Week In Review

State Capitol Week in Review

            LITTLE ROCK – The governor announced his plans to increase highway funding with budget surpluses and transfers from other state sources of revenue.

            He is expected to call a special session for the legislature to consider the plan. The governor emphasized that the new highway proposal would not raise taxes.

It would generate about $750 million in highway spending over the next 10 years. Also, it would provide matching funds of about $50 million a year in state money to allow Arkansas to receive an additional $200 million a year in federal funding.

The federal money became available when Congress passed a national highway funding bill in December. Over the next 10 years Arkansas would get an additional $2 billion in federal funding under the governor’s plan.

            The new highway program would receive 25 percent of the General Improvement Fund (GIF), which is replenished by surplus state revenue that is available at the end of fiscal years because it has not been budgeted for specific purposes. Traditionally the legislature and the governor use GIF money for one-time, capital projects. Legislative leaders noted that highway projects are in that category.

            Based on the average surpluses of the past 10 years, this provision would increase highway spending by about $48 million a year.

            Currently, sales taxes on purchases of new and used motor vehicles goes into the state’s general revenue fund and is distributed among state government agencies, public schools and universities and colleges. The governor’s plan would phase in a transfer of revenue from motor vehicle sales taxes to a special highway fund. It would reach its cap of $25 million annually in Fiscal Year 2021.

            The Highway Department would receive an immediate boost in the form of $20 million from the governor’s rainy day fund and $20 million from existing surplus funds. The $40 million from those two sources would be available for highway projects in Fiscal Year 2017, which begins on July 1, 2016.

            Also, the plan would move $4 million from general revenue to highways that is generated by existing diesel taxes. The state Highway and Transportation Department would get 70 percent of that amount, or about $2.7 million a year, and cities and counties would each get their traditional 15 percent share of highway funds.

            The governor said he would ask the Highway Department “to be responsive to increased legislative oversight in light of the transfer of general revenues to the Highway program. It is important that the Highway Commission initiate internal reform which assures the public that taxpayer dollars are being wisely, efficiently and fairly spent.”

            Amendment 42 to the Arkansas Constitution, approved by voters in 1952, created the current five-member Highway Commission and buffered decision-making on highway projects from politics. It is commonly referred to as the Mack-Blackwell amendment, after Senator Young Milton Mack of Moorefield (Independence County) and Senator Lawrence Blackwell of Pine Bluff, the sponsors of the Senate Joint Resolution that placed it on the ballot.

            The governor said that he had not decided when to call a special session to address highway funding. He is expected to also call a special session for the legislature to consider health care spending. The legislature will convene in fiscal session on April 13 to write budgets for state agencies, and although there is a parliamentary procedure for addressing non-budget bills during a fiscal session, it requires extraordinary majorities of each chamber.