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Governor Hutchinson and Legislative Leadership Announce $300 Million Highway Plan, Largest in State’s History Plan protects education, prisons, and public safety from funding interruption

By Danny Watson, 02/11/19 6:02 PM

LITTLE ROCK – Governor Asa Hutchinson joined legislative leadership this morning to announce details of a proposed $300 million, long-term highway plan. At $300 million in increased annual revenue to State Highways, this plan would be the largest in Arkansas’s history.
[For a breakdown of the funding, click HERE<https://t.e2ma.net/click/t421cf/d0onv1/lu91m9c>. For key points, click HERE<https://t.e2ma.net/click/t421cf/d0onv1/1ma2m9c>.]
The plan is broken down into two parts, the first of which is an extension of the half-cent sales tax of 2012 through a Referred Amendment for 2020. This would generate $205,590,000 a year for highways.
A large portion (roughly 28 percent) of the current half-cent sales tax will go toward paying off bonds for road projects. By extending the half-cent sales tax, the state would be able to shift to a “pay as we go” system.
The second part of the plan would produce $95,071,995 in additional, ongoing funding. That legislation will include:

* New index on gas (+$0.03) and diesel (+$0.06) prices = $58,097,076 (net to State)
* Additional registration fees for hybrid and electric vehicles = $1,974,919
* Dedicated casino tax revenues and Restricted Reserve Funds or other General Revenue = $35 million minimum, guaranteed

In addition to the extension of the half-cent sales tax, other components of this plan, such as the registration fees on hybrid and electric vehicles and the casino tax revenues, have future growth potential. This upward trajectory in funding will provide certainty for our highway program where none previously existed.
In addition to the $300 million to the Highway Department, cities and counties will receive $110 million annually to help maintain local streets and roads.
Governor Hutchinson issued the following statement:
“I’m delighted to detail this plan that is both a prudent and a responsible approach to establishing a historic, long-term highway plan for our state. I appreciate the spirit of cooperation from legislative leadership in working with my office to come up with a plan that can capture a majority of support from both chambers.
“While the state is providing additional funding from General Revenue for this plan, it is important to note that the long-term funding will come from the new revenue stream provided by the passage of the Casino Amendment. By dedicating casino tax revenues, we are able to protect other essential services, like education, public safety, and prisons from any funding interruption.”
The new index on gas and diesel prices is commonly referred to as a “user fee.” That means that those who use state highways most often will pay more than those who use the highways less. Unlike the income tax, which is taken directly from a person’s income, a “user fee” focuses on those who use our road system.
Over the past four years, Governor Hutchinson has cut more than $150 million in income taxes for low- and middle-income categories, including a $100 million cut for middle income in 2015 and a $50 million cut for lower income in 2017.
Even with the increase in user fees from this highway plan, all taxpayers will have an overall tax reduction this year and next with the decline in the grocery tax and the $50 million low-income tax relief that goes into effect this year.