Highway bill now just shy of Senate OK

Gov. Asa Hutchinson's highway-funding legislation won the endorsement of the Senate Revenue and Taxation Committee on Friday, while a competing bill failed to clear the House Rules Committee.

Friday's action set the stage for the Senate to consider sending Hutchinson's highway-funding legislation to the governor on Monday to complete action in the special session that started Thursday.

"I am not much of a betting man, but I think I would bet everything in my pocket that this bill is going to pass the Senate floor Monday," said the Senate Transportation, Technology and Legislative Affairs Committee chairman, Sen. Bill Sample, R-Hot Springs. He was referring to the governor's bill. Sample co-sponsored the competing bill by Sen. Jimmy Hickey, R-Texarkana.

The Republican governor's legislation would raise about $50 million a year in state funds to match an additional $200 million in federal highway funds available under the new federal highway law. The plan would cover a five-year period.

Hutchinson's plan wouldn't raise taxes. It relies largely on portions of general-revenue surpluses and increased investment earnings from the state's treasury.

Hickey's bill would essentially implement the first year of Hutchinson's highway-funding legislation and raise nearly $50 million in state funds for highways in fiscal 2017. Hickey said his measure is aimed at giving state lawmakers time to work on developing a longer-term funding plan during the 2017 regular session, starting in January.

Friday was the second day of the 90th General Assembly's third special session called by Hutchinson. The House and Senate resume meeting Monday morning.

Hutchinson later told reporters that he is very pleased with the legislative support for his highway-funding bill.

"It's cleared really every hurdle," he said.

"I'm awaiting a final vote in the Senate on Monday. We are not going to take that for granted. We're going work [on] that. We are very optimistic that it will pass on Monday," Hutchinson said.

In a voice vote, the Senate Revenue and Taxation Committee late Friday morning recommended that the Senate approve the House version of Hutchinson's highway-funding legislation -- House Bill 1009 by Rep. Andy Davis, R-Little Rock.

The tax committee's endorsement of HB1009 came after the Senate voted 19-14 to re-refer HB1009 from the transportation committee to the tax committee. The bill had just come from the House, which approved it 75-15.

A day earlier, the Senate version of Hutchinson's plan -- Senate Bill 11 by Sen. Bart Hester, R-Cave Springs -- failed to clear the Senate Transportation, Technology and Legislative Affairs Committee in a 4-4 vote. Before that vote, Hester's bid to re-refer his bill to the taxation committee fell three votes short in a 15-15 vote.

The Senate on Friday voted 18-10 to send Hickey's Senate Bill 12 to the House, where it then failed to clear the House Rules Committee. The committee is appointed by House Speaker Jeremy Gillam, R-Judsonia, and no committee member made a motion to recommend approval of Hickey's legislation.

Sample, who voted against SB11 on Thursday, said he would vote for the identical House Bill 1009 on Monday.

"I am not one to hold a grudge. You got to remember you can't make a list and cross things off because you may need that guy next week. I told [the governor] when we started down here that I wanted to make sure we come out [of] here with a bill and, if that's it, that's it," he said.

Sample said he doesn't know if, in the 2017 regular legislative session, he, Hickey and two other senators would resurrect their proposal to phase in an 8-cent-per-gallon increase in gas and diesel taxes for four years.

Hutchinson said there's always the potential for a longer-term plan with increased revenue for highways.

"Ultimately, if you want to have a longer-term approach, and fundamental reform and higher revenues ... for the highways, it is going to have to be a ballot initiative that is presented to voters," Hutchinson said.

Asked whether he is going to work on a longer-term plan to refer to voters, he said, "I think we need to let the dust settle after this session.

"I want people to have experience with it. I want them to be able to feel confidence that this meets the needs," Hutchinson said.

Earlier this week, Lt. Gov. Tim Griffin, a Republican, said he will oppose any proposed tax increases that get on the ballot.

"If we were to start our state govt from scratch today, it wouldn't look like it does," Griffin said in an email to this newspaper. "We need to reform our govt through innovation. Don't ask Arkansans for another penny in taxes until they can open the morning newspaper and not see another story about government waste."

HB1009 and SB11, which are identical, would create the Arkansas Highway Transfer Fund. The Highway and Transportation Department could use money with the approval of the governor and the Legislative Council.

The fund would include a transfer of $1.5 million in fiscal 2017 and $20 million in fiscal 2018 and following fiscal years from investment earnings on the state treasury's funds.

The bills would provide for a one-time transfer of $40 million from the state's rainy-day fund to the Highway Transfer Fund.

The state's current rainy-day fund balance is $30.6 million and there will be a $50 million transfer of surplus funds to the rainy-day fund on July 1 under the state's Revenue Stabilization Act, said Jake Bleed, a spokesman for the state Department of Finance and Administration.

The bills also would rename the Arkansas Rainy-Day Fund, which has existed for several years but was never funded, as the Long Term Reserve Fund to avoid confusion over which "rainy day" fund is being used, Bleed said. The Long Term Reserve Fund "would function as a fallback funding source in the event of an economic downturn," and its funding would come from the securities reserve fund, which comes from earnings on investments made by the treasurer, he said.

Under HB1009 and SB11, highways and roads would get the $8.4 million of a half-percent sales tax for highways that now goes to state central services, which includes money for constitutional offices, starting in fiscal 2017. They also would get $4 million from diesel taxes starting in fiscal 2018.

Starting in fiscal 2017, the bills also would provide that 25 percent of the surplus general revenues at the each of each fiscal year would be transferred to the Highway Trust Fund. Richard Wilson, an assistant director of research for the Bureau of Legislative Research estimated Wednesday that the state could have a surplus of between $160 million and $185 million in fiscal 2016 based on conservative budgeting and lower-than-expected individual income tax refunds.

The bills with the governor's plan also would create a 20-member Highway Commission Review and Advisory Subcommittee of the Legislative Council to review the Highway Commission's proposed rules regarding the criteria for distribution of funds and the spending priority designated for highway and road construction contracts. The subcommittee also would receive progress reports on construction projects costing at least $10 million.

Earlier this week, Davis, HB1009's sponsor, said the subcommittee will increase oversight of the Highway Department and allow lawmakers to get a better understanding of how the Highway Commission makes its funding decisions. He said the subcommittee wouldn't violate Amendment 42 to the Arkansas Constitution.

Amendment 42 states in part: "There is hereby created a State Highway Commission, which shall be vested with all the powers and duties now or hereafter imposed by law for the administration of the State Highway Department, together with all powers necessary or proper to enable the Commission or any of its officers or employees to carry out fully and effectively the regulations and laws relating to the State Highway Department."

Also known as the Mack-Blackwell Amendment, it was enacted in 1952 in response to allegations of corruption and favoritism. It was intended to insulate the Highway Department from political interference.

But Rep. Dan Douglas, R-Bentonville, said Friday he's leery of the provision that would create more legislative oversight of the Highway Department because he doesn't want to see Arkansas fall back to a past where the state's roads became a "political football."

"That's where it gets scary, where we start on down that slippery slope of being unconstitutional and violating the intent of [the Mack-Blackwell Amendment]," Douglas said. "Even though we've taken a lot of the politics out of highways we don't need to go back to it. Then we'll get into rural versus urban battles. We'll get into Northwest versus South. It'd just be a hell of a mess."

A Section on 05/21/2016