Roads and streets in every city and all 75 counties of Arkansas would be improved and upgraded with revenue from a proposed 0.5% increase in the state sales tax, highway director Scott Bennett told lawmakers last week.
Voters will decide on the tax increase as a constitutional amendment in November.
Bennett, director of the Arkansas Highway and Transportation Department, said voter approval of the 10-year tax in November would provide $670 million for roads over the coming decade.
The tax increase would also support $1.3 billion of general obligation bonds, which would be used to pay for new state four-lane roads or add capacity to four-lane highways.
Bennett told a joint session of the Legislature’s Transportation, Technology and Legislative Affairs and House Public Transportation committees that the revenue projection is conservative and could be higher.
The state will receive 70% of the additional revenue generated by the tax increase, amounting to about $160 million a year, Bennett told lawmakers last week.
The other 30% of the annual revenue, estimated at $67 million, will be split among cities and counties. The cities will receive their allocations based on population.
Each county’s share is to be determined by a formula that will consider population, land area and vehicle registrations.
“Even though not every county has a [state] project, every city and county will benefit,” Bennett said. The tax increase is expected to cost about the average household about $5 a month, he added.
The tax plan also devotes a penny of the existing gasoline tax to a city street fund.
A nine-member panel of mayors would choose projects to be financed with the projected $20 million a year in revenues.
Voters in November 2011 renewed a highway modernization proposal that will allow the state to issue $575 million of grant anticipation revenue bonds to finance repair projects on Interstate highways.
The constitutional amendment was favored by 80% of voters.