FOREFRONT ISSUE


Blue Ribbon panel points to funding sources – but will the public go for it?


(Editor’s Note: Wes Fowler served on the Blue Ribbon Committee for Highway Finance as the designated representative for counties. He served six terms as Madison County Judge until Jan. 1; now he’s busy as Government Relations Director for the Association of Arkansas Counties).


By Wes Fowler AAC Government Relations Director


party one could imagine – including U.S. Rep. Vic Snyder, several Arkansas Senators and Rep- resentatives, transportation experts from other states and even the federal Highway Administra- tion – the Blue Ribbon Committee on Highway


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fter 18 months of meetings, which included a forest’s worth of printed materials needing review, and tes- timony of almost every interested


funding issues. I can now say I have a much bet- ter understanding and appreciation of just how complex this issue can be. However if you have not been involved in the building and mainte- nance of roads you might not know we are at a crossroads in how we are going to manage to maintain the highway system as we now know it, or to have the needed improvements. Te one thing that became even clearer to those on the committee and other stakeholders who were added to help in developing this report is that we have a system of funding our highways that is flawed and must be addressed. We have a user-based funding system that is predominately pay as you go and is based mostly upon fuel tax, which is based on a per gallon rate. With the development of more fuel efficient


Governor Mike Beebe commends the panel for their hard work, and offers comments on some of the findings


Finance delivered its final report in December. Te Blue Ribbon Committee was formed


by Act 374 of 2009, composed of three state senators, four state


representatives, one rep-


resentative each from counties and cities, and nine other members. Te committee was asked to make recommendations to the 88th General Assembly on the issue of funding for highways, city streets and county roads. Having served as county judge for almost 12 years, I had a pretty good idea of highway


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vehicles, and consumers being more responsible about driving fewer miles, the amount this type of tax generates has actually flattened out and is now beginning to decline. Couple that with escalating construction costs, and therein lies the problem. If we do not act in a manner of respon- sibility and do it sooner rather than later we will have a road system that will be more expensive to fix. We as citizens will pay more even if no ad- ditional taxes are added. Tis will come in the form of vehicle repairs and lower fuel economy due to disrepair. Also, we will lose jobs (or not have the higher paying jobs we desire) to other states that do recognize and address this prob- lem. Tis truly is a major economic develop- ment issue. Te following is the list of recommendations and additional studies included in the blue rib- bon report on highway funding.


Funding Recommendations


A 10-year phased-in transfer of the sales tax that is currently collected on the sale of new and used vehicles, tires, batteries, and vehicle parts and services: Moving these road- user revenues to the Highway Fund strengthens the road-user-based support of improvements to highways, roads and streets, and is currently being done by several other states. Phasing it in over 10 years would minimize or negate the negative impact to our state’s general revenues.


Indexing the current per-gallon tax on mo- tor fuels to Arkansas’s Highway Construction Cost Index: Per-gallon motor fuel taxes are an equitable but declining revenue source due to the combination of inflation, conservation, greater fuel efficiency, technology (hybrid and electric vehicles), and the increasing cost of fuel; indexing to Arkansas’s Highway Construction Cost Index provides elasticity to this major revenue source. Allowing the citi-


zens to vote on a temporary 10 year, half-cent general sales tax dedicated to a statewide, bond- financed highway im- provement program: Arkansas has many immediate roadway needs, some with high estimated costs, and the citizens expect to see quick results; this temporary, results-ori- ented mechanism can help address immediate needs in a timely manner. Implementing a new excise tax on the wholesale price of motor fuels: Tis percent- age-based levy, used by many states, provides a new revenue stream and, with its elasticity, a bet- ter hedge against inflation than consumption- based sources. Authorizing, by public vote, the reissuance


Blue Ribbon member Mark Lambeth


of GARVEE bonds to improve our Interstates using the revenue stream already in place for that purpose: Allowing the same mechanism that was used ten years ago to improve our In- terstates from being some of the worst in the country to being among the best; additional improvements are needed, but no additional revenue and no new taxes are needed, just a vote of the people. Modifying funding for the current State Aid County Road Program and creating a new State Aid City Street Program: Continu- ing dedicated funding for the successful State Aid program for counties, creating a mirror-im-


COUNTY LINES, WINTER 2011


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