A committee Wednesday recommended Senate approval of a proposal to refer to voters in 2020 a proposed constitutional amendment that would make permanent a half-percent sales tax that benefits highways but was intended to expire in four years.
House Joint Resolution 1018 by Rep. Jeff Wardlaw, R-Hermitage, is projected by state officials to eventually raise about $205 million a year more for the state Department of Transportation for highways and $44 million a year more each for cities and counties.
The proposed ballot measure is one part of Gov. Asa Hutchinson's plan to ultimately raise about $300 million a year more for state highways. The other part is a bill approved by the Legislature to raise about $95 million a year more for highways and about $13 million a year each for cities and counties.
In a voice vote with Sen. Bart Hester, R-Cave Springs, and Trent Garner, R-El Dorado, dissenting, the Senate State Agencies and Governmental Affairs Committee recommended Senate approval of HJR1018.
[RELATED: Complete Democrat-Gazette coverage of the Arkansas Legislature]
Sen. Lance Eads, R-Springdale, said afterward that he expects the Senate to approve the measure today. The measure requires 18 votes in the 35-member Senate for approval. Being a resolution, no action by the governor is required.
"From what we have and people that were signed on as co-sponsors, I think we have plenty of support to get it passed," Eads said in an interview. The measure has 14 co-sponsors.
The House voted 67-30 to approve HJR1018 on Monday.
Eads told the Senate committee that 58 percent of Arkansas voters in 2012 cast ballots to approve Amendment 91 to the Arkansas Constitution. That amendment imposed the half-percent sales tax for highways for a 10-year period. Polling has shown that about 62 percent of voters support making the sales tax permanent.
Voter approval of HJR1018 would allow the Department of Transportation and its contractors and subcontractors to plan on a long-term basis for a highway program in perpetuity, he said.
"This resolution will still allow our voters to be consulted in the decision, so it is not like we are saying today we are making the decision for them. We give them the choice to have an ongoing, long-term funding solution," Eads said.
Earlier, no committee members seconded Garner's motion to change the proposed ballot measure so that the tax expired in 10 years instead of being permanent. The motion therefore failed.
In its present form, HJR1018 "forever and ever, this will be taken from the people of Arkansas, and the accountability that we will lose with the Arkansas Department of Transportation from seven or eight years from now, I think is a critical issue that we should think about," Garner told the Senate committee.
"Secondly, I think it is important that we have another funding mechanism that we work on, that 10 years from now, to be able to give that relief to the people of Arkansas and provide a long-term highway funding solution that meets the critical needs [of the state] while also moving away from a half-cent sales tax that I believe is not a great way to fund highways," he said.
Ryan Norris, state director for the Americans for Prosperity's Arkansas chapter, testified against the proposed ballot measure, while officials for the Arkansas State Chamber of Commerce, Arkansas Trucking Association, Arkansas Farm Bureau and Arkansas Municipal League backed the proposal.
"We understand that Arkansas roads are in need of funding," Norris said.
"It's an albatross around the neck of the state," he said. "We are the seventh-largest road system, but 32nd in population."
But Norris said the proposed permanent extension of the half-percent sales tax for highways "adds to Arkansas being the third-highest sales tax in the United States of America," in terms of state and local sales taxes.
"There are many sales taxes that are looking right now to increase, by counties and by cities, to even add to this burden on the Arkansas people," he said. "It also affects low- and middle-income [people] disproportionately. It is regressive. It takes more of their income."
But Randy Zook, president and chief executive officer of the Arkansas State Chamber of Commerce, said, "I can think of very few, if any issues, that can have a more positive and short-term and near-term, as well as long-term, positive impact on the business climate of Arkansas than to have a satisfactory and comprehensive funding program for the highways."
Companies must locate where they hire employees who can get to work on a reliable and safe basis, and have the capacity to transport raw materials and finished products, and retailers need to have customers who can get to their stores easily and conveniently, he said.
"This bill gives a long-term solution to helping to meet the needs of the highway department in funding their program, for maintenance especially, and allowing for planned expansions for the highway system in both multi-lane and two-lane systems," Zook said.
The chamber represents about 1,200 businesses and organizations, and "we enthusiastically support" this proposed ballot measure, he said.
"We were one of the lead organizations when the half-cent sales tax was passed initially ... and we will serve in whatever capacity that makes the most sense if you pass this issue when it gets on the ballot," Zook said.
Shannon Newton, president of the Arkansas Trucking Association, said the trucking industry supports sustainable and substantive solutions to funding the state's highways.
"All the things we have done in the last decade have been temporary, and we have the option to have a permanent solution ... and we support this bill," Newton said.
Hester pressed Newton about whether the Arkansas Trucking Association would support another source of highway funding in the next legislative session.
"I don't believe we will be back in two years," Newton replied.
The Senate committee's advancement of the proposed ballot measure came a day after the full Senate sent Hutchinson the bill with the other part of his highway program, Senate Bill 336 by Sen. Terry Rice, R-Waldron. The House on Monday approved the measure 71-26.
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.
A Section on 03/07/2019