Needing directions

State highway officials ponder funding for future

If Arkansans imagined the future of highway funding as a construction zone, the guy in the orange safety vest and holding a “detour” sign at the start of a collection of orange barrels might closely resemble Gov. Asa Hutchinson.

The Arkansas High- way Commission has been talking for months — years, really — about development of a new funding approach to give the Department of Transportation the money it needs to repair and maintain the 16,000-mile system of interstates, highways and bridges for which it is responsible. For a while this year, commissioners have licked their chops at the idea of tapping into existing general tax revenue collected by the state. They put forward ideas about legislative changes that would divert some of the growth in state revenue in future years to the state’s highway needs.

Highway funding in Arkansas amounts to hundreds of millions of dollars a year, but the officials charged with ensuring the state’s highway system stays in good repair have warned for years that something’s got to change. Costs of construction continue to climb, but the per-gallon fuel taxes don’t grow fast enough to meet the system’s needs.

There has long been a wall of sorts between highway funding — primarily collected through fuel taxes — and the money collected by state government to operate human services, prisons, the judiciary, economic development and the like. Then, in October, Gov. Hutchinson figuratively put his veto on that. In terms of authority, Hutchinson doesn’t have a formal veto of any ballot proposals the Highway Commission wants to float. But when a state’s governor unequivocally says he will “vigorously oppose” such a plan, commissioners are astute enough to know they don’t want to go up against the sitting and relatively popular governor.

It’s not that Hutchinson doesn’t recognize the highway needs. But he’s wisely unwilling to turn over some of the taxation power of state government to the Highway Commission because he knows state government has needs, too. And he’s counting on the future growth in state revenue to either fund those needs or, if not needed for that, to help fund a cut in tax rates for Arkansans.

The future of highway funding is not insignificant for Northwest Arkansas. In the latest annual report, the Department of Transportation noted that three of the top 10 contracts it let in 2016 involved a total of $162.3 million for Interstate 49 projects in Benton and Washington counties. And there are a host of projects on other state-maintained highways.

The latest idea, from Department of Transportation Director Scott Bennett, is an $8.4 billion, 10-year program funded by a new 6.5 percent excise tax on the wholesale price of fuels and a half-cent sales tax extension of a tax that expires in 2023. In all likelihood, that measure would go before voters sometime in the next couple of years.

Voters haven’t been afraid of investing in the highway system. In 2011, voters backed the Interstate Rehabilitation Program by authorizing the Highway Department to issue up to $575 million in bonds supported by state and federal tax allocations for the next few years.

Then, in 2012, voters backed the 10-year, $1.8 billion Connecting Arkansas Program, focused on increased capacity and connectivity of the state’s fourlane highways. That’s the program funded by a temporary half-cent sales tax that expires in 2023.

The new proposal would generate $549.4 million annually, with $385.6 going to the Department of Transportation. The remainder, under Arkansas law, is distributed among Arkansas’ cities and counties for road needs in those communities.

So, in the coming months, Arkansans can probably expect to hear highway advocates laying out potential scenarios involving projects that might be funded if the Department of Transportation can count on the money.

“We may need to consider using these next several months to educate the Legislature or the people not just about bring the money from here or there in a tax increase, but what can be done with this level of funding,” Bennett said.

Of particular interest may be how the Department of Transportation attempts to find new revenue through taxation on alternative energy vehicles. In terms of reducing vehicles’ impact on the environment, it seems wise to promote vehicles that don’t burn fossil fuels or significantly reduces what’s consumed. But electric or hybrid vehicles cruising down our highways create about the same wear and tear as those fueled by gas or diesel. It’s unlikely to be our Department of Transportation using its tax policies to promote the use of alternative energy vehicles unless those vehicles are helping share the costs of highway improvements and maintenance.

It goes almost without saying that Arkansans want good roads and certainly we have a lot of companies that rely on them to transport goods. Trucking and other companies must consider taxation for roads as a cost of doing business that should not be disproportionately borne by Arkansas drivers. Everyone is going to have to pay if our highways are to be kept in decent condition or improved.

The Department of Transportation has floated a proposal, and it’s likely there will be tweaks along the way. Arkansans need to play close attention to the discussion and provide feedback at every opportunity. Doing nothing is not a responsible option.