Proposed Arkansas Highway Plan Would Raise $300M Per Year

Gov. Asa Hutchinson explains a $300 million highway funding plan that includes the permanent extension of an existing half-cent sales tax for highways.

Gov. Asa Hutchinson and legislative leaders on Monday unveiled a $300 million per year plan to maintain Arkansas’ roads and bridges — one billed as the largest single highway proposal in the state’s history.

The bulk of the plan — a permanent extension of an existing half-cent sales tax for highways — would be up to Arkansas voters. Legislators must vote to refer the matter to the November 2020 ballot. The tax, enacted in 2012 and now set to expire in 2023, raises $205 million per year.

The remaining $95 million would come from a mix of sources that legislators must approve:

• An indexed tax hike on gasoline (3 cents per gallon) and diesel (6 cents per gallon) that would raise $58 million per year.
• New registration fees on electric and hybrid vehicles that would raise $1.9 million per year.
• Tax revenue from Arkansas’ new casino gaming centers that would raise at least $35 million per year.

The plan would also raise $110 million a year for cities and counties to maintain local streets.

More: See notes on the highway plan and elements of the highway package, issued by the governor’s office.

In addition to primary road maintenance, the governor said the plan in its first 10 years would be able to provide money for bridge replacements, maintenance for secondary roads, safety improvements, interstate maintenance and new lane capacity.

The Republican governor said the plan is “the top-dollar” amount that Arkansas can afford.

“This plan achieves the right balance,” he said. “It is affordable, it is prudent for our budget and it is reasonable.”

The $300 million proposal was endorsed by the Arkansas Trucking Association and the Arkansas Good Roads Foundation, whose representatives spoke at a news conference at the state Capitol to unveil the plan. Both have long advocated for a long-term solution to the state’s highway funding needs.

In a statement after the news conference, ATA President Shannon Newton said ATA members were pleased “to see decisive action” by the Legislature and the executive branch.

“The trucking industry currently pays 46 percent of all taxes owed by Arkansas motorists, and we are willing to pay more,” she said. “We believe doing so will create a safer workplace for our drivers, better maintained infrastructure for our equipment and improve our ability to meet the demands of our customers.”

State legislative leaders also backed the plan. House Speaker Matthew Shepherd and Senate President Jim Hendren, both Republicans, said they were confident the proposal would find support in both chambers.

The plan comes as the governor’s tax cut plan, already approved in the Senate, begins working its way through the House. Some legislators have criticized the tax cut and wanted highways to take precedence. Others have said it’s necessary to approve the tax plan before working on the highway bill.

On Monday, legislative leaders indicated that having a highway plan on the table would expedite approval of the tax cut plan.

Hutchinson said a draft bill of the highway plan is under study. He said it’s possible it would be filed this week.

Arkansas highway officials have said the state needs up to $478 million to adequately maintain current roads and bridges and keep up with future needs. Hutchinson said before the start of the legislative session that he’d like to see a highway plan worth at least $200 million.

Lawmakers in 2017 rejected a plan to put a 20-year bond issue on the ballot and raise $200 million annually for the state’s highways. The measure failed when some Republicans opposed an accompanying bill to raise taxes on gas and diesel to pay for the bonds. The state Highway Commission last year dropped an effort to put its own plan on the 2018 ballot.

Watch Video of the News Conference