Asa Hutchinson announced a proposal for funding the state's highway needs over the next 10 years without raising or adding taxes. Instead, he aims to pull money from existing sources.
Gov. Asa Hutchinson on Tuesday unveiled his plan to fund state highways — a plan he says will generate $750 million in new funding over the next decade.
Hutchinson’s plan won’t raise taxes, he said, but would instead divert sales tax revenue generated from the sale of new and used cars to highways. That revenue, which he said amounts to a user’s fee, would be phased in over five years and capped at $25 million.
More: View a breakdown of Hutchinson’s proposal here (PDF).
An unallocated surplus of $40 million would be devoted to highways in the plan’s first year. Half of that amount would be transferred from an unobligated surplus from the 2015 fiscal year, and the other half would come from the governor’s “rainy day fund,” which is available for Hutchinson to use at his discretion.
Hutchinson said “efficiency efforts” aimed at eliminating waste in state government and other budget savings will offset lost revenue.
Other dollars going to the plan, which do not include the tax and fee increases that were recommended by the Highway Working Group formed by Hutchinson, are:
- $4 million directed from general revenue for diesel tax collection, $2.7 million of which will go the state highway department. The remaining $1.3 million will be split among cities and counties.
- $5.4 million in sales tax revenue previously devoted to Central Services.
- 25 percent of the unallocated surplus in a given fiscal year, which will go to highways after basic budget obligations are met.
Hutchinson said he will work with lawmakers to come up with the “efficiencies” necessary to offset the loss from general revenue, and he expects two special sessions this year to move the plan through the Legislature. Hutchinson still said he would prefer one special session to deal with highways and medicaid expansion.
The governor noted that Arkansas remains unique among its neighbors in the annual percentage of general revenue funds devoted to highways.
In all, the plan would make the state eligible for $200 million in federal matching funds as part of the FAST Act signed last year by President Obama. The state must raise $46.1 million by Sept. 30 to meet the match.
“This is the first time in history we’ve made a meaningful contribution to highways,” Hutchinson said. “We’re not gonna have our cake and eat it too, but we’ll be able to fund highways in a conservative approach without raising taxes.”
Reaction
The Republican House speaker and Senate president said they believed Hutchinson’s plan would find support in the majority-GOP Legislature, but said they haven’t starting counting votes in either chamber.
The top Democrat in the House said he was grateful for Hutchinson not proposing tax increases, but had reservations about counting on surplus funds.
“If we have any hiccup in our state budget, that surplus may not be as large as it has been in the past,” House Minority Leader Michael John Gray said. “To count on that to always be there to fund is something that gives me a little concern.”
Hutchinson also warned that his plan is dependent on the Legislature approving his proposal to keep the state’s hybrid Medicaid expansion. Hutchinson has proposed adding new limits on the program, which is providing coverage to more than 200,000 people.
“This budget, with the surplus funds that are available that I can allocate $40 million to highway needs in our state, is not workable if we do not have access to the federal funds that are a part of the Medicaid expansion” he said.
(Andrew DeMillo of The Associated Press contributed to this report.)
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