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The Last Word

We’re Gonna Do What They Say Can’t Be Done.

By Andy Davis, Guest Writer

After months of the Governor’s Highway Funding Work Group meetings, Governor Asa Hutchinson announced his proposals for additional highway funding to a large crowd on Tuesday January 19, 2016.

Some of the ideas presented in the working group are included in the Governors proposal. The plan includes transferring $4 million ($2.7 to the state, $1.3 to cities & counties) in existing diesel taxes from general revenue back to highways, $5.4 million in revenue from the ½ cent sales tax approved by voters that is currently directed to the central services fund. That is the fund that pays for elected official’s offices.

Another $25 million in new and used car sales tax money would be phased in over 5 years and $40 million of one-time money from his current surplus funds in FY16. In future years, he is asking the legislature to dedicate 25% of surplus revenue, or general improvement funds, to highways each year. The amount of this surplus provided to highways would be variable year to year, but over the last ten years 25% of surplus would have averaged $48 million per year. Using that figure, accounting for the 5 year phase in, considering that the $5.4 million expires in 2023, and some political license, the Governor’s proposal would generate about $75 million per year, and allow the Arkansas Highway & Transportation Department (AHTD) to access two billion dollars in additional federal funds over the next ten years. You’ll have to trust my math on that.

This proposal sets two notable precedents in Arkansas highway funding policy. The first is that thanks to the efforts of everyone involved, we will increase highway infrastructure investments without raising taxes. The second is the first sizable contribution of general revenues (non-fuel tax revenue) to the state’s highway system. Regardless of whether you think it would be good timing, or good policy, to raise fuel taxes, the fact is that any proposal to raise taxes is not getting though this Republican-controlled legislature.

The second precedent is even more notable in my opinion. For the first time, general purpose revenue will be used for highway expenses in addition to user fee revenue sources like fuel taxes. Along with this shift in policy should come additional policy changes aimed at verifying the best possible use of these general funds in addition to the other hundreds of millions collected and spent on highways each year. The Arkansas Constitution provides that the Highway Commission is the chief executive over the highway department, but it does not isolate the commission or the department from legislative oversight. Since one of the primary roles of the legislative branch is to keep a watchful eye on the budget, shouldn’t it do that? Certainly now that general revenues will potentially be spent on the state’s highways, the time has come for legislative oversight of the funding process and execution of funded projects in this state.

The state highway department isn’t the only entity that taxpayers should expect the legislature to oversee when expending highway money. Local governments currently receive over $200 million annually for local streets, roads and bridges. However, there is not an adequate accountability system in place to verify those funds are used as intended.

The Governor’s funding proposal is the right plan for today’s needs using today’s resources. In the future, additional resources could be available, and even more general revenue could be on the table for state and local road needs. Now is the best time to address reforms in highway funding policies that do not include new dollars, but should be addressed before the legislature agrees to additional spending.

New highway funding including smart general revenue transfer, putting highway money into highways, and getting more for our existing dollars, without raising taxes. We’re gonna do what they say can’t be done.

Andy Davis is a Republican member of the Arkansas House of Representatives. He also served on the Governor’s Highway Funding Working Group.

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