Between the lines

Hutchinson brings end to tax revenue reroute for highways

Hutchinson brings end to tax revenue reroute

A resurrected idea to siphon money for highways from state general funds died more quickly than expected.

The bill won approval in a House committee just over a week ago and was poised for consideration by the full House when its sponsor pulled the bill late last week.

Apparently, there will be no test of sympathy for this means of highway funding in the more-Republican House or Senate. The legislation is done for the session.

Give credit to Gov. Asa Hutchinson.

He apparently persuaded state Rep. Dan Douglas, R-Bentonville, to abandon House Bill 1346.

Douglas' plan was to shift as much as $2.8 billion in general funds to highway use, taking an increasing percentage each year for 10 years until 100 percent of sales tax revenue from named highway-related items was redirected to highways.

This would have been tax revenue from items like new and used cars, batteries and other road-related items.

Mind you, the money still wouldn't touch the $20 billion or so that the state Department of Highway and Transportation estimates will be needed in the same time frame.

Officials project usual highway funding sources will produce only $3.2 billion in the next 10 years, so the department is in something of a financial free fall these days.

It is in part the result of more fuel-efficient vehicles, because the state's road users need less fuel and pay taxes on fewer gallons of fuel. Fuel taxes have long been the primary source of state funding of highways.

Another huge problem is that the federal government has effectively turned off the tap on federal highway funds, too. They are also derived mostly from federal fuel taxes that drivers pay at the pump.

There is no question the Highway Department needs more money to meet highway needs.

The question this session -- and in at least two previous sessions of the Legislature -- is whether that need is enough of a priority to take money away from other state needs. General funds have traditionally gone to education, prisons, health and human services and pretty much everything but highways.

The case for diversion of general tax dollars to highways simply hasn't been made. And Gov. Hutchinson couldn't accept the ramifications to the general fund budget this year.

After meeting with Rep. Douglas, the governor said on Thursday that he "made the case that now is not the right time for making significant adjustments in our balanced budget."

Hutchinson also said he understands the importance of the issue and he has 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."

The governor's office, asked for details, gave none on Friday. But Hutchinson can be expected to follow through on the promise.

He is after all from Northwest Arkansas, where the cry for highway funding is as loud or louder than from any other region of the state.

Hutchinson heard it when he was the 3rd District's congressman and he surely hears it today.

But this Republican governor, whose first term has featured a tax cut, may have trouble promoting a tax increase to provide more highway funds.

An increase may not be the only way to find new dollars for highways; but it is the most likely means, if the idea of a tax shift isn't going anywhere.

Douglas' bill proposed the tax shift, including a change in distribution of state severance tax receipts as a sort of trade for the better-producing sales taxes on road-related items.

For the record, the Bentonville representative's proposal was similar to bills offered two years ago by then-Rep. Jonathan Barnett, R-Siloam Springs and a former Arkansas Highway commissioner, and four years ago by former Rep. Duncan Baird, R-Lowell. Baird is Gov. Hutchinson's budget director.

Clearly, the desire for greater highway funding has been strongly represented in this area and in the governor's office.

It isn't so clear how this new governor's working group will differ from past studies of the issue, most notably by the Arkansas Blue Ribbon Committee on Highway Finance.

It churned out a lengthy report in 2010 that examined funding options and made recommendations, including a tax shift like the different lawmakers proposed in 2011, 2013 and this year.

Nevertheless, the challenge continues to find a way out of the ever-growing funding hole Highway Department is in.

It would help Arkansas and the rest of the country if federal lawmakers would address what is really a nationwide dilemma.

But that seems even less likely than an in-state solution to funding highways.

Brenda Blagg is a freelance columnist and longtime journalist in Northwest Arkansas. Email her at [email protected].

Commentary on 03/08/2015

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