Arkansas bill would tap revenue, raise tax for highways

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LITTLE ROCK, Ark. — An Arkansas lawmaker on Monday proposed tapping into tax revenue from car sales and imposing a new tax on motor fuels to raise money for the state’s highways, a proposal that quickly drew opposition from the state’s Republican governor and Democrats.

Republican Rep. Dan Douglas said he hoped the bill he filed would start the conversation on highway funding, which legislative leaders and Gov. Asa Hutchinson have called a priority for this year’s session. No funding plan had emerged as lawmakers entered the third week of this year’s session.

“Here’s the thing: If we don’t do something, we’re just going to let our highways continue to deteriorate and fall apart and then wait until the bill comes due,” Douglas said. “We have to do something.”

Douglas’ proposal calls for gradually diverting up to $120 million a year in tax revenue from car sales to highways over a four-year period. The state would begin diverting the money once its gross sales tax revenue exceeds $2.5 billion a year. In the first year, the state would transfer $30 million to highways and would increase that by $30 million a year until reaching $120 million.

The proposal also calls for imposing a 3.5 percent sales tax on the wholesale price of motor fuel, which Douglas estimated would raise another $100 million to $120 million a year.

Hutchinson has said he’s usually opposed to diverting general revenue to roads and that he couldn’t support Douglas’ plan.

“Pulling additional money from general revenue is not the answer,” the governor said in a statement. “We are already devoting $50 million a year from state revenue to the highway department. Doing more will only create new problems elsewhere and will negatively impact education, prisons, public safety, and more.”

Democrats, who have raised similar objections to tapping general revenue, also said they were worried that it could open the door to even more money being diverted later.

“This is in a way the most important time to stand up against general revenue being diverted to highways,” Democratic Rep. Andrew Collins said.

The motor fuel sales tax is also likely to face resistance in the majority-Republican Legislature, with many GOP members vowing opposition to any tax increase. Since it’s imposing a new tax, Douglas’ proposal would require only a simple majority rather than the three-fourths needed to increase existing taxes. Republican House Speaker Matthew Shepherd has said he would prefer for the Legislature to look at existing revenue before considering any tax increases. He reiterated that stance Monday.

Republican Senate President Jim Hendren said he expected to see more work on highways once lawmakers tackle Hutchinson’s proposed income tax cut.

“I think you’ll see half a dozen ideas, serious ideas, floated out there and we’ll just see which one of them solves the problem and has the ability to pass the Legislature,” Hendren said.

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