ArDOT Takes Hit, but Jobs Keep Rolling

A joke circulating in these stay-at-home days of the COVID-19 pandemic tells of a motorist bragging that he is now getting three weeks to the gallon.

It makes light of how much travel has been curtailed, starting in March with school closures and continuing as employees were either laid off, furloughed or transitioned to working from home. Then as the pandemic grew in Arkansas, many summer vacation plans were canceled.

The Arkansas Department of Transportation, like its counterparts in the other 49 states, probably isn’t laughing; it depends on gasoline- and diesel-tax revenue to fund a large portion of its infrastructure projects.

ArDOT said fuel-tax revenue — excluding that generated by a per-gallon rate increase — dropped about 5.25% in the first six months of 2020 compared with the same period in 2019.

The modest overall decline hides the drastic drops during the past three months. April 2020 saw a 6.23% drop in revenue (from $24.6 million to $23.1 million), followed by a bottoming out in May when revenue fell to $19.4 million, down more than 20% from $24.3 million in 2019.

June 2020 showed better numbers with $23.4 million, which was still nearly 11.5% below June 2019 revenue of $26.4 million.

“The problem is our revenue stream is so tied to motor fuel consumption — gas and diesel — which is directly tied to miles traveled,” said Randy Ort, ArDOT’s chief operating officer and spokesman. “Two-thirds of our traditional revenue comes from a consumption-based tax, and it is everybody’s goal to reduce consumption. We took a hit, and we are seeing it start to come back now.”

Ort said personal travel in the state dropped as much as 40% at times and truck traffic dropped 10%. Fortunately, Ort said, it looks as if travel miles in the state are rebounding.

Ort said none of the state’s ongoing construction projects have been stopped, although work was temporarily postponed on several for safety reasons. So far, ArDOT doesn’t think future infrastructure projects will be affected by the pandemic, although that chiefly depends on how much longer COVID-19 continues to affect Arkansas and how severe those effects are.

“If we receive revenue numbers and they are not trending in the right direction, we might have to look at some future projects and readjust,” Ort said. “We are hoping we don’t have to do that.”

Act 416

Last March, the state Legislature passed and Gov. Asa Hutchinson signed Act 416, which increased the tax on gasoline by 3 cents a gallon and the tax on diesel by 6 cents a gallon.

In fiscal 2020, which ended in June, ArDOT collected $35.8 million from the higher rates over the nine months it was in place.

The act is one reason ArDOT is confident it will survive the drop in fuel use, because the higher rates help offset the lower volume. The department has been able to maintain its project work schedule thanks to the extra $26.2 million the higher tax rate has generated in the first six months of 2020.

The department tallies Act 416 revenue separately from the original fuel tax because the Legislature requires specific accounting of the revenue’s use. But while the act revenue has helped soften the blow, the pandemic’s effect on fuel consumption has resulted in much lower revenue figures than the department had expected.

The passage of Act 416 was the first of two steps Hutchinson planned to boost the department’s funding. The second, and more lucrative, step was the permanent extension of a half-cent sales tax first implemented in 2013 and set to expire in 2023.

The constitutional amendment to make that tax permanent is on the ballot in the November 2020 election. The state predicts it will generate $205 million annually for state highways.

The amendment’s passage is critical for the department, which has said it needs an increase of $400 million annually to adequately maintain and upgrade the state’s road infrastructure.

Operation Virus

When the pandemic hit, the department implemented its “continuity of operations” protocol. ArDOT has plans in place to keep working whether a pandemic hits or a massive earthquake or an accident at Nuclear One in Russellville.

“We have been living by that since mid-March,” Ort said.

Office workers who could were sent to work from home, but many of ArDOT’s employees did not have that luxury. ArDOT engineers, maintenance crews and supervisors stayed at work in the field; major construction projects can’t progress without ArDOT supervision, either.

“They cannot work if we’re not out there to inspect their work,” Ort said. “We felt it was very important that we keep working, both our maintenance crews to keep the roads safe and our construction crews to keep that segment of the economy going. We saw the importance of a good transportation system and network because commerce kept moving.”

Fresh Isolated Air

Robert Gillis is the co-CEO of Emery Sapp & Sons of Columbia, Missouri, the primary contractor for the Bella Vista Bypass in north Benton County.

The multiple projects total slightly more than $100 million and are scheduled to be completed in the fall of 2021. When one of his employees tested positive for the virus just before Memorial Day, Gillis shut down the sites for a few days with ArDOT’s blessings.

Ort said the department decided to treat pandemic-related work problems as a “weather delay” as allowed in contracts.

“The director has been very clear that the DOT will treat any impact related to COVID in a fair and appropriate manner, and I haven’t seen anything to the contrary,” Gillis said. “It is something that I would expect. It is putting your money where your mouth is. If you’re going to say we put safety first, then we really should. They are doing that.”

Gillis said the temporary delay would have no effect on the project’s scheduled completion because a construction worksite has its own built-in social distancing. Workers limit interaction and reduce equipment sharing, and being outdoors helps lower infection risks.

“When we are working we are able to keep right on working,” Gillis said. “For the most part when you’re working outside and you’re doing construction, you’re socially distanced anyway. It’s not very often you’re in each other’s space.”

Ort said the reduction in traffic has presented one opportunity: It is easier in some cases to do maintenance work or overlay a road. Some work is being done in the daytime — which had been avoided because of high traffic — rather than over the course of several nights.

“We did that on a case-by-case basis,” Ort said. “There were many jobs around the state that we were able to extend hours. That doesn’t save money because the contracts are in place, but it can save time.”

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Fuel Tax Revenue