DALLAS — The Arkansas Trucking Association has withdrawn its support for a proposed increase of the state diesel tax to support $1.1 billion of bonds for interstate highway projects.

The trucking industry trade group has sent a letter to Gov. Mike Beebe asking him to not call a statewide vote on the proposal to increase the diesel fuel tax by 5 cents per gallon. Alabama voters must approve the measure because the highway bonds would be considered general obligation debt.

In the letter, ATA president Lane Kidd asked the governor to seek voter approval instead for a continuation of the state’s existing grant anticipation revenue bond program, which is set to expire at the end of 2012.

The Garvee extension would allow the state to issue $575 million of 12-year bonds supported by the dedicated 4 cents from the existing 27.8 cent per gallon tax.

A survey in May of 600 registered Arkansas voters found 63% opposed to the diesel tax hike, with 50% “strongly opposed” and only 34% in favor of the tax increase, Lane said.

The proposal is the right tax but at the wrong time, according to Lane. Failure at the polls would have a devastating effect, he said.

“The trucking industry can ill afford to set precedent nationally by failing to pass a self-imposed fuel tax to improve highways,” Lane said. “This scenario will likely occur if the election is held, jeopardizing the industry’s ability to build support for future funding of highways in this manner.”

Act 773 gave Beebe the authority to refer the diesel tax increase to voters, but does not require him to do so.

Beebe spokesman Grant Tennilli said the governor would make a decision on whether to set the election after conferring with the members of the Arkansas Transportation Commission and House Speaker Robert Moore, D-Arkansas City, who sponsored the road debt legislation in the General Assembly.

“At this point, the governor does not have a position,” Tennilli said.

Moore has urged the Democratic governor to call a special election on the debt this fall instead of waiting for the November 2012 general election.

Moore added that he was disappointed in the shift by the truckers.

ATA vice president Shannon Newton said the Trucking Association believes the fuel tax is a reasonable way to finance highway construction and maintenance, but a recent poll of Arkansas voters found a low level of support for the bonding effort.

“We have not fundamentally withdrawn our support for a diesel tax increase,” Newton said. “We still believe it is the right tax — now is just the wrong time for a special election.” 

She said the political climate, including a strong anti-tax sentiment, means the plan has little chance of gaining voter approval.

“Our organization was very surprised by the public’s strong opposition to what is virtually a self-imposed tax,” according to Newton. “Our industry would like the opportunity to invest more in our infrastructure, but unfortunately, under the current proposal, we need the public’s support to do so.”

Voters approved the Garvee program, with a cap of $575 million of outstanding debt at any time, in 1999. A proposal to extend the program indefinitely was rejected in 2005.

The highway program adopted by the 2011 General Assembly includes a proposed constitutional amendment that would raise the state sales tax rate by 0.5% for 10 years to support $1.3 billion of revenue bonds.

Proceeds the bond sale are earmarked for construction of a network of four-lane highways between major cities in the state.

The amendment must be on the November 2012 ballot unless a special election is held first.

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