Legislative panel backs shift of $41.5M to road agency

A legislative panel on Tuesday approved a request from the Arkansas Highway and Transportation Department to transfer $41.5 million in state funds to the department to be used to match additional federal highway funds.

After a handful of lawmakers raised questions about how the money would be spent, the Legislative Council’s Performance Evaluation and Expenditure Review Subcommittee signed off on the request to transfer the money out of the Arkansas Highway Transfer Fund.

The Highway Transfer Fund was created under Gov. Asa Hutchinson’s highway funding legislation, enacted in a special legislative session in May. The Legislative Council’s approval is required for transfers out of the fund. The council meets Friday and usually approves its subcommittee’s actions.

The governor’s plan avoids raising taxes. The $41.5 million in the Highway Transfer Fund comprises $40 million from the state’s rainy-day fund and $1.5 million from the treasury’s interest earnings. Under the governor’s highway funding plan, the department also is getting $5.88 million a year in salestax revenue that previously went to fund the state’s central government services.

The department requested the transfer of the $41.5 million “for the department to have sufficient matching funds required to utilize nearly $200 million in federal fiscal year 2016 federal-aid funds,” said department Director Scott Bennett. Federal fiscal 2016 ends Sept. 30.

“The department must notify the Federal Highway Administration of our intent to use [federal fiscal] 2016 federal funds by mid-September,” he wrote in a letter to Hutchinson.

“If the department cannot

provide the matching funds required, these federal funds will be redistributed to other states,” Bennett said. “This will equate to a nearly $250 million reduction in construction projects to improve and maintain Arkansas’ Transportation Department.”

In a letter to the Legislative Council’s co-chairmen, Hutchinson recommended approval of the fund transfer.

In May’s special session, the Republican-controlled Legislature enacted Hutchinson’s highway funding plan, which relies largely on using 25 percent of future general

revenue surpluses and $20 million a year from the treasury’s future interest earnings to raise about $50 million a year. The state funds would be used to match an additional $200 million a year in federal highway funds available under a five-year federal highway funding law.

During Tuesday’s meeting, a subcommittee co-chairman, Sen. Bruce Maloch, D-Magnolia, said he received a letter in the past week from the Highway Department with a list of planned projects in his Senate district and the south Arkansas region.

He asked whether those projects would be financed with state and federal matching funds.

Lorie Tudor, the department’s deputy director and chief operating officer, replied, “Yes sir. We need this money to fully fund all the projects in this state that are scheduled this year.”

Tudor said each lawmaker has received a list of planned projects in their legislative districts.

Sen. Terry Rice, R-Waldron, wondered whether the department will be able to use any of the $50 million a year in state funds for “something besides federal highway standards.”

Tudor replied, “These will all be used to match federal money and, with federal money, we have to use federal criteria.”

Rice told Tudor that he has

concerns with “some of the planning that you do.

“At some point, I would like somebody to get with me and help me with some questions,” Rice said.

Tudor said that “we would more than welcome you to come by and sit down with you and go through all the funding issues that we are faced with.”

Rep. Stephen Meeks, R-Greenbrier, said the U.S. 67 highway corridor project from Little Rock to the Missouri border “has been ongoing for quite some time. Will we see completion as part of this?”

For the U.S. 67 corridor from Walnut Ridge to the Missouri line, Tudor said $5 million is set aside for environmental

planning. After the meeting, Highway Department spokesman Randy Ort said $4 million was the actual amount set aside to be spent on environmental planning. U.S. 67-167 is an interstate-type road that intersects with Interstate 40 in North Little Rock. U.S. 167 splits off to the north at Bald Knob and U.S. 67 continues toward the northeast part of the state. Last week, the latest section of four-lane, divided U.S. 67 opened from Arkansas 226 west of Jonesboro to Walnut Ridge.

“At this point in time, we are in the planning stages. We are looking at different alternative routes to go from Walnut Ridge to the Missouri line,” Tudor said. “Once we kind of

[cut] those down to a manageable number, then we will start the environment process,” an in-depth analysis of each option and decide which one is the preferred alternative.

Department officials hope to determine a preferred alternative route for that project during the next few years and then they will start to look for funding sources to build that road, she said.

As far as the department’s major projects during the next five years using the new funding, Tudor said the majority of the money set aside for highway improvements will be for “system preservation,” including improving pavement and improvements to reduce traffic congestion.