Arkansas pays for highway projects from its gasoline tax rather than general revenues.

DALLAS -- The Arkansas Highway and Transportation Department is using social media and other avenues to push back on published reports that the state's road taxes are higher than those in neighboring jurisdictions.

A map printed in a Little Rock newspaper that highlighted the gasoline taxes levied by neighboring states misrepresented Arkansas' road funding system, said Scott Bennett, executive director of the Arkansas Highway and Transportation Department.

The report failed to note that the surrounding states also rely on dedicated sales taxes and other general revenues sources to fund transportation but Arkansas does not, Bennett said.

"Arkansas has a little bit higher gas and diesel tax rate than surrounding states. This is a fact," Bennett told members of the Arkansas Highway Commission.

"All these other states get other kinds of funding for highways that Arkansas doesn't," he said. "They get sales tax revenue, they get gaming revenue, and they get what we term general revenue to spend on highways."

The highway department receives a little more than $400 million per year from the state fuel taxes, revenues that peaked in 2004, Bennett said.

"The fact that Arkansas' fuel consumption levels are the lowest of all the states shown [on the map] further diminishes our revenue," he said.

Arkansas levies a gasoline tax of 21.5 cents per gallon and a diesel tax of 22.5 cents. Oklahoma fuel taxes include a 16-cent gasoline tax and a 13-cent diesel tax. Motorists pay a 20-cent per gallon for both fuels in Texas and Louisiana, 18 cents in Mississippi, and 17 cents in Missouri.

The national average state fuel tax is 20.1 cents per gallon of gasoline and 20.2 cents for diesel, but sales taxes and other fees drive the per-gallon average to 29.6 cents of gasoline and 29.1 cents of diesel, according to the American Petroleum Institute. The state taxes are in addition to the federal gasoline tax of 18.4 cents and the diesel tax of 24.4 cents.

A special session of the Arkansas legislature in May approved a transfer of $50 million to the highway department from a state surplus in fiscal 2016 estimated at up to $185 million.

Gov. Asa Hutchinson, who called the special session to deal with transportation funding, said the transfer would give lawmakers time to develop a long-term highway revenue source when the 2017 General Assembly convenes in January.

The transfer will allow Arkansas to access up to $200 million of federal funding next year but is only a temporary fix, Bennett said.

Indexing the fuel tax to inflation is one possible funding solution, Bennett said last month during a radio interview "Indexing is one of those issues that would help account for fuel consumption going down and tax revenue going down and to help account for construction cost increases," said Bennett. "It has some merit."

The state expects only $3.6 billion of state and federal funding to help cover more than $20 billion of highway needs over the next 10 years, he said.

Arkansas received $499.7 million of federal highway funding in fiscal 2015 and $525.2 million in fiscal 2016. It is in line for $2.7 billion through 2020 from the five-year Fixing American's Surface Transportation Act, an average of $548 million per year.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.