The Arkansas Blue Ribbon Committee on Highway Finance has urged tax increases and a diversion of general fund revenue to finance highway construction and maintenance needs estimated at $19.1 billion over the next 10 years. Current sources would provide only $4.1 billion over the period.
The commission will conduct a series of public meetings across the state over the next two months to explain the proposals.
The highway committee endorsed a transfer of $425 million a year from state general revenue to highways, indexing state fuel taxes to the annual construction cost index, and a new excise tax on wholesale motor-fuel sales.
Highway director Dan Flowers told the committee that Arkansas needs an additional $200 million a year to maintain the existing system at current levels. The government currently spends about $900 million of state and federal funding each year on highway construction and maintenance.
The 19-member panel was created by the General Assembly in 2009. It is scheduled to submit its initial report and recommendations to the governor by July.
The revenue diversion proposal would shift state tax revenue generated by sales of new and used motor vehicles, repair parts and services, and retail tire sales from the general fund to highways.
The committee said indexing the state tax on gasoline to the rate of inflation in construction materials would result in an increase in the gasoline tax from the current 21.5 cents per gallon to 30.1 cents. The increase would result in a $100 million a year increase in revenue.
State motor fuel taxes currently generate approximately $418 million a year, with the state receiving $292 million.
The proposed 6% excise tax on the wholesale price of fuel could raise more than $100 million a year based on an average wholesale cost of gasoline of $1.93 per gallon.
Gov. Mike Beebe said he was opposed to moving general fund revenue to the highway effort. Beebe also said it was not politically feasible to raise taxes in a weak economy.
