Governor offers more details on highway funding, Medicaid expansion and, yes, tax increases

Gov. Asa Hutchinson said his highway funding plan will work without raising taxes by finding government efficiencies and continuing with the state’s Medicaid expansion. Without those planks, Hutchinson says tax increases will enter the debate.

“If we do not have the Arkansas Works initiative, if we do not have the federal expansion money, then we have to plug about $100 million at least into the budget. So $40 million that I would be putting into highways would have to go elsewhere,” said Hutchinson, who appeared on this week’s edition of Talk Business & Politics on Sunday to discuss his highway plan and his first year in office.

“If they don’t accept those reforms I’ve offered, then they’ve got to understand we’ve got to redo the budget and there’s some serious consequences to that,” he added. “We wouldn’t be able to meet the short-term financing needs and certainly would not be able to do it without a tax increase.”

Hutchinson said his 10-year, $750 million highway funding proposal would use about $40 million in rainy day and surplus funds, while shifting tax collections from diesel fuel and the sale of new and used autos from general revenues to roads. The fiscal shift would allow the state to take advantage of matching federal funding for highways that was enacted last November.

“Part of our highway plan to meet an immediate need of $46 million for this year to match the federal money that’s available to us – so there’s really $200-$250 million on the table,” he said, noting that allowing general revenue to be used by the Highway Department should lead to more communication and oversight by the state Legislature.

Hutchinson said beyond the revenue shift and continuing Medicaid expansion from the Affordable Care Act, he’ll be looking for a series of government efficiency initiatives to help cut wasteful spending at the state level. He currently has a hiring freeze in state government and has implemented three major efforts to streamline spending. Lt. Gov. Tim Griffin is reviewing the sprawling Department of Human Services for efficiencies and the Arkansas Policy Foundation is conducting a review of overall state government spending with an eye toward efficiencies.

Hutchinson said he has also asked Arkansas Economic Development Commission director Mike Preston to review the state’s economic development incentives for potential waste or ineffectiveness.

“It’s not about cutting funding, it’s about using our tools that are most effective at job creation. We want to be able to compete and we’re using our incentive packages and our tax credits very effectively, but we’ve got a number of them and I think it’s appropriate to take a look at that,” Hutchinson said.

The governor also discussed his first year in office, saying he delivered on his campaign promise to begin reducing income taxes. He said he will be working to improve communications with the state legislature, solving prison overcrowding, and addressing changes at the Department of Human Services as areas where he’ll seek to do better. Watch his video interview below.

Also, Arkansas Advocates for Children and Families executive director Rich Huddleston and Americans for Prosperity’s Arkansas director David Ray debated the governor’s highway plan. Watch their video below.