Audit confirms highway funding needs

Agency requires $478 million a year to build, maintain roads, bridges, report says

A special report by the Arkansas Legislative Audit confirms Arkansas Department of Transportation's assertions that its construction and maintenance program for roads and bridges requires additional revenue of more than $400 million annually.

The report, which is expected to be presented at Friday's legislative audit meeting, comes as the Arkansas Highway Commission moves closer to a decision on whether to place a proposal to raise the additional revenue on the 2018 election ballot.

The amount the department needs -- $478 million, according to the report -- is higher than the $400 million the agency has used as a goal for additional annual long-term funding. The smaller number was developed by the Governor's Working Group on Highway Funding.

"It's a real number," said commissioner Philip Taldo of Springdale of the figure developed by the legislative audit staff. "Where did that number come from? Right here [in the report]."

Several legislators sought the legislative audit report to address skepticism about the department's budgetary woes. The agency has struggled to raise enough state money to match all the federal transportation money that is available to the state.

"The Highway Department, they keep saying, 'We need money,' but a group of people have questioned the numbers," said Sen. Jimmy Hickey Jr., R-Texarkana, one of the lawmakers who asked for the report, which he said is an independent assessment of the department's figures.

The special report said the methodology used to prepare the report was "developed uniquely to address the stated objectives" and therefore was "more limited in scope" than a formal audit, which is performed in accordance with more stringent government auditing standards.

But all the revenue and expenditures related to construction and future federal funding were "tested for accuracy and reasonableness" by the audit staff, according to the report

The report found that the state has available about $447 million annually for highway construction, but has needs totaling $925 million, leaving the shortfall of $478 million.

Highway construction includes pavement and bridge preservation, capacity relief, safety improvements and maintenance.

The money discussed in the report excludes two road construction initiatives that total $3 billion.

The interstate repair program accounts of $1.2 billion of that total. Voters approved reissuing up to $575 million in bonds to help pay for repairs to the interstate system.

The Connecting Arkansas Program is a $1.8 billion road construction initiative focusing on regionally significant projects. Voters backed it when they approved a temporary half-percentage-point increase in the statewide sales tax in 2012. The tax is in place for 10 years.

At a commission meeting Wednesday, members agreed to adopt the higher audit report number as they continued to fashion a proposal they could place before voters.

They have given themselves until next month to submit the actual ballot language to the attorney general's office for approval in January and until July to gather signatures on petitions. An initiated act requires 68,000 signatures of registered voters to be placed on the ballot.

Scott Bennett, the director of the Highway Department, said the new amount means that any initiative the commission undertakes would have to raise $682 million to take into account the amount of highway funds that cities and counties share.

Traditionally, cities and counties receive 30 percent of every state transportation dollar with the state retaining the remaining 70 percent.

Bennett and the commissioners discussed several scenarios to raise the funds, which Bennett said likely would have to come from more than one source.

Commissioners wanted to hear from key stakeholders, including the Arkansas Chamber of Commerce, the Arkansas Municipal League and the Association of Arkansas Counties before they committed to any particular funding.

The most likely revenue sources include transferring the existing sales tax on new and used vehicles as well as repairs and parts, which would raise an estimated $302 million annually. Also on the table is raising the motor fuel tax. Each 1-cent increase raises an additional $14 million annually.

Both likely would be phased in, Bennett said.

But commissioner Alec Farmer of Jonesboro said pursuing the initiative is not a sure thing.

"The governor made the recommendation so we have to look at it seriously," he said. "I don't know how I would vote right now. We are still just trying to gather information. We are pursuing as if we are going forward with it, but that decision hasn't been made yet."

It is uncertain at this point whether the commission will pursue the initiative.

Metro on 09/07/2017