Panel to focus on roadway funding

— A committee formed to find more taxes or fees for road construction took five months for its efforts to come into focus.

The previous meetings of the Arkansas Blue Ribbon Committee on Highway Finance generally examined the scope of the problem at the state, county and local level.

"We are beginning to find a way to come up with some definite proposals," state Sen. John Paul Capps, D-Searcy, chairman of the Arkansas Blue Ribbon Committee on Highway Finance, said at its monthly meeting last week. "I think fairly soon we will start seeing some results of our deliberations."

The focus came from two subcommittees formed to delve into the two different approaches to raising money - new taxes or shifting taxes already on the books. They met separately for the first time last week and reported on their deliberations to the full committee.

Both subcommittees appeared to agree that the $200 million in new money the Arkansas Highway and Transportation Department said it needs every year to maintain 16,000 miles of state roads should be the floor. The state already receives a sum approaching $1 billion annually in state and federal tax money for state road maintenance, construction and nonconstruction related work.

The committee must "not be satisfied just to meet the $200 million ... but go beyond that," said state Rep. John Lowery, D-El Dorado, who runs Lowery Oil Co. and is a member of the committee.

The 19-member panel began meeting in May to develop recommendations for the 2011 regular meeting of the General Assembly. Act 374 of 2009 created the Arkansas Blue Ribbon Committee on Highway Finance to define an adequate system to pay for improvements on state highways, county roads and city streets.Under the law, the committee must submit its initial report and recommendations to the governor and others by July 1, 2010.

The state has nearly 100,000 miles of state, county and city roadways, and ranks 17th in the United States in terms of mileage. Arkansas highways account for 16 percent of the total mileage, or 16,248 miles, a system that ranks 12th in the nation but only 41st in terms of revenue per mile.

State roads carry most of the traffic, 77 percent. County roads account for the bulk of the public road system in Arkansas - 68,832 miles, or 69 percent - but carry just 9 percent of the traffic. City streets total 14,551 miles and account for 15 percent of the public road system. They carry 14 percent of the traffic.

State needs in road improvements and new highways requested alone account for nearly $19.1 billion in costs over the next decade while the money available to meet those needs will total just $4.1 billion, according to the Highway and Transportation Department projections.

The problem is similar nationally, according to the Council of State Governments, which said current highway spending totals $70.4 billion annually when $186 billion in spending is required for needed improvements every year.

The new revenue subcommittee is headed by Jim Mc-Kenzie, executive director of Metroplan, the central Arkansas transportation planning agency. The group preferred to focus on user-based taxes rather than general taxes, but would consider the latter if user-based taxes fall short of what the committee believed the state's roads needed, he said. Its members also preferred to concentrate their funding on state highways, assuming the traditional split of highway revenue - 70 cents of every dollar to the state, with cities and counties sharing the remainder.

The subcommittee also started looking at specific taxes.

They included increasing the excise tax on gasoline and diesel - 21.7 cents and 22.7 cents per gallon, respectively - though previous testimony has acknowledged that the revenue it generates has not kept pace with the state's road needs. More fuel efficient vehicles have led to automobiles traveling more on roadways while paying the same in fuel tax receipts. Nationwide, fuel taxes represent less than a quarter of revenue devoted to state highways, according to The Council of State Governments.

The Highway and Transportation Department receives about $418 million annually from the excise tax on motor fuels. The agency nets about $292 million after cities and counties receive their share of the revenue - about $63 million each. Increasing the tax by 1 cent per gallon would net the Highway and Transportation Department an extra $14 million annually, and cities and counties would see an addition of about $3 million annually.

Also on the subcommittee's agenda to consider, according to McKenzie, are repealing the sales tax exemption on the sale of motor fuels; a tax based on the number of miles a vehicle travels; and a weight-distance tax, which focuses on heavy trucks.

Repealing the state sales tax exemption would raise about $226 million annually for state, county and city roads. A weight-distance tax of 1 cent per mile would raise about $26 million a year.

McKenzie suggested that reaching a consensus within the subcommittee wouldn't be easy. "We've had energetic discussion on a number of points," he said.

Meanwhile, the subcommittee looking at shifting existing revenue, is concentrating on transferring the 4.5 percent state sales tax on new and used vehicles, which would raise about $160 million a year for the Highway and Transportation Department and about $34 million annually each for counties and cities. Transferring the sales tax on auto repair parts and service would yield another $126.5 million a year to the department with counties and cities receiving another $33.9 million apiece every year.

Lowery, who heads the subcommittee, said those items represent the "most obvious" choices to shift to the Highway and Transportation Department. If such a shift of general revenue was to be contemplated, he said, it would mean new standards of accountability not only for the Highway and Transportation Department but cities and counties as well.

"We're not limited to this, but they make the most sense," Lowery said.

Still, he acknowledged the political problems associated with taking away money dedicated to education, human services and prisons.

"The big question is, if we move forward with this, how do we phase this in - something that's doable, achievable," Lowery said.

Northwest Arkansas, Pages 7, 9 on 09/21/2009

Upcoming Events