LITTLE ROCK — A year after the Arkansas Blue Ribbon Committee on Highway Finance recommended new ways to fund highway improvements, renewing an old bond issue is the only proposal that doesn’t remain stuck in the mud.
A half-cent sales tax increase will be on the 2012 general election ballot but has yet to receive the governor’s endorsement, and a plan to raise the state diesel tax by 5 cents a gallon has already been scuttled for lack of public support.
Other recommendations made by the committee, such as indexing the existing gas and diesel excise taxes, also have failed to gain any traction with the public or lawmakers.
Renewal of a $575 million bond program for interstate improvements, which voters overwhelmingly approved in November, actually was endorsed by the Legislature in 2007 and had been awaiting Gov. Mike Beebe’s call for a special election, said Lane Kidd, executive director of the Arkansas Trucking Association.
While the committee’s work was important in educating the public on the need for additional highway funding, the panel ultimately failed to fully complete its job, which was to present innovative funding sources for highway needs, Kidd said.
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He said the options the panel put forth were time-worn ideas that did not present innovative new ideas.
“There were no surprises in the Blue Ribbon Committee’s recommendations,” he said. “Was (the process) valuable? Well, it did put the issue of highways on the map, in terms of getting the public aware of the fact that we need to spend more money, so in that regard, I guess the committee was valuable. But in terms of new ideas, no.”
Gov. Mike Beebe said last week that the committee’s importance, or success, should not be judged by which of their proposals are adopted.
“If they are educating the public, providing options, if they are putting proposals forth for people to discuss, to better prepare folks to make conscious decisions one way or the other, then they’re going their job,” Beebe said. “You can’t judge whether they were successful or not by whether or not some or all of their recommendations ended up being adopted.”
Under the proposal approved by voters, $575 million in bonds will be retired with proceeds from a 4-cent state diesel tax hike approved for the original program in 1999, which ultimately financed about $1 billion in improvements to more than 355 miles of interstate highways in the state.
Beebe said he was “not yet” committed to supporting a sales tax increase for highway improvements that the Legislature referred to the 2012 general election ballot. He added that, in the current economy, voters would be hard-pressed to support a tax increase.
The proposed constitutional amendment would raise the state sales tax by a half-cent to fund a $1.8 billion bond program for construction of a four-lane highway system connecting all parts of the state.
The tax would expire after 10 years and would not apply to food or food ingredients. Counties and cities each would receive 15 percent of the funds.
State highway officials estimate about $19 billion in highway improvements needs over the next decade and expect the current fuel taxes to generate about $4 billion of that revenue.
“The funding needs are evident, so that’s not the issue,” Beebe said. “The issue is, can the people afford that right now in these tough economic times? Is that something that people will support? It’s too early to tell yet.”
Kidd said the Trucking Association also has yet to make a decision on whether to endorse the sales tax proposal. He also said the association still likes the idea of raising the tax on diesel fuel by 5-cents-per-gallon to fund highway improvements.
The diesel tax proposal was recommended to the Blue Ribbon Committee on Highway Finance by the Trucking Association and the Legislature referred it to voters to decide in a special election called by the governor.
In exchange for supporting the diesel tax increase, the Legislature also approved a $4 million sales tax break for large trucks and trailers.
However, the association asked the governor in June to hold off on calling an election on the tax proposal, saying its polling showed the measure would fail at the ballot box.
“We simply made a political decision,’ Kidd said. “It was not a decision based on not any longer wanting to support the tax. We’ll go in and talk about this every time the Legislature gets together.”
Beebe and several lawmakers have said they plan to ask the Legislature to repeal the sales tax break for large trucks and trailers, most likely in the fiscal session that begins in February.
Rep. Donna Hutchinson, R-Bella Vista, questioned the recommendations of the Blue Ribbon Committee last week, saying the panel should have suggested changes to how the Arkansas Highway Commission spends the money.
She said the commission must allow “the money to follow the cars,” adding that five members of the Highway Commission currently advocate for highway maintenance districts, which vary in population.
“I know most people in Little Rock and Northwest Arkansas don’t feel the money is being divided up according to need and those areas with high congestion aren’t being recognized,” said Hutchinson, who supported renewing the interstate bond program.
Hutchinson and her son, Sen. Jeremy Hutchinson, R-Little Rock, sponsored a proposed constitutional amendment during this year’s regular legislative session that would have changed Amendment 42 which made the Highway Commission constitutionally independent.
The proposal, which failed to receive support from the Legislature, would have restricted the commission’s powers and duties to those prescribed by the Legislature.
The commission in March agreed to study the idea of changing its structure so commissioners represent equal population areas rather than highway maintenance districts.
Hutchinson said she hopes to hear about the study during the upcoming budget hearings in advance of the fiscal session.