State Road Funding Group Meets Amidst More Highway Department Bid Cutbacks

Gov. Asa Hutchinson called on his appointed Working Group for Highway Funding to be creative but also to work within political realities on Wednesday, the same day that the Arkansas Highway and Transportation Department announced that it was withdrawing more bids because of a lack of funding.

Hutchinson appointed the 20-member group following the legislative session to consider highway funding. In a brief address at the start of the working group’s first meeting, he said the group’s report should be completed in about six months. He suggested the state change its funding formula so that it produces more revenues in the future, rather than just worry about current needs.

“I want you to be creative,” he said. “I want you to really look at what’s happening in other states. I want to look at public-private partnerships. I want to look at vehicle miles traveled as a means versus simply per gallon excise taxes. We’ve got to take in the where we’re going to be not just today, but where we’re going to be 10 years from now. How many cars on the road will be electric cars 10 years from now?”

He later added, “I also expect you to balance everyone’s desire to have a more efficient revenue stream that’s reflective of our highway needs with also balancing of political reality.”

Hutchinson asked for a show of hands regarding how many members believed more funding is needed for highways. Virtually all, if not all, raised their hands.

Earlier in the day, the Highway Department announced that it was withdrawing six construction projects worth $55 million in its July bid opening. That brings the total for the year to 75 projects with an estimated value of $335 million.

The projects were pulled because of concerns over future federal funding. About 70% of Arkansas’ highway construction costs are reimbursed by the federal Highway Trust Fund. But that fund is projected to be insolvent by August, and the law that authorizes highway funding has been temporarily extended by Congress only until July 31. The trust fund is suffering from declining revenues from the gas tax, which has not been raised since 1993.

Scott Bennett, director of the Arkansas Highway and Transportation Department, told his fellow working group members that the system faces a $16.8 billion shortfall over the next 10 years, with $20.4 billion in highway needs but only $3.6 billion in projected revenues. Those needs include $6.25 billion that could be spent on I-49, I-69 and I-55. He said $8 billion is needed for simple system preservation that would give major interstates a “B” grade and less major routes a “C.”

Between 1993-2014, revenues have increased 63% but expenses have increased 83%, with the construction cost index rising 181%. Since 2007, revenues generated by the gas tax have decreased.

Bennett said the average Arkansas household pays $40.71 in federal and state gas taxes per month. A 10-cent gas tax increase would add $1.15 more per week to those taxes and add $200 million for road funding.

Several members of the working group asked Bennett to provide a middle ground target that would meet many needs but still be politically viable.

In Washington, D.C., federal officials including Cong. Rick Crawford, were discussing the funding shortfall and the needs of rural America.

In short, the transportation needs are plentiful, but the ways to pay for them are not. Read more at this link.