Move to next step on roads, group urged

Build consensus to finance highways, Hutchinson says

Gov. Asa Hutchinson on Thursday called on the Arkansas Good Roads Foundation to work on building a consensus on the "next step" for permanent financing of the state's long-term highway needs.

In May, the Legislature met in special session to enact the governor's highway funding plan for the next five years.

"What type of bond program is needed? How do you build a consensus across this state, so that all stakeholders are engaged and buy into something ... so that whenever the Legislature or the voters consider, that it would have broad support?" the Republican governor asked about 170 people at the nonprofit foundation's summer meeting and luncheon at the Governor's Mansion.

The Good Roads Foundation is a group that describes itself as dedicated to promoting "adequate and dynamic funding and financing" for the planning, development, construction and maintenance of a safe and efficient Arkansas highway and road system.

Hutchinson said "a quiet pause is in order" after the Legislature enacted his highway funding plan. The plan relies largely on using 25 percent of future general revenue surpluses and increased investment earnings from the treasury to raise about $50 million a year. Those state funds would be used to match about $200 million a year in federal highway funds available in the next five years under a new federal highway bill.

"Let's get some experience under the current plan, let's work to take advantage of the federal highway bill that provides some unique opportunities for us to do innovative financing, to do public-private partnerships [and] to accelerate the delivery and the building of our highway infrastructure," he said.

After the meeting, foundation Director Craig Douglass said Good Roads officials will likely propose to the governor and legislative leaders a series of research projects to interview each state lawmaker, conduct community focus groups, and talk to business leaders and economic development and chambers of commerce officials.

"I think the process will be building from the ground up because that's the way we did it in 2012 that we had success with," Douglass said, referring to voter approval of a constitutional amendment that increased the state's sales tax by 0.5 percentage point, to 6.5 percent, for 10 years. The tax raises an estimated $160 million a year for the state Highway and Transportation Department and about $35 million a year for cities and another $35 million for counties.

Douglass said he doesn't know whether legislation or a ballot measure will be proposed to increase highway funding.

Hutchinson defended his highway funding plan at the Good Roads Foundation meeting.

"I believe what we have done is a good solution for our state for some time," he said. "But we also recognize that there is a need for overlay. There [are] additional needs down the road long term."

With the Legislature's regular session starting in January, Hutchinson reiterated that he opposes the Legislature raising taxes to raise more money for highways, saying "that is the mood of the Arkansas voter."

"It's the right thing to do in terms of protecting the lower gas prices that they have, helping them in their pocketbook," the governor said. "Any proposal to raise taxes for highways should go before the voters."

In addition, there should be no additional transfers of general revenue to the Highway Department "without offsets," Hutchinson said, such as reducing spending in other areas.

"We want to protect general revenues for education and for all the other needs of our state, so there should be no additional [general] revenue transfers without offsets" in the state budget, the governor said.

Any highway planning should complement the funding plan enacted in May, Hutchinson said.

After the meeting, Senate Transportation, Technology and Legislative Affairs Committee Chairman Bill Sample, R-Hot Springs, said he hasn't "ruled out anything," including proposing raising taxes for roads in the 2017 regular session.

He said he is studying what other states are doing to increase highway funding.

Nearly a month ago, the governor said he plans to propose individual income-tax cuts in the 2017 regular session. He said he would work with lawmakers during the next several months to determine how much in tax cuts that the state can afford and how the tax cuts would be applied.

In this year's fiscal legislative session, the General Assembly and Hutchinson enacted a budget that would distribute $5.33 billion in general revenue in fiscal 2017 -- up from $5.19 billion in fiscal 2016 -- with most of the general-revenue increase of $142.7 million targeted for the Department of Human Services and public schools.

The general revenue budget factors in nearly $101 million in individual income-tax cuts enacted by the 2015 Legislature and Hutchinson.

Hutchinson said Thursday that his plan to allocate 25 percent of future general revenue surpluses to the Highway Department "is not pie in the sky."

That's "realistic," based on the state's history during the past 10 years and the state's conservative budgeting, he said.

There was debate in the special session in May to increase highway funding beyond his plan, the governor acknowledged.

"I wanted to solve the immediate needs that we had here in the state of Arkansas and the opportunity we had to meet the federal matching funds to give us the funds that we need to build highways and to meet the match of the federal government," he said.

Under the Arkansas Highway Improvement Plan, "the state is prepared to meet its goal of $47.38 million transferred to the Highway Department by Sept. 30 of this year," Hutchinson said.

Under the plan, $40 million in rainy-day funds from unallocated surplus revenue and $7.3 million from other state funds will be transferred to the Highway Department in fiscal 2017, he said.

"This pattern is set to continue throughout the life of the federal highway program over the next five years," raising $1 billion over five years, Hutchinson said.

"This is not a small change. This is significant investment that we have tapped into," he said.

Metro on 07/01/2016

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