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Arkansas lawmaker says proposal to shift tax revenue to highways on hold

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LITTLE ROCK, Arkansas — An Arkansas lawmaker said Tuesday his proposal to transfer tax revenue from car-related items to state highways is on hold as he looks at potential changes to try and win the support of Gov. Asa Hutchinson, who said the proposal would threaten the budget.

Republican Rep. Dan Douglas of Bentonville said he's delaying presenting his measure to the full House after meeting with Hutchinson to discuss it. The proposal, endorsed by the House Transportation Committee last week, would gradually transfer the tax revenue over a 10-year period. Finance officials say the proposal would cost the state nearly $35 million in the coming fiscal year and $548 million once fully implemented.

"I'm not going to run it until after we have some more meetings and try to work through some situations and try to determine how to meet the objectives of the bill," Douglas said.

Supporters of the plan said the move is needed to close the growing gap between Arkansas' road needs and funding. The state's highways are primarily funded by gas and diesel taxes, which have been in decline in recent years. Arkansas highway officials say they have $20.4 billion in needs over the next decade, but only $3.6 billion in expected revenue from the state and federal government.

Hutchinson, a Republican, said he agreed with the need to reduce the gap in highway funding but repeated his objections to a measure he said would undermine his proposed budget for the coming fiscal year. The proposal also faces opposition from advocacy groups who say diverting the revenue would threaten funding for other needs, such as higher education and public schools.

"It takes too much money this cycle from the balanced budget," Hutchinson told reporters. "It would create a huge hole in the budget in the short term and the long term."

Douglas said one possibility he was looking at was changing the trigger for when the transfer would begin. The money would begin diverting under the current proposal when state sales and use tax collections exceed $2.2 billion.


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