The Arkansas Senate on Tuesday sent Gov. Asa Hutchinson legislation that would raise $95 million more a year for the state Department of Transportation's highway program.
After concurring with a House-approved amendment removing House Republican Whip Brandt Smith of Jonesboro as a co-sponsor, the Senate voted 25-8 to send the Republican governor Senate Bill 336 by Sen. Terry Rice, R-Waldron.
The action came a day after the House voted 71-26 to approve the legislation.
The bill would levy a wholesale sales tax on gasoline and diesel fuel; increase registration fees on electric and hybrid vehicles; and transfer at least $35 million a year in casino revenue, restricted reserve funds and other funds designated by the governor to the Department of Transportation.
The new wholesale sales tax would increase the tax on gas by 3 cents a gallon, to 24.5 cents a gallon, and the tax on diesel by 6 cents a gallon, to 28.5 cents a gallon. The bill proposes indexing the tax and limiting future increases to one-tenth of a cent a year, meaning the maximum increase would be 1 percent over a 10-year period.
[RELATED: Complete Democrat-Gazette coverage of the Arkansas Legislature]
The wholesale tax would raise about $58 million more a year for highways and about $13 million a year more each for cities and counties.
Afterward, Rice said state officials are confident that only requiring a majority vote for approval of his SB336 would stand up to a legal challenge.
Attorney John Theis of the state Department of Finance and Administration told the House Rules Committee on Monday that the Arkansas Supreme Court would have to overturn its past precedent to toss the votes on SB336.
Rep. Julie Mayberry, R-Hensley, appealed House Speaker Matthew Shepherd's ruling that the bill required a simple majority -- 51 votes of the 100 House members -- for passage.
She questioned whether the taxes established under SB336 represented an increase of existing taxes, since fuel taxes existed in 1934 when Amendment 19 to the Arkansas Constitution was adopted, and thus required a three-fourths vote for approval.
But Theis said he drafted the bill by following the blueprint laid out in a 1939 state Supreme Court decision on the imposition of a beer tax.
The tax at issue in that case mirrored the fuel tax SB336 would levy, Theis said, because both taxes are levied on retailers who pay the taxes to wholesalers, who then remit them to the finance department.
SB336 also would increase registration fees for electric vehicles by $200 a year and those for hybrid vehicles by $100 a year to raise about $1.9 million a year.
Under the bill, if the casino tax receipts fall below $35 million, the bill would draw funds from a restricted reserve fund or other funds designated by the governor to reach that threshold for highways each year. Casino revenues are expected to reach $35 million in fiscal 2025, according to state officials.
Smith said in an interview that he had his name taken off the bill as a co-sponsor because "I told 'em all along I am supportive, but I didn't feel like I wanted my name on there as a co-sponsor. I did not think far enough out that would delay the bill a day or two and it sure enough did."
A Section on 03/06/2019