A group tasked by Governor Asa Hutchinson with finding additional revenue for highways in Arkansas is a step closer to submitting recommendations. Stakeholders conducted their final meeting Thursday in anticipation of finalizing proposals by mid-December. Chairman Duncan Baird said some ideas have more political support than others.
“I think there's a wide range of feelings about the different options, but the importance was having a comprehensive list of things that were possible and really kind of pulling out some of those things—trying to determine where on the scale do each one of those options fall,” said Baird, who is also the Governor's Budget Director.
Proposals would seek 160 million dollars in annual revenue for the Highway Department within three years of being implemented. Options include increasing gas taxes and redirecting some general revenue funds from state agencies towards highways.
Hutchinson created the Governor's Working Group on Highway Funding by executive order in April to “provide recommendations to the Governor for the state to create a more reliable, modern, and effective system of highway funding.” A draft of the group's proposals emphasizes that the funding proposals are “short-term.”
The formation of the group came amidst a national backdrop of instability in the federal Highway Trust Fund, a major source of funding for highway projects and declining motor fuel taxes nationwide, due to lowered rates of consumption. According to the state Department of Finance and Administration, Arkansans pay about 22 cents per gallon in state fuel taxes. That's in addition to a federal fuel tax which U.S. Energy Information Office says is 18 cents per gallon for gasoline and 24 cents per gallon for diesel. Those taxes are currently revenue sources earmarked for highways.
One idea for new highway funds in Arkansas contributed by state Highway Commissioner Frank Scott would tax drivers based on number of miles they report traveling over the course of a year. He said he's not sure it will work.
“Once we get the actual answers from the Highway Department from what it would look like. If you put this reportable miles traveled in place, would it be better for the Highway Department or would it be worse? If it's worse then it's something we don't need to do,” he said.
The Highway Department and the state Department of Finance and Administration will consult before the proposals are finalized to confirm a revenue generation estimate for each idea.
State Chamber of Commerce President Randy Zook, another one of the 14-member working group, said any proposal that requires an increase in motor fuel taxes would have to be clearly outlined and gradually implemented.
“The more straightforward we are, the more people are likely to buy into it and accept it and be willing to pay a little bit or a modest amount,” he said.
Other options are “revenue-neutral,” meaning they would not amount to a tax-increase on citizens, but would redirect other revenue streams. One proposal would redirect about 70 million dollars in state desegregation aid to three Pulaski County school districts toward highway projects. The state is under a federal court-order to end payments to the districts through 2017, a result of a settlement agreement in a long-running school desegregation case.
Ideas are to be sent to Hutchinson by December 15. At that point the Governor can decide to pursue a legislative agenda to craft bills based on the proposals.