DALLAS — Arkansas will study a proposal to turn the Interstate highway from Little Rock to Memphis into a toll road after the General Assembly failed to repeal a sales tax exemption on large trucks and trailers.
The Arkansas Highway Commission on Tuesday authorized the Highway and Transportation Department to hire a consultant to determine the feasibility of using toll revenue to add new lanes to 130 miles of Interstate 40.
Highway commission chairman Madison Murphy said the transportation department needs additional revenue after lawmakers declined to kill the trucking sales tax exemption set to go into effect July 1.
The Highway and Transportation Department “will suffer a $12 million loss over our next four-year planning cycle,” Murphy said.
“We must now determine where to cut $12 million from those proposed projects,” he added.
The highway department had been relying on the $3 million of annual revenue that would have been generated by the demise of the exemption, according to Murphy.
The state must revise its highway improvement plan for fiscal years 2013 through 2016 to accommodate less revenue.
“The end result is that we now have less money to spend on road improvements, and when you’re talking about highway construction, you can’t do more with less — you can only do less with less,” he said.
The sales tax on large trucks currently generates $3 million a year for state highways and $1 million divided among cities and counties.
An attempt in this year’s legislative session to repeal the sales tax exemption before it became effective failed in the Senate after passage by the House of Representitives.
The 2011 General Assembly removed the state sales tax on trucks weighing more than 34 tons in exchange for agreeing to an increase in the diesel tax of 5 cents per gallon.
The additional diesel tax revenue would have been dedicated to an extension of the state’s grant anticipation revenue vehicle bond program.
The higher tax would have expanded the program’s capacity to $1.1 billion from the original $575 million approved by voters in 1999.
The trucking group later withdrew its support of the diesel tax increase, and voters in November 2011 reauthorized $575 million of bonds supported by federal highway grants and 4 cents of the state gasoline tax.
The renewed Garvee program will finance work on 300 miles of Arkansas interstate highways.
Voters will decide in November on a constitutional amendment for a 10-year, 0.5% increase in the state’s sales tax.
The revenue will support $1.3 billion of bonds to build a network of four-lane state highways between major cities in the state.
Neither of the programs will add capacity to the heavily traveled stretch of I-40.
Federal law restricts new tolls on existing Interstate roads, but highway department director Scott Bennett wants the state to be able to move quickly if a federal pilot toll program is expanded or the law is changed.
“Four million dollars is not an estimate that may or may not happen, it is the amount printed in the law that we will see taken from our motor fuel-tax revenues annually to pay for this exemption,” Bennett said.
“That’s a $4 million loss in roadway revenue to the [state], cities and counties to allow the purchasers of large trucks and trailers to pay zero in sales tax,” he added.
Bennett said a consultant would be hired within two months, with a feasibility report expected within a year.
If the recommendation is for a tolled lane in both directions, Bennett said, the toll would probably be levied on all lanes along the entire segment.
Lane Kidd, president of the Arkansas Trucking Association, said the group would oppose tolls on I-40.
Opposition by the truckers in the late 1990s killed a proposal for tolls on highway bridges.
Arkansas general obligation bonds issued for highway projects are rated Aa1 by Moody’s Investors Service and AA by Standard & Poor’s.