NWA editorial: Taxing in perpetuity

NW Arkansas benefits from sunsetting highway tax

The statistic has long been a jaw-dropper: State highway officials say Arkansas has the 12th largest state-maintained highway system in the country in terms of miles of concrete and asphalt.

It's an astonishing piece of not-so-trivia. Only 17 states have a smaller population than Arkansas. In terms of geography, 28 states cover more area. Arkansas ranks around 35th in terms of population density. Only five states have a higher percentage of their people living in poverty. And yet the state's highway system is massive, requiring constant upgrades and maintenance.

What’s the point?

Northwest Arkansas residents should be somewhat skeptical of a push to make a half-cent, temporary sales tax for highways approved in 2012 into a permanent tax.

State highway officials remind us time after time, Arkansas can't afford the system it's got. No matter how many hundreds of millions of dollars we manage to throw at them, the analysis of unmet needs still totals in the billions (that's with a "b.") From all its revenue sources, such as fuel taxes, vehicle registration and the like, Arkansas ranks 40th in terms of revenue generated per mile of highway in its system.

That's one reason the Arkansas Highways And Transportation Department jumps at almost any chance to shed highway miles, such as the planned deal with the city of Fayetteville that would, after upgrades, turn Arkansas 112 (Garland Avenue/Maple Street/Razorback Road) over to the city for future maintenance. Granted, that's only four miles in the state's system of more than 16,000 highway miles, but when a city's taxpayers are willing to take over the obligations for highways within their borders, every little bit counts.

Last year, the Legislature responded to Gov. Asa Hutchinson's push for highway funding. About $50 million in each of the next five years is expected to come from state government's general revenue surpluses and investment earnings. That money will become the state's 20 percent match for federal highway dollars, translating into about $250 million in highway funding annually.

But the Highway Department's hunt for revenue continues.

Last week, a nonprofit organization that advocates for better roads (and the construction contracts that produce them) released results of a statewide survey they said showed support for making the temporary half-percent sales tax for highway construction, approved by voters in 2012, a permanent fixture.

As it stands today, the tax is set to expire in 2023 unless the state's voters reauthorize it in some form.

These advocates hope to prove what taxpayers already suspect: There's no such thing as a temporary tax.

The Arkansas Good Roads Foundation survey showed support in the public for making the tax permanent, the group said. And who can blame them? It's always much better for government when it doesn't have to keep asking voters what they want. Just hand over your money and ... keep handing it over. State officials want Arkansans to turn on a perpetual pump, removing the public's ability to cut off the flow of sales tax funding.

It's a no-brainer why government officials want that outcome. Why deal with the uncertainties of elections if Arkansans are willing to grant taxing authority once and for all?

But should taxpayers agree to it? There's no question Arkansas can spend the money on roads and get a great benefit from the expenditures. But the 2012 tax increase was marketed on the basis of its temporary nature. It hasn't even been collected for a single 10-year cycle before work is underway to ensure it never disappears.

Voters in Northwest Arkansas might be easily swayed into voting for a permanent tax. After all, the need for highway construction in the region is constant. Perhaps enacting the permanent sales tax would help those improvements along.

Keep in mind, however, that advocates for the temporary sales tax devoted quite a bit of time and energy to make sure the 2012 proposal would benefit the region, mindful as they were that a lot of votes could be collected in this neck of the woods. They promised spending about $461 million from the sales tax-supported bonds to expand Interstate 49 to six lanes between Fayetteville and Bentonville; to complete the first portion of the Bella Vista bypass; and to build a portion of a U.S. 412 bypass north of Springdale.

Once could suggest a permanent tax reduces the incentives for state decision-makers to concentrate projects where, in the 2012 election, they needed votes. Will the Highway Department, based in Little Rock, be as focused on Northwest Arkansas' needs if its sales tax funding becomes permanent? Is it plausible they might listen more if an election is required?

A sunsetting tax might very well be a good thing for Northwest Arkansas. In a state that has historically liked to spread a lot of its highway money around in equal regional portions, Northwest Arkansas needs some kind of mechanism to encourage spending where the most traffic needs to be moved.

Commentary on 01/14/2017

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