Highway Funding

Proposed fuel tax increase could hurt Arkansas-side retailers

The Arkansas Highway Commission is working on an idea that could be another blow to economic prospects on the east side of the state line.

The commission is looking for ways to raise funds for highway and bridge maintenance. Right now about $475 million a year comes in for highways, but it hasn’t kept up with maintenance needs. Gov. Asa Hutchinson has said he does not want to use general fund revenue for highways so that leaves few alternatives beside raising taxes.

At a meeting Wednesday, Arkansas Department of Transportation Director Scott Bennett proposed raising the excise tax on the wholesale price of fuel by 6.5 percent and extending the existing 0.5 percent sales tax already devoted to highway funding by another decade. The tax, approved by voters in 2012, is set to expire in 2023.

The proposal would bring total highway funding to an estimated $8.4 billion over the next 10 years. Taxpayers are probably wondering why, after voters approved the sales tax increase just a few years ago, transportation officials are coming back to the well for more. That’s a good question and something that should be addressed.

Locally, the more obvious concern is that higher excise taxes on wholesale fuel might translate to higher prices at the pump, possibly putting Texarkana, Ark., retailers at a disadvantage.

This proposal isn’t set in stone, so we don’t have hard numbers on how retail prices will be affected. Transportation officials will have to work out the details and present a final plan to the Legislature. And voters will have to agree to extend the sales tax. Variables are abundant at the moment. But the potential is there for a price imbalance that could push cost-conscious consumers to pumps on the other side of town.