Governor’s highway bill stalls in Senate committee

The Senate Committee on Transportation, Technology, and Legislative Affairs deadlocked 4-4 Thursday morning voting on Gov. Asa Hutchinson’s highway bill.

The vote came after its Senate sponsor, Sen. Bart Hester, R-Cave Springs, failed in an attempt on the Senate floor to move the legislation to the Senate Revenue and Taxation Committee.

The governor’s bill had an easier time in the House. Placed in the Rules Committee, it passed easily and heads to the House floor.

Hutchinson called legislators into special session Thursday in order to find about $50 million a year in state funds so the state will receive $200 million in matching federal funds. Legislators and the governor hope to end the session in three days.

His bill would create the Arkansas Highway Improvement Plan of 2016, which would be funded by an Arkansas Highway Transfer Fund. For 2017, the state would make a one-time transfer of $40 million in rainy day funds to the Highway Transfer Fund.

In the future, the Highway Transfer Fund would come from deposits of 25% of state surplus funds. Deposits also would come from a Securities Reserve Fund consisting of savings created by the early retirement of nonhighway direct general obligation bonds, of discounts received through securities purchases, and of premiums and interest earned from the sale of securities in the state treasurer’s securities account. The Securities Reserve Fund would generate $1.5 million for the Highway Transfer Fund in fiscal year 2017 and $20 million in the following years.

The bill also would dedicate to highways money generated by diesel taxes and taxes from the half-cent sales tax passed by voters in 2012. Some of those tax dollars currently go into general revenues.

The bill also increases legislative oversight. To access the Highway Transfer Fund, the department would be required to request in writing that the governor propose a recommendation to the Legislative Council or the Joint Budget Committee to review and approve the transfer. The bill also creates the 20-member Highway Commission Review and Advisory Subcommittee. Its job would be to review Arkansas Highway Commission rules, but the legislation explicitly states that it would not have approval authority.

Voting for the bill in the Senate Transportation Committee were Sens. Jim Hendren, R-Gravette; Jake Files, R-Fort Smith; Greg Standridge, R-Russellville; and Bobby Pierce, D-Sheridan. Voting no were the chairman, Sen. Bill Sample, R-Hot Springs; and Sens. Jimmy Hickey, R-Texarkana; Ronald Caldwell, R-Wynne; and Bryan King, R-Green Forest.

Sample told Hester that he wants to pass a funding bill this session and encouraged him to come back with amendments.

Hickey, who is sponsoring a competing bill, said the governor’s bill fails to meet the Arkansas Highway and Transportation’s long-term needs, which the AHTD has said amount to $20 billion over the next 10 years. He told Hester that the Legislature should do enough to obtain the federal match this year and work to find more money before meeting next year in regular session. If support can’t be obtained by then, he said he would carry the bill next year.

Addressing the General Assembly Thursday, Hutchinson defended the plan, saying it will allow the state to access $1 billion in federal funds without raising taxes. He said the current projected surplus is $160-$180 million, which would be more than enough to generate the money needed for the match when coupled with other sources.

“I do not view this as a one-time fix,” he said. “It’s a plan to meet our match for the next five years or more.”

He later said in a press conference that any other plan will require a tax increase and that the political climate won’t be different in January.

Hickey also expressed concern that the bill threatens the Highway Department’s traditional constitutional independence and could run into trouble in court because legislators would review transfers out of the fund, potentially exercising influence. Hester replied that legislators already can do that when they fund the AHTD.

“The Legislature certainly has the power of the purse,” Hester said.

King pointed out that the bill does not specify who would appoint the 20-member Highway Commission Review and Advisory Subcommittee. He expressed concerns about relying on projected surpluses, pointing out that legislators previously approved a severance tax for highways, but now all natural gas drilling in the state has stopped.

Hendren, a supporter, said legislators should review how state agencies spend money and said there will be opportunities for legislators to change the funding if the surplus doesn’t materialize.

Hickey has offered competing legislation that would fund highways using the governor’s mechanisms for one year only. The Senate Transportation Committee will consider that bill once a fiscal impact statement has been prepared – as early as Thursday.

In other business, Hutchinson said that he had opposed adding a bill to the special session regarding the use of bathrooms by transgender individuals. He said he had assured legislators interested in such a bill that he would work with them after the session.

“This is a highway session,” he said. “I did not need to have that complexity as we entered the highway session.”