Highway panel seeks sales tax increase, new bond program

Five new proposals approved by The Arkansas Blue Ribbon Commission on Highways involve raising taxes, shifting taxes, and indexing taxes, according to this report from Talk Business.

For nearly 18 months, the 20-member panel has studied possible remedies to the state’s $19 billion in estimated highway needs. On Tuesday (Nov. 16), the working group approved five suggestions for legislators to consider in 2011 to address state road requirements. Panel members did not agree on all of the recommendations, which include:
• Indexing the gas and diesel excise tax;
• Levying a new excise tax on the wholesale price of motor fuels;
• Transferring general fund revenues on sales related to automobiles and transportation products;
• Proposing a 10-year highway bond program funded by a half-cent increase in the general sales tax; and,
• Increasing state aid to counties through an indexed one cent fuel tax.

The panel did not recommend all of the proposals as necessary to meet the state’s road needs, but it did pull the recommendations together to highlight possibilities and issues needing to be addressed by lawmakers as part of an overall state highway policy.

Two draft bills have been written for potential pre-filing. One bill calls for levying the excise tax on the wholesale price of motor fuels. The group would phase in a 1% tax initially and add 1% each year until it reaches 6%.

The second bill would begin the transfer of general fund revenues on sales related to automobiles and transportation products, such as tires, batteries, and auto parts. Currently, sales tax collected from those products flows into general revenues.

The commission also proposed a number of studies to address current and future highway needs. Those proposals include:
• A heavy truck study to gauge 18-wheeler wear-and-tear on the state’s highways;
• A vehicle registration and license fee study that could propose license fee increases on light duty vehicles; and,
• A state highway system reduction study that could seek to transfer state roads to counties and would establish strategic needs for larger corridors.

Other recommendations brought forward by the group include reauthorizing GARVEE bonds for interstate highway reconstruction. The panel advocated that this proposal be forwarded to a vote of the people "as soon as practicable."

Two other proposals were recommended for further study. They included the study of a vehicle miles traveled (VMT) tax, which would examine how declining fuel revenues due to fuel-efficient vehicles impact highway financing. The other study called for an examination of tolling existing and proposed new roadways.