Facing voters at the polls this fall is Issue 1, a proposed constitutional amendment that, if passed, will permanently extend the state's one-half cent sales and use tax on motor fuels. The 2019 Legislature referred to voters the proposed amendment to permanently extend the half-percent sales tax for highways and roads. Voters in November 2012 approved that tax for a 10-year period.
Gov. Asa Hutchinson said Wednesday that he would take down a placard in his office referring to the 2019 regular session as "the greatest of all time" if voters reject the proposed constitutional amendment that would permanently extend the state's one-half-percent sales tax for highways and roads.
"If you come into my office, you will see behind in my cabinet there all the acts that were passed in the 2019 session of the Legislature and then you'll see the placard that says GOAT session," Hutchinson told about 40 people attending the annual meeting of the Arkansas Good Roads Foundation in Little Rock.
"That is really a source of pride for me because I know people have razzed me because you shouldn't be doing this, bragging about what happened," said the Republican governor, who first called the 2019 regular session the GOAT in April 2019.
"But it was the greatest of all time," Hutchinson said. "We had so many initiatives that were all geared around growth. It was about raising teacher pay, improving education. It was about [income] tax cuts that keeps us competitive. It is about transforming state government that is a good success story. But the fourth T was transportation."
In 2019, the Legislature enacted a law aimed at raising $95 million a year for state highways by imposing a wholesale tax on gas and diesel; increasing registration fees for electric and hybrid vehicles; and reallocating a minimum of $35 million in state funds, including casino tax revenue. That law also is projected by state officials to raise about $13 million a year each for cities and counties.
Issue 1, as much as almost any other item on the ballot, will have a profound effect on Jefferson County residents, according to county and city officials.
County Judge Gerald Robinson said continuation of the sales and use tax, which is levied on diesel fuel and gasoline at one-half cent per gallon, is vital to the county's ability to maintain its roads, many of which have suffered damage over the past few years due to flooding.
"We need it, and it is not a new tax," Robinson said. "It's an existing tax that we're asking to be continued."
State officials project the proposal, if extended in November, would raise about $205 million a year for highways and about $43 million a year each for cities and counties.
Robinson said the money is important because it makes up a significant portion of state turnback funds the county receives from the state. Of the county's annual road maintenance budget of $4 million, Robinson said, the sales and use tax makes up about 25%, or just over $1 million.
"We can take that money and do extensive work when it comes to county roads," Robinson said. "A lot of them, we may do overlay, repair, and patching and things of that nature, and so when you talk about that type of funds being lost, you're talking about several miles of roads not being fixed, and I daresay, a couple of hundred miles of roads that will hurt, and Jefferson County overall is in pretty bad shape."
Robinson said the state turnback funds from the sales and use tax have enabled the county to do a lot of repair that would otherwise not be possible.
"Without that money we couldn't even make a stab at some of those roads," he said.
Pine Bluff Street Department Superintendent Rick Rhoden said the city is even more dependent on those funds.
"My budget is $5 million, somewhere around that," he said. "It has to pass because I get absolutely no money at all out of the city general fund so if it fails I don't know what the city is going to do to put the money back into my account."
Rhoden said turnback funds from the state account for about 95% of his maintenance budget. A small portion, he said, comes from property taxes, but he said that amount is minimal. He said a homeowner who has a home valued at $100,000 would pay about $19 a year in property tax earmarked for roads.
"Nineteen dollars doesn't go very far on road maintenance. People like to holler that they pay a lot of taxes but most of that goes to schools, not to street funds," he said. "All of my money has come from the fuel turnback tax so far."
Rhoden said although the pandemic hit a lot of public budgets hard, the advantage of having most of his funding come from the tax is that motor fuel is taxed on volume, not on price.
"It doesn't matter how cheap gas gets, the tax stays the same per gallon," he said. Rhoden added that removing the sunset clause would give the funding source additional long term stability.
"It's better because we're already running down the one that's on there," he said. "It's supposed to run out in 2022 and that money is important to the street department."
Justice of the Peace Ted Harden acknowledged that the money is needed for roads, but he expressed reservations about the lack of a sunset clause.
"We've got a lot of road damage that needs to be repaired, and we really need the money," he said. "I can put it that way. There's a lot of rural areas that are really hurting for road repair, and it's all backed up with all the damage we had from the flood and everything, so I'd really like to see it continue."
But with no sunset clause, Harden said, it's hard for him to get 100% behind the measure.
"I don't know about the no sunset clause but right now, temporarily we certainly need the money," he said.
Even though Hutchinson said Wednesday that voters could conceivably repeal the tax at a future date, Harden said he still didn't like the permanent nature of the issue.
"I'd like to see it on the front end, myself, to have a sunset clause," he said. "Even if it's a year or two or whatever we feel is necessary, I think it's preferable for the voters to know there's going to be an end to it. Besides, it's easier to come back and renew it than it is to repeal it."
Asked if he would vote for the measure, Harden didn't commit wholeheartedly but did acknowledge that, sunset clause or no, the money is needed.
"Without a sunset clause?" he said. "Ah, probably. We need it. We definitely need it. We've got a lot of road repair."
Information for this article was contributed by Michael R. Wickline of the Arkansas Democrat-Gazette.