Week In Review

State Capitol Week in Review

LITTLE ROCK – In recent years tax revenue from traditional sources for maintaining Arkansas state highways has been flat or in actual decline. At the same time the cost of fixing highways and bridges has gone up.

Raising taxes is always politically difficult, and in an economic slowdown it becomes extremely so. However, when highway maintenance is postponed it quickly becomes more expensive.

For those reasons the job of the Blue Ribbon Committee on Highway Finance is tough. The legislature created the group in the 2009 session and charged it with recommending methods of paying for much needed improvements to the state's highway system.

The Senate chairman of the committee recently said that any tax increases recommended by the group would most likely be put on the ballot for voter approval. If highway officials can make a strong case that the state needs new sources of revenue, and that any new taxes or fees would be fair and equitable, the voting public is more likely to buy into the idea and approve a new highway program.

Helping to make the case are business and civic leaders who understand the importance of transportation in economic development. During a series of public hearings throughout Arkansas, several people told the task force that they felt economic development in their communities suffered due to a lack of good roads.

Last year the state Highway and Transportation Department had total revenue of about $591 million.

Almost 75 percent of that amount was from motor fuels taxes on gasoline and diesel. Those taxes are collected on a per gallon basis, and therefore they don't increase with inflation as sales taxes do. In fact, the growing popularity of fuel efficient cars tends to hold down revenue from motor fuels taxes.

Last year the state Highway Department's revenue declined by about $30 million from the previous fiscal year.

Several ideas have been considered and none appears to be a great deal more popular or feasible than the rest. They include toll roads, bond issues, increased excise taxes at the wholesale level and levying a sales tax on motor fuels.

Arkansas is not the only state with problems raising funds for highways. The Missouri Highway Department just released a new five-year plan that lowers average spending on highways and bridges from $1.25 billion to $500 million a year.

In North Dakota, the Highway Department is mowing ditches less frequently along roadsides. In areas of North Dakota where heavy flooding washed out small roads, they are not being resurfaced with pavement but repaired instead with gravel.

Oregon and Rhode Island are looking into a tax levied according to the number of miles traveled by a vehicle. Virginia and North Carolina are looking at placing toll booths on heavily traveled interstates. In Georgia, citizens will vote on a sales tax dedicated to highways. West Virginia is looking at a plan that would require counties to pay a greater share in road maintenance.

In Arkansas, since 1965 cities and counties each receive 15 percent of motor fuels taxes and registration fees. Last year the combined share for cities and counties was $82 million.