Road bill to skim revenue is pulled

For the third regular legislative session in a row, a bill that would have shifted as much as $2.8 billion over 10 years from general revenue to state highway maintenance is dead.

Rep. Dan Douglas, R-Bentonville, on Thursday formally withdrew House Bill 1346 from the House calendar after Gov. Asa Hutchinson said he would form a working group to develop recommendations on long-term highway funding.

"I would've liked to have seen the bill go forward," Douglas said. "But there were some budgetary concerns."

Just as with 2013 legislation to shift funds to highways, Douglas' version of the bill ran into a buzz saw of opposition from a variety of interests that rely on general revenue, including higher education and social-service organizations.

"It was the right call, especially given we've had significant tax cuts this session," said Rich Huddleston, the executive director of Arkansas Advocates for Children and Families who testified against the bill in a legislative hearing last month. "This bill would have put funding for programs for vulnerable children and families at risk."

But opposition from the Hutchinson administration also was significant. The administration argued that the bill wasn't factored into the governor's budget nor did it have consensus support. Larry Walther, the director of the Arkansas Department of Finance and Administration, was among those who testified against the bill at a Feb. 19 meeting of the House Public Transportation Committee, which still gave the bill its recommendation.

"I met with Rep. Douglas and expressed to him my appreciation for his work on a new highway funding formula," Hutchinson said in a statement released Thursday evening. "I made the case that now is not the right time for making significant adjustments in our balanced budget.

"But I do understand the importance of this issue, and I have committed to forming and leading a governor's working group that will include all the key parties in an effort to build a consensus on highway funding for our future."

Under the bill, a portion of the money from the sale of new cars and trucks and some road-user items would gradually be shifted from the state general budget to the Arkansas Highway and Transportation Department, which now relies chiefly on state and federal fuel taxes to fund highway construction and maintenance.

The shift would apply only to the portion of money that is over and above what came in the previous year and thus, proponents say, would not only preserve the base general revenue being collected but also allow general-revenue growth to be available to other agencies and providers.

In the first year, about $34.8 million would be collected from state general revenue and set aside for road construction, according to a Department of Finance and Administration fiscal review of the bill. The traditional split of highway money would be used with 70 percent going to the Highway Department and the remainder divided evenly between city and county road departments. The slice that roads would get by 2025 would grow to an estimated $548.4 million.

Two years ago, a nearly identical bill by former Rep. Jonathan Barnett, R-Siloam Springs, fell a vote short in the same committee. Former Rep. Duncan Baird, R-Lowell, now the governor's budget director, filed a similar bill in 2011 but it died in committee.

"I'm disappointed" to see the effort fail again, Barnett, a former Arkansas Highway Commission chairman, said Thursday. "This thing has been studied [already]. They want another task force. The results will be the same.

"The state obviously needs a highway bill. The need has never been greater to maintain the existing system. We're going to have to address it sooner rather than later."

Douglas tried to overcome opposition by winning agreement from state highway officials to shift revenue from the severance tax on natural gas -- an estimated $53 million next year -- to community colleges and workforce training. Most of that money now goes to highways.

Frank Scott Jr. of Little Rock, who was appointed to the Highway Commission by former Gov. Mike Beebe, opposed Barnett's bill before he got on the commission but backed Douglas' bill with the additional provisions, which he said showed that highway interests were willing to work with the bill's opponents and help provide a new source of funding for higher education.

Nevertheless, regarding Thursday's developments, Scott took the formation of the task force as a "positive sign" and said it would be different from the Arkansas Blue Ribbon Committee on Highway Finance, which had among its recommendations a version of Douglas' bill.

In the meantime, state highway officials will continue to struggle with balancing funding commitments with declining sources of revenue.

The Highway Department's traditional source of money -- fuel taxes -- is waning thanks to more fuel-efficient vehicles. They travel farther on less fuel than older vehicles. Other factors include rising construction costs and a growing gap between the amount of money available and maintenance and new-project needs, a gap state highway officials now peg at $16 billion over the next 10 years.

"The issue is still at hand," Scott said. "Gov. Hutchinson understands the needs of infrastructure development, the needs of roads and its critical place in economic development. In this case, he wants to spend more time looking into the issue" than can be done in a legislative session.

Federal transportation spending also is spotty. The Federal Highway Trust Fund has more spending authority than it has money available. With the trust fund projected to run out of money again before summer, Congress has been unable to agree on a permanent fix.

Because of this, the department already has postponed awarding contracts on eight projects totaling an estimated $58 million and canceled its $50 million annual overlay program. The overlay program is an interim maintenance measure designed to extend the life of highways to put off more costly repairs.

The Legislature has gone to bat for highways in recent years with temporary or short-term fixes. In 2008, it passed an increase in the severance tax on natural gas and earmarked 95 percent of the proceeds to road construction, which state highway officials use for road needs in the Fayetteville Shale, where traffic generated by natural-gas production has damaged highways.

Legislative actions led to successful elections in 2011 for renewal of a bond program to help finance a $1.2 billion program aimed at repairing interstates and in 2012 passage of a half-percent increase in the statewide sales tax to fund a $1.8 billion highway construction program aimed at easing congestion, at building more four-lanes and at other projects of regional significance. The tax is in place for 10 years.

Metro on 03/06/2015

Upcoming Events