DALLAS – Arkansas will take to market in September the first $300 million tranche from $1.3 billion of sales tax bonds authorized by voters in 2012 to build a network linking major cities in the state.
First construction contracts funded through the Connecting Arkansas Program will be awarded in 2014, said Scott Bennett, executive director of the Arkansas Highway and Transportation Department.
The road building and widening effort will be in full gear by 2015, Bennett told a joint legislative panel Thursday.
The 0.5% sales tax increase approved by voters as a 10-year constitutional amendment in November 2012 will generate $1.45 billion for the state highway department over the next decade and another $626 million for city and county road projects.
Supporting bonds with the revenue is more cost effective than a piecemeal pay-as-you-go approach, Bennett said at a joint session of the state House and Senate transportation committees.
“There are a lot of important, costly projects that we’ll be able to take care of in the near term instead of spreading those things out over the next several years,” he said. “This is in addition to all the work we’ll have going on along the interstates.”
Rehabilitation work on interstate highways in Arkansas is also under way, Bennett said, funded with proceeds from $575 million of grant anticipation revenue vehicle bonds approved by voters in 2011.
Eight of the 75 to 80 planned maintenance projects are currently under construction, he said, with contracts for another 12 to be awarded over the next 12 months.
“You’re not going to be able to go much of anywhere or any distance without seeing some work,” Bennett told the lawmakers.
The Garvee bonds are supported by federal highway grants as well as four cents of the state’s diesel fuel tax of 28.4 cents per gallon. Approval of the bond program did not require an increase in the diesel tax.
Arkansas’s first $575 million Garvee program as adopted as a constitutional amendment in 1999. The General Assembly approved a bill allowing the governor to put the program’s extension onto a statewide ballot in 2007, and again in 2009.
Gov. Mike Beebe called a special election on the proposal in November 2011. The measure was approved by a 4-to-1 margin.
Arkansas’s revenue bonds are rated Aa1 by Moody’s Investors Service and AA by Standard & Poor’s.
Stephens Inc. is the state’s financial advisor for the Garvee and sales tax bond programs.
The highway department spends approximately $1 billion of state and federal money on road projects each year, Bennett said, but that is not enough to adequately maintain Arkansas highways.
The 650 miles of rehabilitation and upgrade projects in the two bond-financed programs cover just 4% of the state’s 16,400-mile road network, he said.
"We need another $200 million a year over the next 10 years just to keep everything the same," Bennett said. "That's just to keep things from getting worse.
“That’s so we won't have more congestion in 10 years, we won't have any more bridges in poor condition in 10 years than we have today,” Bennett said.