Sunday, May 8, 2016

Legislators float tax increase for highways

Posted By on Sun, May 8, 2016 at 7:25 AM

JIMMY HICKEY: Takes swing at highway tax plan.
  • JIMMY HICKEY: Takes swing at highway tax plan.
It was encouraging to read a report from Michael Wickline in the Arkansas Democrat-Gazette this morning that some legislators — Republicans even — were talking sense on highway finance. A tax increase is necessary.

The Republicans senators — Jimmy Hickey, Bill Sample, Ron Caldwell, Greg Standridge — are talking about a five-cent-per-gallon fuel tax increase some time in 2017 and a future additional tax of three cents per gallon. In the interim, they're behind Gov. Asa Hutchinson's plan to use the Obamacare-created $50 million surplus to pay for most of new highway construction next year, plus some money diverted from streams that normally go to other state agencies, mostly placed under zero-increase budgets.

All acknowledge the political difficulty. But Hickey said somebody needed to step up to the plate.

Democratic Rep. Joe Jett mentioned removing part of the sales tax exemption on fuel sales.

Of course they're right. More money is needed.

Problem: Too many other Republicans believe and practice voodoo economics. Gov. Hutchinson continues to rule out tax increases. Other Republicans say they would accept  a "revenue neutral" tax plan. In other words, if you raise more money for highways, you have to punish another part of government by taking money away — preferably in some legislators' minds by cutting the income tax on the wealthiest taxpayers.

It's hard to be optimistic about where this story ends. But I do know the highway construction lobby was ready to push independently for a fuel tax increase in 2017 had the Obamacare extension plan failed and left the state scrambling for money. They are a force, particularly combined with city and county lobbies, which share in fuel tax revenues.

John Lyon of the Arkansas News Bureau also reports on the issue. Several legislators criticize the governor for proposing only a short-term fix — "and it's actually not much of a short-term fix," Sample said.

Senate Minority Leader Keith Ingram, D-West Memphis, said he agrees with the governor that a short-term fix is needed to avoid leaving federal highway money on the table, but he said that right now a number of people who usually disagree with each other politically are coming together in support of raising taxes for a longer-term fix.

The governor should take advantage of that opportunity during the “short window” that it exists, Ingram said.

“It’s sort of like Halley’s comet,” he said.

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