BETWEEN THE LINES: Issue Sets New Funding Approach

There’s more to the highway tax proposal on next month’s general election ballot than may be obvious.

The campaign for the proposal is all about what the half-cent sales tax would do for the Arkansas highway system. But the ballot issue authorizes a major departure in state tax policy, allowing use of a sales tax for highway construction.

If the measure is successful, the state or your city or county may find it more diff cult the next time it needs to pass a sales tax for some other more general purpose.

Because sales taxes pass the state Legislature more easily than other revenue measures that require larger voting percentages, Arkansas has long relied on sales taxes for a quick revenue fix to pay for public schools or prisons or human services, all of which are huge elements of the state budget.

Highway funding has come from fuel taxes and license fees, all dedicated revenue generated from highway users. Those revenues flattened out as drivers have chosen to drive less or replaced gas guzzlers with more fuel-efficient vehicles.

Add to that a reluctance from the U.S. Congress to hike federal levies or increase federal funding for highways. The resulting frustration for Arkansas’ highway planners led to the Arkansas Legislature’s decision to refer Issue No. 1 to voters.

This is such a change in past practice that a constitutional amendment is required. The details are spelled out in a 16-page resolution passed by the Legislature that would become effective only if voters approve the measure. Check the secretary of state’s website at the links for elections and for initiatives and referenda to read the entire proposal.

Boiled down, it provides for a half-cent temporary sales tax to be levied beginning July 1. Proceeds are to be divided among the state (70 percent), cities (15 percent) and counties (15 percent). The state’s part is to pay oft a bond issue of no more than $1.3 billion for improvements to four-lane highways. The cities and counties will split about $670 million in additional turn back for local street and road projects.

The tax is to expire in 10 years, when the bonds will have been paid oft ; but scheduled roadwork could be complete in fewer years.

Madison Murphy, chairman of the Arkansas Highway Commission, acknowledges that a lot of these new dollars will be spent in central Arkansas and in Northwest Arkansas, where the highway department has identified costly four-lane projects to ease heavy regional congestion.

Almost one out of four of the new highway money would go to Northwest Arkansas alone, he recently told a Springdale audience. But Murphy said he delivers the same message statewide because the new tax revenue and related bond issue will solve priority problems on the state’s four-lane system, freeing other state revenue for secondary road improvements.

Wherever he goes, the natural question from voters is “What’s in it for me?” Many details, including projections for individual city and county revenue as well as listings of four-lane projects in every region of the state, are available online at MoveArkansasForward.com.

The overriding decision Arkansas voters face comes down to these questions: Are these four-lane highway improvements worth a half-cent sales tax? And are they important enough to trump whatever other pending need the state or its localities might have that would also require passage of sales taxes?

Whatever the planned use, Issue No. 1 is not only a 10-year tax increase but also a significant change in tax policy in Arkansas. It is not just about the money for state and local road improvements and deserves a close look.

BRENDA BLAGG IS A FREELANCE COLUMNIST.