DALLAS — Arkansas Gov. Mike Beebe urges voters in a 30-second television ad being aired statewide to renew a $575 million Garvee highway bond program at next week’s special election.
The 12-year bonds would be supported with federal highway grants and an existing diesel fuel tax of 4 cents a gallon approved by voters in 1999 to support the current grant anticipation revenue vehicle program. Proceeds from the bonds would be split, with 70% going to maintenance on 300 miles of Interstate highway in the state and the remainder divided between city and county road efforts.
“The interstates are the backbone of our highway system,” Beebe said in the ad. “They are critical to our state’s economy, tourism, and quality of life.”
In the ad, Beebe stresses that a vote to extend the Garvee program will not require a tax increase. The bonds will be used to “modernize our interstates,” he promised. “Together we can create jobs, improve the state, and do it all without raising taxes.”
Voters approved the Garvee program, with a cap of $575 million of outstanding debt at any time, by a 4:1 margin in 1999. A proposal to extend the program indefinitely was rejected in 2005.
The proceeds from the initial Garvee program paid for upgrades and repairs on 350 miles of the 650 miles of Interstate highway in Arkansas. The proposed extension would complete the modernization effort, the governor said.
The existing diesel fuel tax generates $16.2 million a year for the Arkansas State Highway and Transportation Department and $7 million for cities and counties.
A spokesman for the highway department said if voters approve the extension, the first sale would occur in late 2012 with construction beginning in early 2013.
The $575 million of Garvee bonds must be issued by end of 2015.
The ads will air across the state until Tuesday’s election. The campaign is funded by Move Arkansas Forward, an advocacy group co-chaired by Madison Murphy, chairman of the Arkansas Highway Commission.
Craig Douglass, spokesman for the pro-bond group, said there is only scattered opposition to the highway modernization program.
“The only opponents are a few Tea Party groups around the state,” Douglass said. “They apparently believe we should 'pay as you go’ and not use bond financing, although our plan has absolutely no new taxes and no increase in existing taxes.”q
Mark M. Moore, of the conservative group Secure Arkansas, said the state should not be asking voters to approve additional debt.
“I think most of the taxpayers in this state are working and sacrificing to pay down their personal debt. At the same time, these public officials are pushing for those same people to take on more public debt,” he said. “That’s tone deaf. It’s not where responsible people are right now.”
The original $575 million authorization from 1999 was exhausted with a $175 million sale in 2000, a $185 million one in 2001, and a $215 million one in 2002. Arkansas also received premiums totaling $23.6 million on the bonds.
Arkansas refinanced all $253.2 million of outstanding Garvee bonds in June 2010 to cut debt service costs by $13 million in fiscal 2011, but did not extend the final maturities past August 2014.
The refunding bonds are rated AA by Standard & Poor’s and Aa1 by Moody’s Investors Service.
Voters will decide on a separate bond-financed road program at the November 2012 general election. That proposed constitutional amendment would raise the state sales tax rate by 0.5% to support $1.8 billion of bonds to build a four-lane highway linking major cities.