For as long as I’ve covered state government, since 1980, an unwritten and altogether wise and sound rule has survived against occasional heretical incursion.
It is that we reserve the state general fund, which is made up of general taxes, for general human needs such as public education and social services and public safety.
It is that we pay for highways—or apply state-generated money to match federal aid, to be precise—with what’s called user taxes and special revenue. That means gasoline taxes paid according to how much gasoline you purchase, meaning how much you drive. And it means taxes applied to the big trucking rigs according to weight carried and miles traveled. And it can mean other unique vehicle-related charges, such as for car licenses and title transfers.
And the rule has declared that the twain should never meet—that we protect education by funding it off the top of the general fund and that we protect highways by dedicating for them their own source of money not available to anybody else.
So now we’re cutting income taxes that make up much of the general fund for education. And we are enduring stagnant highway-tax income because people drive fewer miles and cars get better gas mileage than they once did.
On Sunday on the Talk Business and Politics program on KATV, Channel 7, state Rep. Joe Jett, a Democrat and chairman of the House Revenue and Taxation, offered … well, not so much a solution as an idea he deemed worthy of discussion for possible alleviation of the stress.
So I’d like to discuss it, unfavorably.
As he phrases it, we would dedicate 25 percent of annual surplus funds to highways.
As I phrase it, he would thrust highways into competition for general funds and pit roads against schools in violation of the long-surviving unwritten rule.
“Surplus” is a misnomer. Here’s what that money amounts to: It is unallocated funds coming into the general fund over the course of a year that, at year’s end, exceed the level of general revenue spending as dictated by an official forecast set by the Legislature.
Some years the unallocated cash can be as piddling as loose change. Other years it can come to tens or hundreds of millions, driven on one side by the stinginess of approved spending levels and on the other by a well-performing economy.
You can produce a surplus by holding down spending levels.
Historically, this overage has been called “one-time money” and been used—smartly—for one-time purposes. That means not for recurring operations with ongoing costs, but for buildings at colleges and universities, or local pet projects of legislators (scandalously, I’ve long held), or emergencies such as a crisis in the teacher health-insurance fund, or for the governor’s “quick-action closing fund” to lure economic prospects looking to see if our ransom payments are as generous as those of other states.
When you say you want to dedicate to highways 25 percent of the surplus, then you are saying you want to dedicate to highways a new and unprecedented chunk of the general fund not paid by the highways’ users and previously held off-limits to highways because of its dedication to schools and human services.
So here is what could and would happen: Some of the stoutest lobbyists in the Capitol, meaning highway commissioners and highway contractors, would lean on legislative budget insiders to be stingy on approved spending levels in the Revenue Stabilization Act. That would better assure a significant end-of-year overage for highways.
It would amount to a back-door raid on public school money and human services money and higher education money and prison money. And it is a back-door raid some anti-government conservatives like: Under the guise of bailing out popular highways, they could arbitrarily reduce general state government spending for human needs.
There is another problem. The surplus is always uncertain, widely variable and, in the context of applying 25 percent of it to the great expense of highway construction, insignificant.
We would almost certainly end up giving this money to highways and then hearing the highway people say it hasn’t helped much and that they still need more. We’d have succeeded only in imperiling general needs without changing the untenable status quo in highways.
So here is the answer:
General agency spending levels funded by general revenue ought to be set by demonstrated needs and objective forecasts of expected revenue. End-of-year overages ought to be incidental. They should meet vital general infrastructural needs, not highway ones, and otherwise be held for the inevitable emergencies or special needs.
Highways should be funded entirely separately by highway users. If the revenue flow is inadequate to the need, then we must raise additional money from highway users.
By that I mean higher gasoline taxes or weight-distance taxes, or, better still, a less-fixed, thus more flexible, source of user money. Mainly I mean a variable gas tax based not exclusively on gallons purchased, but also on the price per gallon—an element that is sales tax, yes, but one specifically applied to that which fuels highway usage.
If gas prices went up and gasoline tax receipts came down, then the portion of the tax paid by price would compensate.
But you must watch those highway guys. Whenever you begin to concede that they need a blended sales tax on gasoline, they inevitably counter by saying, yes, but we also need the sales tax on motor oil, and oil filters, and air filters, and windshield wiper blades, and tires.
But that’s money straight out of the schools and Medicaid and prisons and colleges and the State Police.
And, by the way, tolls are always worthy of discussion. You drive it, you pay. School money is undisturbed.
The simple fact is that there aren’t many new ideas. Often new ideas simply rephrase the same old previously failed incursions against wise and sound rules. That’s the case here.
John Brummett’s column appears regularly in the Arkansas Democrat-Gazette. Email him at jbrummett@arkansasonline.com. Read his blog at brummett.arkansasonline.com, or his @johnbrummett Twitter feed.