Road Funding Measures Moving in Arkansas, Washington Legislatures

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DALLAS — An Arkansas House panel on Thursday approved a bill that would divert $2.8 billion of vehicle sales tax revenues to road projects over the next 10 years to compensate for declining collections from the state's gasoline tax.

The bill, HB 1346, would give to the Arkansas Highway and Transportation Department a portion of the sales tax on new cars and trucks, batteries and parts that now flows into the state's general fund. The House Committee on Public Transportation sent the proposal to the full House with a "do pass" recommendation on a voice vote.

The highway department is currently funded almost entirely with federal transportation grants and revenue from state gasoline and diesel taxes, said Rep. Dan Douglas, R-Bentonville, who filed the tax diversion proposal.

 "With cars being more efficient, fuel tax is not an efficient way of funding our highways anymore. We've got escalating costs and diminishing revenues," he said at the Feb. 19 committee session. "It's just not working, and we know we've got to do something different."

Arkansas levies a 21.8 cent per gallon tax on gasoline and 22.8 cents on diesel fuel. The taxes generated $392 million in 2014, down from $454 million in 2007.

Highway director Scott Bennett, who testified in favor of Douglas's bill, said the tax plan would provide long-term relief to Arkansas's road funding woes. General fund revenues support transportation projects in 34 other states, he said.

"It's set up as a long-term solution," Bennett said. "If this passes, there's nothing else we're looking at."

However, he said, the gasoline tax may one day need to be restructured or replaced.

Arkansas has $20.4 billion of transportation needs over the next 10 years, but available state and federal resources will total only $3.6 billion, Bennett said.

The highway department removed three projects totaling $30.5 million from the January bid list over concerns that federal transportation funding could be at jeopardy this summer. Bennett said another five projects totaling $27.5 million have been removed from the March bid list.

If Congress does not pass a long-term transportation bill before the current extension expires May 31, Bennett said, it could imperil $490 million of Arkansas road projects in fiscal 2015 and $520 million of projects in fiscal 2016.

State auditors said the sales tax proposal would divert $34.8 million from the general fund to roads in the first year and $548.4 million by fiscal 2025. The state highway department would get 70% of the revenue, with the remainder split evenly between cities and counties.

Gov. Asa Hutchinson opposes the revenue diversion bill, according to spokesman J.R. Davis.

"While the governor recognizes the need for improvements in the highway funding formula, he cannot support a bill that undermines the current balanced budget and doesn't provide a consensus on a solution to the funding gap," Davis said.

Meanwhile, in Washington State, the Senate Transportation Committee on Thursday endorsed a $15.1 billion transportation package that includes an 11.7 cent increase in the state's 37.5 cents per gallon gasoline tax over the next three years.

Funding for the proposed 16-year program also would include $4.3 billion of Washington state general obligation bonds.

Democrats on the panel failed in attempts to reduce the gasoline tax increase to 7.7 cents per gallon. They instead favored a carbon tax on large polluters with the revenue dedicated to transportation.

Gov. Jay Inslee has proposed a carbon emissions tax on the state's top 130 polluters that he said would generate $400 million per year for transportation.

The Democrats also were unable to erase a provision that would remove funding dedicated in the measure for transit and trails and instead allocate it to road projects if lawmakers enact Inslee's proposal for stricter fuel efficiency standards.

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Infrastructure Transportation industry Arkansas
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