Week In Review

State Capitol Week in Review

            LITTLE ROCK – The deadline is approaching for the Governor’s Working Group on Highway Funding to formalize its list of ideas on how to generate revenue for highway and bridge projects.

            The group has been working since June, and its goal has been to come up with funding options that would raise about $160 million a year. Of that total, cities and counties would each receive 15 percent, which is the traditional distribution formula in Arkansas for highway revenues.

            Legislative leaders and the governor have said publicly that any highway funding proposal must be revenue neutral to gain their support. That means, it cannot be an additional new tax. Rather, it must be a transfer of existing revenue or increasing a highway-related tax while at the same time lowering a separate broad based tax.

            There is always a strong anti-tax sentiment among members of the legislature, and now is no exception. Any highway funding proposal that raises taxes or fees would generate vigorous opposition, from legislators and from anti-tax organizations.

            The working group’s deadline is in December. It has already produced a draft, which likely will not change much when the final version is issued. The draft outlines several options, some of which would be more politically difficult than others. The working group wanted to present specific plans that the governor and legislators could consider in conjunction with other state government budget demands.

            The state Highway and Transportation Department gets the bulk of its state dollars from special revenues, specifically motor fuels taxes and fees paid by truckers. 

The motor fuels taxes are 21.5 cents per gallon on gasoline and 22.5 cents per gallon on diesel. The fees paid by large trucks depend on things like the type of vehicle, what kind of load it hauls and its weight.

            Motor fuels taxes have been a stagnating or declining source of revenue. While the cost of building and maintaining highways has risen steadily with inflation, revenue from motor fuels taxes has not gone up proportionately. In fact, most cars and trucks get better gas mileage than ever before.

            Last year the Highway Department’s total revenue was about $670 million, and 64 percent came from motor fuels taxes.  Another 19 percent came from registration fees and almost 11 percent came from dedicated revenue generated by severance taxes.

            Cities and counties each receive about $87 million a year for their local road and street projects. Other allocations for street and road projects come from the $670 million brought in by the Highway Department, leaving about $426 million for maintenance and construction of the state highway system.

            The Highway Department also receives federal funding and revenue from bond issues approved by voters, which brought its total receipts last year to about $1.2 billion. About 3,500 people work at the department. They maintain more than 16,400 miles of highway within the state system, as well as more than 7,300 bridges.

            The 75 counties in Arkansas maintain more than 68,600 miles of road and more than 4,300 bridges. Cities in Arkansas maintain more than 17,500 of streets and more than 1,000 bridges.