The Governor's Working Group on Highway Finance on Thursday released a draft of preliminary recommendations for increasing funding for road construction.
The group is expected to ultimately recommend multiple options to Gov. Asa Hutchinson and the Legislature, who would then determine which ones to use to bolster the state's highway funding.
The first option is to increase motor fuel taxes by 10 cents per gallon and transfer road-user revenue from General Revenue to the highway fund.
The group also proposed a “revenue-neutral” package, which would redirect the existing $4 million in diesel tax back to the highway fund from general revenue.
The third recommendation calls for a “three-pronged approach” incorporating a phased-in motor fuel and diesel tax increase. The approach would index existing gas and diesel taxes to inflation; increase gas and diesel taxes by 15 cents over three years; and transition to a “Reportable Miles Traveled” funding strategy, which would require drivers to report their mileage at their annual car tags renewal date and pay a fee to the highway department, cities and counties.
The fourth option would eliminate the sales tax exemption for motor fuel and diesel. That exemption costs $207 million per year, according to the recommendation.
The last proposal would increase the diesel tax 5 cents per gallon. The group estimates the increase would general $30 million annually.
Read Friday’s Arkansas Democrat-Gazette for full details.