A $73.8 million transfer of state funds to expedite flood-damage repairs for Arkansas highways and other purposes zipped through a legislative panel Tuesday.
About $30 million of the one-time state funds will go to repair recent flood damage, according to the Department of Transportation's request.
The rest will help expedite highway pavement preservation projects ($21.9 million) and match federal highway funds ($21.9 million), department Director Scott Bennett said in a letter dated July 17 to Gov. Asa Hutchinson.
Hutchinson recommended that the Legislative Council approve the request, and the council's Performance Evaluation and Expenditure Review subcommittee did so Tuesday with no questions asked.
The subcommittee also approved a Hutchinson request to shift $5.7 million out of the state's restricted reserve fund to the Arkansas Economic Development Commission to provide startup funding for a new grant program to expand high-speed Internet in rural communities.
The $73.8 million for the Transportation Department represents 25% of the state's unobligated surplus funds in fiscal 2019, which ended June 30, department spokesman Danny Straessle noted after the subcommittee's meeting.
The department already has received $28.1 million in state funds, including $20 million in treasury interest earnings and the reallocation of $8.1 million in state funds, under the governor's 2016 highway improvement plan, so the additional $21.9 million will provide a total of $50 million to match $200 million in federal highway funds under the plan, Straessle said.
None of the lawmakers during the subcommittee meeting asked about the estimated cost to the Transportation Department for the flood repairs.
Afterward, Straessle said in a written statement that "our estimate for disaster-related damage is $30 million, and that covers a number of events, including the recent historic Arkansas River flooding -- most notably the damage incurred on State Highway 155 in Yell County -- as well as a few additional areas along the river corridor.
"The estimate also includes damage incurred during recent flash flooding in southwest Arkansas," he said in the statement.
In mid-July, "portions of I-30 were temporarily closed due to high water on the interstate. There were a number of adjacent highways in the area that were closed due to culverts being washed out, etc. Finally, rain-saturated embankments have continued to slide out from underneath the roadway in a few areas (most notably the State Highway 23 corridor north of I-40 and State Highway 59 in Crawford County) and subsequently taking the pavement with it."
Straessle said that "we have to pay for everything up front with state dollars with the hope that we will be reimbursed by federal funds."
"We are not financing any of the work to repair the flood damage I mentioned," he said.
As for the $21.9 million to expedite pavement projects, Straessle said the department has an identified need of $478 million for this work.
In this year's session, the Republican-controlled Legislature enacted the governor's plan to raise about $95 million a year for the Transportation Department and $13 million a year for cities and counties by imposing a wholesale tax on gasoline and diesel fuel, increasing registration fees on hybrid and electric vehicles, effective Oct. 1, and reallocating at least $35 million a year in state funds to the department.
The Legislature also referred to voters in the 2020 general election a proposed constitutional amendment that would make permanent the half-percent sales tax for highways approved by voters in 2012 for a 10-year period. The proposal is projected to raise about $205 million a year for the transportation agency and $44 million a year each for cities and counties.
"Thank you for your work to address our state's highway funding shortfall," Bennett wrote in his letter to Hutchinson. "I look forward to working with you to educate the public on the benefits of the long-term funding solution that will be presented to voters in November 2020."
BROADBAND GRANTS
The subcommittee heeded the recommendation of the state's chief fiscal officer, Larry Walther, to approve the transfer of $5.7 million in restricted reserve funds to the Arkansas Economic Development Commission to support the expansion of high-speed broadband to rural communities.
"This fund transfer is in the best interest of the citizens of the state in order to initiate and partially fund a grant program called Arkansas Rural Connect," Hutchinson said in a letter to Walther, who is secretary of the state Department of Finance and Administration. "This is a necessary step to further our efforts to expand high speed internet to the rural portions of Arkansas."
In May, Hutchinson set a goal of expanding access to high-speed broadband to all communities with more than 500 people by 2022, calling for big increases in Internet speed and connections for a state that ranks last in access to the Web.
The cost of the Arkansas Rural Connect program will total $25 million, and the Legislature will be asked to authorize the remaining funds in next year's fiscal session, according to state officials.
The proposed $5.7 million for expenses includes $4.7 million for broadband infrastructure grants, $750,000 for professional fees and services, $235,000 for maintenance and operations and $15,000 for conferences and travel, according to a letter from Mike Preston, secretary of the Department of Commerce,
"This is our shot out of the gate to get this going," Preston told lawmakers "Out of the gate, we'll need to develop rules.
"We'll probably need to spend the next couple of months developing those and hopefully by the first of the year have a ... competitive program set up that will allow communities to partner with Internet service providers to make a request into the state."
Rep. David Fielding, D-Magnolia, asked whether the state is targeting a specific area.
"I would say that the designated area is the entire state, anywhere that is underserved," Preston responded.
"It is who is ready to start working with their local [Internet service providers], what communities are ready to have this and ready to work with the state," he said.
"This to me is truly a public-private partnership where a community can partner with an [Internet service provider] to come to this state and access these grants. So those who are ready to help themselves are going to be the ones that will be ready out of the gate."
If the Legislative Council approves the request, a balance of $42 million to $43 million would be left in the restricted reserve fund, state budget administrator Jake Bleed said. The restricted reserve funds are state surplus funds.
Arkansas ranks last among states in access to wired broadband, according to the website Broadband-Now.com. While 92% of Americans as a whole have access to wired broadband, only about 75% of Arkansans have similar access.
A Section on 08/21/2019