General revenue for roads a no-go, governor says

Gov. Asa Hutchinson said Tuesday that he would “vigorously oppose” any effort to use Arkansas general revenue for road construction, saying he wanted to protect any growth in general revenue for other government services and possible income-tax cuts.

The governor’s remarks rattled members of the state Highway Commission, which is to convene today in what had been shaping up to be a pivotal meeting to decide whether to pursue a ballot initiative for the 2018 general election to raise more than $400 million for road construction.

Last month, the Arkansas Department of Transportation’s director, Scott Bennett, said that much money would have to come from more than one source. The options on the table included raising the state tax on gasoline and diesel, as well as transferring the sales tax on new and used vehicles. Other states treat the latter as road-user revenue.

The commission chairman, Dick Trammel of Rogers, said Hutchinson’s stance likely would make a “big difference” on what options the commissioners might consider in fashioning an initiative for 2018.

“I don’t know the answer,” he said. “I don’t think anyone knows.”

Tom Shueck, a commission member from Little Rock, said Hutchinson’s comments definitely would

affect the commission’s deliberations, which Shueck said could extend beyond today’s meeting and into November.

“We’re running out of time,” he said. “But he’s the governor. You have to pay attention.

“He’s got his needs and we’ve got our needs. Hopefully, we can come together and work it out.”

The governor’s comments even left Philip Taldo of Springdale, whom Hutchinson appointed to the commission last year, taken aback.

“I knew he wasn’t in favor of that,” Taldo said, referring to the general-revenue transfer. “I didn’t know how adamant he was about it. That’s something to consider moving forward.”

Hutchinson said Tuesday that he wanted to leave no doubt where he stood.

“I want to be very plain-spoken today, both to our legislators but also the highway department and others who are considering how we should develop the second phase of our highway plan, that I will vigorously oppose any plan that taps additional general revenues from our revenue stream,” he told reporters summoned to his office.

“Those are funds that are necessary for education, for public safety and for all the other needs of our state and so I say, no, we cannot divert that general revenue stream that’s needed for education, higher education and other needs over highways,” Hutchinson added.

“That is an important principle. It bears underlining and emphasizing today as different groups look at the new potential for a highway plan

in the future.”

Granted, the governor said, he made an exception last year when he diverted some general revenue to the Transportation Department to help the agency with the state money to qualify for an extra $200 million in federal funding that was made available. The federal government typically requires states to come up with 20 percent of every federal dollar available for road construction.

“Through the Arkansas Highway Improvement Plan, in a special session last year, we approved for the first time in modern history a portion of general revenues, but it’s limited to being used to make that match,” Hutchinson said. “I think it was the right thing to do then.”

“Always before it had been sacrosanct, not been touched,” he said.

Hutchinson also dismissed the way the Transportation Department has proposed fashioning the measure. The department wouldn’t take its portion of the general revenue all at once but rather have it phased in to where it protects existing allocations of general revenue, which would grow as well.

“I think they estimate $78 million and graduating over time to the larger amount, perhaps $300 million,” he said. “But whatever figure you take, it dramatically impacts not only the current services that are offered, but it also eliminates the potential for utilizing growth revenue for reducing the income tax rate in Arkansas down to what I believe is important.

“So they’re basically saying it is not going to hurt general revenues that much because we’ll grow our economy and it will be gradual. Well, we want to use that growth revenue as an opportunity to reduce

the tax rate or do other things in state government.”

The governor’s comments come as the commission tries to grapple with what an Arkansas Legislative Audit report identifies as $478 million in additional revenue to meet department road maintenance and construction needs.

The special report released last month said the state has available about $447 million annually for highway construction, but has needs totaling $925 million.

Highway construction includes pavement and bridge preservation, traffic congestion relief, safety improvements and maintenance.

The money discussed in the report excludes two road construction initiatives that total $3 billion.

The interstate repair program accounts for $1.2 billion of that total. Voters approved reissuing up to $575 million in bonds to help pay for repairs to the interstate system.

The Connecting Arkansas Program is a $1.8 billion road construction initiative focusing on regionally significant projects. Voters backed it when they approved a temporary half-percentage-point increase in the statewide sales tax in 2012. The tax is in place for 10 years.

Hutchinson expressed support for efforts by the Highway Commission and the Transportation Department to work on a long-range plan to increase highway funding, and backed the idea of letting the voters make the decision. He declined to say whether he would support a specific ballot initiative until it was crafted.

“The voters should make the decision on any initiative and I am for it going to the voters to decide,” he said. “I won’t take a position on a particular ballot initiative until I see the exact language on that.”

In response to a question, he said he wouldn’t “vigorously oppose” a ballot initiative containing a increase in fuel taxes or fee increases.

“That’s something the voters should decide,” he said. “Where I’m drawing the line is that if you’re going to have any kind of tax increase or a fee increase or a diesel tax increase for highways then that ought to go to the voters to decide.”