current House speaker, Davy Carter, R-Cabot, is not among them.

Carter said the question of how to maintain the state’s highway infrastructure is a difficult one. He said everything being considered by the Legislature is arguably related, but he questioned how much of a direct connection there could be between Barnett’s proposed long-term funding mechanism and more immediate budget decisions.

“You’re looking so far out in the future, it becomes a different thought process,” he said.

Carter continued, “I know Commissioner Moore is very passionate about it. These guys have got genuine goals, hearts in the right place. We all probably wish this would have been done a long time ago.”