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Gov. Asa Hutchinson is calling for tapping into general revenue and surplus funds to raise an additional $339 million for Arkansas' highways over the next 5 years

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LITTLE ROCK, Arkansas — Gov. Asa Hutchinson on Tuesday proposed increasing funding for Arkansas highways by $339 million over the next five years under a plan that relies heavily on surplus funds that aren't a certainty and an effort to tap into general revenue, an idea that's traditionally faced resistance from Democrats in the Legislature.

The proposal unveiled by the Republican governor doesn't include any of the tax or fee increases suggested by a panel he formed to look at road funding. Hutchinson wants lawmakers to take up the plan at a special session later this year.

"It is a highway plan that has no new taxes," Hutchinson said. "It is a highway plan that allows us to fund all of the essential services of our state without jeopardizing them."

Hutchinson's plan calls for an increase in funding for highways of $46.9 million in the coming fiscal year, with $40 million of that coming from state surplus funds. The remainder would come from diverting other tax revenue to highways.

Hutchinson's proposal would gradually redirect a portion of sales tax revenue from new and used vehicles to highways, capping the annual transfer at $25 million in five years. It would also redirect a portion of diesel tax revenue that goes to general revenue to highways. Past efforts to transfer general revenue to highways has faced opposition from Democrats and advocates who say diverting the money threatens funding for higher education, social services and other needs.

Hutchinson's plan also calls for setting aside up to a quarter of the state's surplus each year for highways. The governor estimated that could raise $48 million a year for highways based on the average size of the surplus over the past 10 years.

The plan doesn't adopt any of the tax or fee increase proposals suggested by a task force Hutchinson formed last year to look at the highway funding shortfall. The panel had offered a range of options for increasing state highway funding by $110 million a year, but had stopped short of endorsing a specific plan.

Highway officials say they have $20.4 billion in needs over the next decade, but expect only $3.6 billion in state and federal funding. Highways receive about $410 million in state funding a year, primarily through fuel taxes.

The Republican House speaker and Senate president said they believed Hutchinson's plan would find support in the majority-GOP Legislature, but said they haven't starting counting votes in either chamber.

The top Democrat in the House said he was grateful for Hutchinson not proposing tax increases, but had reservations about counting on surplus funds.

"If we have any hiccup in our state budget, that surplus may not be as large as it has been in the past," House Minority Leader Michael John Gray said. "To count on that to always be there to fund is something that gives me a little concern."

Hutchinson also warned that his plan is dependent on the Legislature approving his proposal to keep the state's hybrid Medicaid expansion. Hutchinson has proposed adding new limits on the program, which is providing coverage to more than 200,000 people.

"This budget, with the surplus funds that are available that I can allocate $40 million to highway needs in our state, is not workable if we do not have access to the federal funds that are a part of the Medicaid expansion" he said.


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