An extraordinary coalition of public interest organizations from across the political spectrum has formed to oppose the awful new tax that is on the ballot in Arkansas this November as Issue 1.
When groups as diverse as Arkansans for Prosperity, Garland County Tax Alliance, Northeast Arkansas Tea Party, Arkansas Liberty Coalition, Arkansas Community Organizations, Sierra Club, Arkansas Audubon, and Little Rock Downtown Neighborhood Association are all against a proposed tax, you can be certain that the tax is bad public policy.
In 2012, Arkansans voted to adopt a special half-cent sales tax to fund highways and roads, with the tax scheduled to run from July 1, 2013, through June 30, 2023. Issue 1 is a proposed constitutional amendment, placed on the ballot by the Legislature, that would convert this temporary tax into a permanent one, in violation of numerous promises made by public officials in 2012 that the tax would expire after 10 years.
There are multiple reasons why conservatives, moderates, and liberals have come together to oppose Issue 1. Here are three important reasons, each of which alone warrants rejecting Issue 1 on Nov. 3:
1.Arkansas Department of Transportation will receive the bulk of the funds raised by the new tax. ArDOT is a runaway agency that is unaccountable to the people and the elected branches of government. Indeed, ArDOT is wasting staggering amounts of taxpayers' hard-earned money on unneeded and even counter-productive construction.
The expansion of Interstate 30 in Little Rock is illustrative. ArDOT is planning on spending $1 billion to increase I-30 from six lanes to a whopping 10. This unnecessary project was labeled a "boondoggle" by two leading government watchdog groups.
And as I noted in two prior guest columns in this newspaper, the changes to I-30 will critically damage downtown Little Rock, undermining the progress Arkansas' capital has made over the last two decades toward becoming a more livable city.
ArDOT plans to use $350 million of the revenue brought in by the new tax in an attempt to shore up the I-30 project, which unsurprisingly is vastly over budget. After accounting for funding allocated to maintenance work, only about $50 million of the sales tax proceeds will be available for new ArDOT projects each year. ArDOT thus intends to spend seven years' worth of new construction sales tax revenue on a single seven-mile stretch of highway in central Arkansas.
I-30 is not the only example of ArDOT's profligacy. The agency has released tentative plans for hundreds of millions more in extravagant spending on new construction, with a particular focus on central and northwest Arkansas. Its approach is to burn through taxpayers' money on unnecessary and destructive projects in the richest and urban parts of the state while starving rural Arkansas of the resources required to improve local transportation systems in genuine need.
Issue 1 will enable ArDOT to double down on its big-city-highways philosophy. The ballot measure doesn't just grant ArDOT more of your money. It also removes current rules mandating that ArDOT use sales tax proceeds on the state's four-lane highway system. Accordingly, if Issue 1 passes, the expansion of I-30 will be far from the last boondoggle we can expect ArDOT to pursue.
ArDOT must be reined in before it receives another cent from the pockets of Arkansans. That means ensuring that the agency is subject to appropriate oversight by elected officials. Only then can we expect ArDOT to implement rational and equitable transportation measures.
2.Highways, roads, and bridges should be funded by use taxes such as levies on gasoline, diesel, and cars, not general sales taxes. That way the parties responsible for wear and tear on our roads are the ones funding its upkeep.
According to the Tax Foundation, Arkansas has the second highest combined state and local sales taxes in the country at 9.53 percent--quite the dishonor. But the American Petroleum Institute found that our state has only the 35th highest gasoline taxes and the 27th highest diesel taxes.
If ArDOT needs more revenue--and it wouldn't if the department abandoned sinkholes like the I-30 project--then this data makes it all the clearer that the funding should come from use taxes, which are far lower in this state than general sales taxes. The trucking industry in particular ought to be called upon to pay for the damage its vehicles inflict on our highways long before we ask for more money from Arkansas families.
3.It is a truly appalling idea to place a permanent sales tax in the Arkansas Constitution. The purpose of a constitution is to establish the basic structure of government and to protect fundamental individual rights. That is why constitutions are so difficult to amend. Day-to-day tax policy has no place in our governing charter. And it will be nearly impossible to repeal the tax once it is adopted, even if revenue needs and travel and commuting patterns change.
It should come as no surprise that the interstate trucking and road construction industries are leading the charge for Issue 1. After all, the new sales tax, combined with ArDOT's new spending discretion, will enable the agency to expand its unfortunate practice of using taxpayer funds to subsidize these two wealthy industries.
Some proponents assert that Issue 1 is not a tax increase but merely an extension of an existing tax. That's nonsense. If your bank modified your mortgage payment from 30 years to forever, you'd see that as an increase in your mortgage, right?
Defenders of the new tax also argue that ArDOT's construction plans will generate economic growth. But if Issue 1 fails, then all of the money not collected by the department will instead be spent by private citizens. That will almost certainly create far more jobs and economic activity than if an unaccountable government bureaucracy does the spending.
Finally, ArDOT claims that cities and counties will lose critical funding for roads if Issue 1 fails. But if ArDOT stops diverting tax dollars for unneeded projects like I-30, then any revenue shortfalls at the local level can easily be addressed, especially if such a reallocation of money is combined with higher diesel taxes.
Issue 1 imposes a terrible new tax on all Arkansans. I urge everyone in this state to vote no on Issue 1.
Joshua M. Silverstein is a law professor who lives and works in Little Rock. Links to the sources referred to in this article may be found at http://jurisophia.blogspot.com/2020/09/sources.html.