Highway Bill ‘On Hold,’ Sponsor Hopes For Compromise

The sponsor of a bill that would dedicate $2.8 billion in general revenues over 10 years to highways hopes to find a compromise after placing it “on hold” because of opposition from Gov. Asa Hutchinson.

House Bill 1346 by Rep. Dan Douglas, R-Bentonville, would dedicate funding from the sale of new and used cars and car parts to roads. Seventy percent would go to highways, 15 percent to counties, and 15 percent to cities. The funding would increase over time so that it would grow from $35 million in year one to $548 million in year 10.

The bill passed the House Committee on Public Transportation Feb. 19 despite opposition. Larry Walther, director of the Department of Finance and Administration, said the bill did not fit into the governor’s current budget, while representatives from higher education and other groups said it would reduce funding for their priorities.

The day it passed in committee, Hutchinson spokesman J.R. Davis said, “While the governor recognizes the need for improvements in the highway funding formula, he cannot support a bill that undermines the current balanced budget and doesn’t provide a consensus on a solution to the funding gap.”

Douglas put the bill on hold after meeting with Hutchinson last week. Douglas said a meeting is planned for Monday with the governor’s office, state agencies, higher education officials and others.

The bill is meant to address a $17 billion funding shortfall over the next 10 years, Scott Bennett, director of the Arkansas Highway and Transportation Department, testified Feb. 19. The transfer would apply only to money raised above $2.2 billion through sales and use tax collections.

Douglas and Bennett touted the bill as a necessary means of funding highway needs that no longer are met by the fuel tax, which has not increased nationally since 1993 and in Arkansas since 2001. Arkansas voters in 2011 did support a bond issue through the Interstate Rehabilitation Program (IRP) as well as a sales tax in 2012 that funds the Connecting Arkansas Program (CAP). Together, those will cover 630 miles, or less than 4 percent of the state’s roads.

“The thing is, on highways, we’ve got two choices: We can either raise taxes … or divert current revenue, and with the flavor of the Legislature and the public out there right now on tax increases, that doesn’t look like a possibility, so our only other option is to utilize current revenues,” Douglas said Friday.

Douglas said possible compromises include delaying the diversion until after the current budget cycle, and reducing some of the revenues that would be diverted to highways.

“We’ve shaken the tree,” he said. “The coconuts have fallen, and now we need to figure out how we’re going to make coconut cream pie.”