Editor’s note: Rep. Andy Davis, R-Little Rock, is the author of this guest commentary. He served on the Working Group for Highway Funding.
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After months of meetings by the Governor’s Highway Funding Work Group, Gov. Asa Hutchinson announced his proposals for additional highway funding to a large crowd on Tuesday (Jan. 19).
His proposals include some items from the working group menu of options as well as some ideas of his own. From the working group came small funding items that could be considered low hanging fruit, or common sense changes. These include $4 million ($2.7 to the state, $1.3 to cities & counties) in diesel taxes that had been transferred away from highways and into general revenue in the past, as well as $5.4 million in revenue from the half-cent sales tax approved by voters that is currently directed to the central services. That is the fund that pays for elected officials’ offices. These are good changes because those dollars are collected under the promise of being used for highways, and maybe now they will be.
The Governor tacked on another $25 million in new and used car sales tax money to be phased in over 5 years. He also threw in $40 million of one-time money from his surplus funds in fiscal year 2016. In future years, he is asking the Legislature to dedicate 25% of surplus revenue, or general improvement funds, to highways each year. The amount of this surplus provided to highways would be variable year to year, but over the last 10 years 25% of surplus would have averaged $48 million per year. Using that figure, accounting for the 5-year phase in, considering that the $5.4 million expires in 2023, and some political license, the Governor’s proposal would generate about $75 million per year, and allow the Arkansas Highway & Transportation Department (AHTD) to access $2 billion in additional federal funds over the next 10 years. You’ll have to trust my math on that.
This proposal sets two notable precedents in Arkansas highway funding policy. The first is that thanks to the efforts of everyone involved, we will increase highway infrastructure investments without raising taxes. The second is the first sizable contribution of general revenues (non-fuel tax revenue) to the state’s highway system. Regardless of whether you think it would be good timing, or good policy, to raise fuel taxes, the fact is that any proposal to raise taxes is not getting though this Republican-controlled legislature.
Proposals to raise fees on hybrid and electric cars have failed in recent sessions because they are viewed as tax increases even though they generate tiny amounts of revenue. Therefore any reasonable proposal had to be free of tax increases.
The second precedent is even more notable in my opinion. For the first time, general purpose revenue will be used for highway expenses in addition to user fee revenue sources like fuels taxes. Along with this shift in policy should come additional policy changes aimed at verifying the best possible use of these general funds in addition to the other hundreds of millions collected and spent on highways each year.
The Arkansas Constitution provides that the highway commission is the chief executive over the highway department, but it does not isolate the commission or the department from legislative oversight. Since one of the primary roles of the legislative branch is to keep a watchful eye on the budget, shouldn’t it do that? Certainly now that general revenues will potentially be spent on the state’s highways, the time has come for legislative oversight of the funding process and execution of funded projects in this state.
The highway department isn’t the only entity taxpayers should expect the legislature to oversee when expending highway money. Local governments now receive more than $200 million annually for local streets, roads, and bridges. However, there is not an adequate accountability system in place to verify those funds are used as intended.
The Governor’s funding proposal is the right plan for today’s needs using today’s resources. In the future, additional resources could be available and even more general revenue could be on the table for state and local road needs. Now is the best time to address reforms in highway funding policies that do not include new dollars, but should be addressed before the legislature agrees to additional spending.
New highway funding including smart general revenue transfer, putting highway money into highways, and getting more for our existing dollars, without raising taxes – we’re gonna do what they say can’t be done.