Municipal League Endorses Roads Programs

The Arkansas Municipal League’s governing board has "unanimously endorsed current efforts to fund the improvement of state highways and roads."

The AML represents more than 500 cities across Arkansas.

A press release from the organization issued Friday stated that the League supports a proposed ballot initiative being pushed by attorney Sheffield Nelson and forthcoming proposals from leaders in the Arkansas House of Representatives. 

"One of those efforts includes a proposed ballot initiative to simplify and increase the severance tax paid by natural gas producers. That initiative is being pushed by retired gas executive, Sheffield Nelson," said the AML release. 

Nelson’s initiated act proposal would raise the state’s severance tax to 7 percent and eliminate several loopholes in state law to provide an estimated $250 million for roads and highways.

The proposal is still being reviewed by Arkansas Attorney General Dustin McDaniel. If approved, Nelson would have more than a year to collect 62,507 valid voter signatures to put the issue to voters in November 2012.

The AML board indicated it would support other road programs that are being discussed, including a proposal backed by House Speaker Robert Moore (D-Arkansas City) for a tax increase for highways. Moore has yet to file a bill for the program, but says he will next week.

Also, former highway commissioner State Rep. Jonathan Barnett (R-Siloam Springs) is planning to file a proposed constitutional amendment for a half-cent sales tax for a bond issue for highway construction and maintennance. If referred by the state legislature, it could be on the ballot in 2012.

“Sheffield Nelson is working extremely hard to find ways to fund the repair of Arkansas’ roads," said Don Zimmerman, Executive Director of the Arkansas Municipal League.

"We’re equally pleased to learn that some of our legislative leaders are also focusing on this problem and are searching for new ways to generate the necessary money to make our roads safer and more dependable. It just makes sense that we should be looking to those gas-drilling operations to help restore our highways and roads.” said Zimmerman.

Cities in Arkansas would benefit from Nelson’s proposal. His measure outlines that cities would receive 15 percent of 95 percent of the proceeds collected from the severance tax for roads. Details of the legislative plans are not confirmed, but could likely include funding for local roads.

But not all city leaders are on board.

Talk Business has learned that Conway Mayor Tab Townsell and Morrilton Mayor Stewart Nelson both expressed opposition to the endorsement from the AML governing board although they do not sit on the panel.

"Mayor Nelson and I spoke against the proposal because it puts Arkansas at a distinct disadvantage to other states with shale gas," Townsell tells Talk Business.

"An honest comparison of other state taxes and exemptions shows that we are taxing natural gas fairly. The Marcellus shale in Pennsylvania has zero severance tax. This industry competes for drilling capital and equipment nationwide daily. Any version of this proposal will result in less investment, less jobs and less tax revenue for Arkansas," Townsell added.

Conway and Morrilton are two cities located in the western portion of Arkansas’ Fayetteville Shale play. Natural gas companies located in the region have expressed opposition to an increase in severance taxes.