Road bill adds $250M for state

Plan would allot funds for 5 years

Arkansas Highway Department Director Scott Bennett speaks at a news conference at the Arkansas state Capitol in Little Rock, Ark., Tuesday, Jan. 6, 2015.
Arkansas Highway Department Director Scott Bennett speaks at a news conference at the Arkansas state Capitol in Little Rock, Ark., Tuesday, Jan. 6, 2015.

Arkansas stands to receive an estimated $50 million in additional funding for highways in each of the next five years if Congress passes a new federal highway bill, according to the state Highway and Transportation Department.

"We're happy it's here," department Director Scott Bennett told members of the Arkansas Highway Commission on Wednesday. "It's a five-year bill with five years of funding."

But he said the department doesn't have enough state money available to match its share of the additional federal money and would have to secure more state money or pare back other areas, such as maintenance, to be able to receive some or all of the additional federal aid.

"The additional federal aid means we need additional state aid to match it," Bennett said.

Typically on highway projects that qualify for federal aid, about 80 percent of the cost is borne by the federal government, with the state picking up the remaining 20 percent. The state must have the money in hand before a project is constructed.

Congress ended weeks of negotiations Tuesday by agreeing to a five-year, $281 billion transportation bill to increase spending on roads and transit systems by billions of dollars each year. A House vote on the measure is scheduled today, while the Senate is expected to vote Friday, when government authority to process aid payments to states expires.

In its first year, the bill increases spending on highways by $2.1 billion above current levels. By 2020, the increase will be $6.1 billion above the $50 billion that has been spent in recent years.

Spending on transit will increase from the current $8.6 billion to almost $10.6 billion in 2020.

The bill falls short of the $400 billion over six years that Transportation Secretary Anthony Foxx has said is needed to keep traffic congestion from worsening, and it puts off the difficult decision of how to pay for transportation programs.

The federal 18.4-cents-a-gallon gas tax, the main source of highway trust fund revenue, hasn't been increased since 1993 and no longer covers annual spending on transportation.

Bills arrived in the conference committee with different funding provisions. The committee settled on a House plan to use money from the Federal Reserve and a Senate proposal to reduce the amount of interest the Fed pays to banks as two ways to help fund the transportation bill.

The funding plan replaces the current 6 percent dividend that the Fed pays to large banks with a floating rate tied to the 10-year Treasury note, which is expected to be less than 6 percent. The House's portion of the plan transfers about $49 billion over 10 years from a Fed capital account to the Treasury and counts the money as new revenue.

But the fundraising tactics have drawn criticism from some lawmakers who say the $49 billion is just a paper transfer that raises no new money.

One of the provisions of the bill is the creation of programs to focus transportation money on highways that are regarded as important "freight corridors" to reduce major bottlenecks and speed the delivery of goods.

The agreement also protects funding for transit, which some lawmakers had argued should be cut from the bill. It increases money for pedestrian and bicycle programs that also have come under attack, and it includes nearly $200 million to speed installation of a railroad safety feature known as positive train control.

In addition to increasing spending on roads and transit, the bill increases funding for freight transportation and creates a grant program for freight; restricts rental-car leasing of recalled vehicles; bumps up to $295 million the cap on liability claims faced by railroads; and triples the amount that the National Highway Safety Administration can level in civil fines -- from $35 million to $105 million. It also includes a measure to reauthorize the U.S. Export-Import Bank.

If approved, the federal transportation bill would arrive as Gov. Asa Hutchinson reviews the recommendations of a working group he created earlier this year to develop ways to increase highway funding in Arkansas.

The working group recommended several ways to raise an additional $110 million in short-term state funding, which the department said was the minimum it needed in the next one to three years. That amount includes the estimated $45 million state highway officials say they would need to match the federal money, with the balance going to pay for an overlay program, which is an inexpensive way to lengthen the life of a roadway before it needs to be rebuilt.

Hutchinson has said he will have a response to the recommendations later this month or in early January.

Even if federal funding remained static, the state wouldn't have enough money to match federal aid, thanks to slowly declining revenue, recent changes in the department budget and the Legislature, according to Bennett.

Revenue for the fiscal year beginning July 1 is down 4.6 percent over the same time a year ago, primarily because of a big drop in revenue from the severance tax on natural gas.

The department has received $136 million through October, or $6.6 million less than the $142.6 million it received at the same time a year ago. It budgeted $19.7 million from the natural gas severance tax but has received $9.5 million, a 51.8 percent decline. Low natural gas prices have reduced activity in the Fayetteville Shale area, said Michael Boyd, the department's chief fiscal officer.

Another factor: The Legislature took the revenue equal to one penny of the state tax on gasoline and diesel and shifted it to a newly created state-aid fund for cities, costing the department about $14 million annually.

The department also has shifted $18 million from its construction budget to maintenance, hiring additional personnel and acquiring more material and equipment. The change in priorities came after the department was overwhelmed by a winter storm two years ago.

Bennett said he would prefer not to cut the maintenance budget, which would require layoffs, to match the federal aid.

"I think we need to keep taking care of what we have before we start building new roads," he told the commission.

"But is it all or nothing?" asked Tom Schueck, a member of the commission from Little Rock.

No, Bennett responded. "That will be the question: How much can we come up with on our own?"

Metro on 12/03/2015

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