Arkansas Gov. Mike Beebe last week shot down a proposal to shift a portion of sales tax revenues to highway projects before a transportation financing committee had a chance to suggest the move.
The revenue transfer subcommittee of the Blue Ribbon Committee on Highway Finance voted last week to transfer the sales tax on new and used motor vehicles and related items from the general fund to the transportation fund, but not before the governor's spokesman said it was not acceptable.
"We've always opened up to new ideas, but a $425 million hit to general revenue is not something we can consider," said Matt DeCample, Beebe's press secretary. "That is $425 million that we would have to find somewhere else just to keep the rest of state government at the current level."
The subcommittee's recommendation that the transfer be accomplished over four years, beginning in July 2011, will be considered by the full committee in February.
DeCample said a phase-in would not solve the problem of losing so much general fund revenue.
"Regardless of how it phases in, you're still looking at a $425 million hit, with nearly all of that directly impacting education, human services, and prisons," DeCample said.
The 18-member Blue Ribbon Committee has been meeting since May to develop a report to the General Assembly by July. It was created by legislators and charged with developing an adequate system to finance improvements on state highways, county roads, and city streets.
The Arkansas Highway and Transportation Department said it had identified construction needs totaling $19.1 billion over the next decade, but current revenue streams would only provide $4.1 billion over the period.
The committee is attempting to identify an additional $200 million a year, which is the minimum the highway department said it needs to maintain the existing network of 16,000 miles of state roads.