Road agency sets up quick-action fund

Faster repairs linked to development

The Arkansas Department of Transportation has established its own quick-action economic development fund, seeking more nimbleness in helping attract new industry.

The Arkansas Highway Commission, which oversees the department, approved an order establishing what for now is a one-time fund of up to $15 million to pay for road improvements tied to economic development projects.

The money comes from a portion of the annual state revenue surplus that goes to the department under a 2016 state law.

Under Act 1 of 2016, the department receives 25% of the state’s general-revenue surplus, increased interest earnings from the treasury and several million dollars a year of reallocated state funds. The goal to provide $50 million in state revenue to match an additional $200 million in federal highway money that the department would not have been able to access without the state match.

The commission order establishing the fund noted that state surplus general revenue for the fiscal year that ended June 30 exceeded projections, “which resulted in additional funding being made available for highway improvements beyond what was anticipated.”

The department received $101.9 million in Act 1 funds for fiscal 2020, which began July 1. Of that, $73.8 million was from general revenue surplus.

The money is earmarked for road maintenance projects, typically asphalt overlays.

“We had scheduled some of that additional surplus for additional overlays,” Scott Bennett, the department director, said Wednesday. “Fifteen million dollars seemed like a reasonable amount” for economic development projects.

He based the figure in part on what other state transportation agencies did for economic development projects.

Before Wednesday, road construction connected to economic development projects had to wait in line because money the department receives is committed to projects scheduled out for four years.

“We have to schedule it along with all the regular projects in the state so if we’ve committed all of our revenue to projects in the state, which is what we do in our construction program, you can’t [pivot],” Bennett said. “You have to put it at the back of the line or you have to move things around.”

The department’s most recent project tied to economic development are improvements to a nearly 2-mile section of Arkansas 198 in Mississippi County, which leads into the Big River Steel complex.

Big River Steel announced in June 2018 that it would expand its operations near Osceola with a $1.2 billion investment that would double its hot-rolled steel production and result in the hiring of about 500 new employees.

The company opened its scrap-recycling and steel production the previous year after an investment of $1.3 billion.

As part of the incentive package, the state Transportation Department pledged to improve the section of Arkansas 198 east from U.S. 61. It is an older section of state highway with lanes that are narrower than standard and has no shoulders.

A contract for that project wasn’t awarded until July 2019. Some construction began last fall. It is expected to be completed in late spring or early summer, according to a department spokesman.

The $2.7 million project, awarded to Delta Asphalt of Paragould, will leave the section with 12-foot lanes and 4-foot shoulders.

Philip Taldo, a commission member from Springdale, insisted that the department draw up some guidelines before awarding any money.

“I’m not concerned about the money,” he said. “I was concerned about having a procedure in place for how requests would be made to us to keep us from having to make judgment calls on whether this entity or that entity is making an appropriate request.

“The way I understand it, the department is going to set up some guidelines as to the procedure we’re going to do. That’s pretty common to do it after the fact. That made me feel better about it.”