The Arkansas Highway Commission last week selected Stephens Inc. as the state’s financial advisor for bond issues supported by a 10-year, 0.5% increase in the state’s sales tax rate.

The commission capped Stephens’ compensation at $450,000, subject to negotiation.

Up to $1.3 billion of state bonds will be issued to finance the Connecting Arkansas Program. Arkansas Highway and Transportation Department will extend or widen existing highways to provide a network of four-lane roads linking all areas of the state.

The voter-approved constitutional amendment allocates 70% of the annual revenue from the 0.5% tax to the state’s four-lane highway program, with 30% shared by counties and cities.

The temporary is expected to generate $230 million a year, with $160 million going to the state and $70 million split equally between cities and counties.

Arkansas’s revenue bonds are rated Aa1 by Moody’s Investors Service and AA by Standard & Poor’s.

Stephens is also financial advisor for the separate $575 million Garvee program authorized by voters in November 2011.

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