Arkansas Trucking Association

Highway Dollars and Sense: Why the Choice is Yours

Why the choice is yours

Ed. note: In November 2020, Arkansas voters will have the power to decide if the state should keep collecting a half-cent sales tax in order to raise over $205 million annually for state highways and bridges, plus an additional $43 million each for counties and cities. Leading up to the election, we’ll be covering the history and potential impact of that decision. We encourage you to educate yourself before you vote and to help educate your friends, family, neighbors and coworkers who will help Arkansas make critical choices about our state’s infrastructure. Read part 2 of this special series "Highway Dollars and Sense" on why the roads in Arkansas have been essential to our way of life on an average Monday and in the middle of a crises.

Last spring was a big win for roads in Arkansas.  You probably heard Gov. Hutchinson claiming to have signed the biggest highway bill in the state’s history. It’s true. In a bipartisan effort, the executive and legislative branches came together with major stakeholders (like Arkansas Farm Bureau, The Poultry Foundation, Arkansas Municipal League, Arkansas Association of Counties and Arkansas State Chamber of Commerce) to find a way to start closing the gap between the amount we have and how much it really costs to maintain and develop the transportation infrastructure that connects our 75 counties to each other and the rest of the world. The Arkansas Department of Transportation estimated the gap to be $478 million.

One reason the funding has not kept up with the costs of maintaining infrastructure is that the highways are funded through dedicated revenue that comes from sources like the fuel tax (which has not increased, despite inflation, since 1999). On the other hand, general revenue, which leadership has reserved for other vital services like public schools, has increased by more than $2 billion in the last 20 years since the fuel tax was raised.

Shannon Newton, president of the Arkansas Trucking Association, says the amount to make a real impact would have to be at least $300 million annually dedicated to the ArDOT for state highways. If the Governor could find a way to put $300 million each year into caring for the state roads we all put our lives on every day, then the trucking industry would walk behind him.

So he did, and trucking supported him.

The solution came in two main parts. The first part is a bill he signed into law in April 2019 that increases the gas and diesel taxes, collects taxes from the state’s brand new casinos, and implements the first registration fees on hybrid and electric vehicles. The result is expected to be $95 million each year to ArDOT. The second part of the solution is making permanent a half-cent sales tax that Arkansans already pay, but which is set to expire in 2023.

The bill.

Before you head to the polls to approve extending that sales tax, you should understand where the rest of the money is coming from and why lawmakers are leaving the final decision on how well-funded, safe, and future-proofed you want your state, county, and city roads to be.

First, there’s the fuel tax increase (3 cents/gallon for gas, 6 cents/gallon for diesel) which began being collected on Oct. 1, 2019 and is expected to raise $58 million/year for the state.  The future of this tax is tied to inflation and can increase as much as one tenth of one cent per year. The fuel tax is the most efficient way to raise money that supports infrastructure because it’s a user fee that has very little administrative costs. Over 98 percent of dollars raised at the gas pump goes right back into the roads.

In November 2018, voters passed a constitutional amendment to allow four casinos in Arkansas. This is a brand new opportunity for highway revenue. The Arkansas Department of Transportation will receive at minimum $35 million from casino taxes. So far, three of the four casinos have opened their doors.

Finally, when fuel taxes increased on October 1, the state also began collecting registration fees on hybrid and electric vehicles. Arkansans driving electric vehicles pay $200 and plug-in hybrid vehicles pay $100. The EV fee is expected to raise just $2 million annually. One limitation of the fuel tax is that it is only a user fee for drivers who use fuel. As technology allows more commuters to use the highways without using fuel, the EV fee will offset the fuel taxes and provide an alternative way for those drivers to contribute to the highways that they use.

According to Arkansas Department of Finance and Administration (DFA) spokesperson Scott Hardin, when the new fee was implemented in October, there were 802 electric vehicles and 18,777 hybrid vehicles registered in Arkansas, The DFA projects the increase on hybrid and electric vehicles will raise about $1.9 million in its first full fiscal year.

The voters.

One thing to keep in mind when you think about the half-cent sales tax is that it isn’t new. On Feb. 2, 2011, Arkansas House Speaker Robert Moore asked his fellow lawmakers to consider referring a measure to the ballot for Arkansas voters to approve a constitutional amendment to collect a half-cent sales tax (which excludes food or food ingredients) for 10 years that would pay for a four-lane highway system statewide.

The funds raised would be divvied up between state highways (70 percent), county roads (15 percent) and city streets (15 percent.)

Both chambers approved, and on Nov. 6, 2012, voters were in favor (58 percent). We are seven years into that ten-year program.

Because voters approved the sales tax then, the Legislature thought it was appropriate for voters to have the power to let the tax expire or to make it permanent and continue using those funds for the roads we still need maintained and the future infrastructure that will support growth and safety in the state.

The decision stays in the hands of the people who approved the sales tax in the first place. It will be on the 2020 November ballot as Issue 1.

The odds.

According to Ballotpedia, from 1996 through 2018, the state legislature referred 28 constitutional amendments to the ballot. Voters have approved 22 and rejected six—about 78 percent have been approved in 20 years. All of the amendments were referred to the ballot for general elections during even-numbered election years.

Gov. Hutchinson launched the campaign, Vote for Roads. Vote for Issue 1. in November. Attorney General Leslie Rutledge has endorsed the issue.

General Rutledge said, “Each year I travel to every corner of this great State and I know, first-hand, the problems with Arkansas roadways. It is not enough to be aware of the problem or talk about the problem. It is about funding to solve the problem. I have heard from county judges, mayors and Arkansans and I support Issue 1 because I will not rob our State of the projected $8.6 billion in economic activity it would generate over the next decade.” 

Polling data tells us people really are already spending money because of pot holes and car maintenance issues from poorly maintained roads.

With the support of state leadership, Arkansas may see the largest highway bill come to fruition after all, but it will take a lot of educated voters understanding how state infrastructure is the bedrock of safety, economic progress and the quality of life in every community.

At Arkansas Trucking Association, we encourage you to make sure you are registered to vote, know your polling place, and learn about the issues this year.

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Part 1: Why the Choice is Yours

Part 2: Mythbusting and Life Saving on the Essentiality of Open Roads