Arkansas Speaker’s road plan seeks trucker support

Arkansas House Speaker Robert Moore said he will file a bill to increase taxes to pay for road repairs in Arkansas and will support a second proposal to give voters the option to increase taxes for highway construction.

"As we’re looking at it right now, this is basically a two-step proposal that we believe is essential for the future of highway maintenance and construction funds," Moore told Talk Business in an evening interview.

Arkansas has an estimated $19 billion in highway needs and the cost for building and maintaining roads won’t get cheaper in the future, Moore said. Current funding will cover roughly $4 billion of those needs, but much of that money stream —  from motor fuel taxes — has been flat and struggling to keep up with needs for more than a decade.

Moore said the proposal he plans to put forward will help with existing roadways, including interstates, while the voter-option proposal would serve a four-lane grid system to "connect the four corners of the state to central Arkansas."

VOTER OPTION
The voter-option proposal would be a part of HJR 1001 by Rep. Jonathan Barnett, R-Siloam Springs, the head of the Public Transportation Committee and a former highway commissioner.

Last week, Barnett explained aspects of his proposal, which could include a half-cent sales tax increase dedicated to pay back bonds for roads. You can access that interview at this link.

If referred by the legislature, Arkansans would vote on raising the tax in the 2012 general election.

Moore was reserved in sharing details of his plan, citing the need to talk to additional stakeholders before revealing all aspects of his proposal.

SEVERANCE TAX OPTION
His bill, which is expected to be filed next week, could include removing exemptions to Arkansas’ severance tax on natural gas. That vote could be complicated, however, as there will be debate as to the vote threshold needed to change the severance tax.

Raising the severance tax requires a supermajority of 75% of each chambers’ votes. Removing exemptions could be challenged by House or Senate members, and — depending on a parliamentary ruling — may require that supermajority of votes.

A proposal to siphon funds from the state’s general revenue coffers is likely off the table due to Gov. Mike Beebe’s staunch opposition to the concept.

There has also been discussion of indexing motor fuel taxes to allow them to fluctuate with inflation versus remaining static. That vote should only require a simple majority of 51 votes in the House and 18 in the Senate.

DIESEL TAX OPTION
Another simple majority vote could include a five-cent increase in the diesel fuel tax paid primarily by truckers. The association representing Arkansas’ trucking firms is seeking a concession in the sales tax paid on tractor and trailer purchases as a trade-off for the tax hike.

Moore acknowledged that trucker support would be crucial to his bill’s passage.

"Certainly, we are communicating with the trucking association leaders," Moore told Talk Business. "We want them on board. They are vitally concerned with repairs to the interstate. I believe our communication indicates that they are going to be willing to look at a reasonable increase that will be a part of the package."

A source within the trucking industry close to the negotiations confirmed that a 5-cent hike in return for sales tax reductions on trailers and other major equipment purchases is on the table. However, the source said trucking industry leaders would like some commitments on how revenue from the 5-cent hike would be used. Those commitments include:
• Adding another travel lane between Conway and Little Rock;
• Adding another travel lane into the West Memphis-Memphis area;
• Prioritizing rehab for interstate portions not fixed during the previous rehab program; and,
• Building or rehabbing roads that are being used.

“We want the money to follow the traffic,” the source noted. “We don’t want to a bunch of this money go to roads in south or east Arkansas just to promote economic development. … Don’t build a new four-lane road that goes to nowhere. Put the money where the traffic is.”

The source also said the trucking industry is making a sacrifice in the compromise because the freight environment does not allow for a 5-cent hike to be fully recovered through rate increases.

“That comes right off our bottom lines, right out of our cash flow. It’s a big hit. We can get some of it back in rate increases, but not all of it,” according to the source.

As for the steep challenge Moore faces in convincing enough legislative colleagues to advance his proposal, the House Speaker seemed undaunted.

"I don’t know that I can convince the majority of them, but I hope that I can convince enough of them to join the rest of us that see this as a matter that the only answer is raising revenue to meet this need. The only question is whether the 88th General Assembly will find the courage to step up and solve the problem or be a part of solving the problem," he said.