Arkansas commission ready to release its highway funding strategy

Group is expected to ask for a general fund diversion as well as increases in taxes

News Arkansas News November 15, 2010
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The Arkansas Blue Ribbon Commission on Highway Finance is working on borrowed time, but that is far better than borrowed money.

State DOTs have been leaning on an increase in bonding during these troubled economic times, but the Commission in the home state of former President Bill Clinton might have a more feasible solution for highway funding. After asking for an extension on a final report that was originally due on July 1, the 19-member panel could be ready to release its recommendations later on this week.

Among the possible remedies are:

• Diverting proceeds from the state sales tax on vehicles and related parts and services from the general revenue to highway improvements;
• Indexing the gas and diesel excise tax with a three-year trailing average of the Construction Cost Index; and
• Imposing a new excise tax on the wholesale price of motor fuels.

The general revenue diversion and new taxes would be phased in over time, and the Commission also is recommending a bond issue for highway construction that would have to be approved by voters. The loan, however, would be repaid through a one-half-cent sales tax increase over 10 years, and could generate $1.7 billion in funds during its first five years of life.

“None of us are oblivious to the sort of economic situation that we are in and nobody is expecting anybody to run out there and want to raise taxes,” said state Sen. John Paul Capps, who is chairing the Commission. “We know that, but still that didn’t free us from the responsibility on that committee of trying to devise a new type of funding mechanism.”

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