Highway tax plan rolled out | Arkansas Blog

Thursday, February 24, 2011

Highway tax plan rolled out

Posted By on Thu, Feb 24, 2011 at 4:59 PM

House Speaker Robert Moore rolled out the highway tax plan today. A 5-cent-a-gallon increase in the diesel tax and a half-cent sales tax increase. Both would require a statewide vote. It is described as a $3 billion highway program, most to be financed by bonds, which means the cost in taxes will actually be many billions more to pay the interest on the bonds.

The sales tax increase would neatly wipe out any supposed gains from the variety of tax cuts percolating in the legislature this year. Poor people's utility bills would finance rebuilding major routes for destructive truckers and help patch roads torn up by gas drillers not paying for the damage they cause, much less environmental risks to air and water. It is the Arkansas way. It might be approved.

Moore is standing by his dream of a four-lane construction program to all corners of the state, whether they need it or not.

More here from Stephens Media. Governor sounds receptive. The Highway Department, which loves to stay busy, and the cities and counties, who'll share in the swag, are also in support. Is a referendum sufficient cover for a Republican tax-cutter to cast a legislative vote that will enable one of the biggest tax increases in Arkansas history (to borrow a phrase from the Republican dictionary)? A tax increase that will enable one of the biggest increases in government spending ever?

UPDATE: On the jump is a brief fact sheet on the plan. I'm interested that the sales tax increase will be embodied in a constitutional amendment. Why? Not clear. You could approve bonds without changing the constitution, unless there is some other chicanery at work here. We'll see. The actual proposasl has only been filed in shell form.

HIGHWAY FUNDING PROPOSAL FACT SHEET

· Add a five-cent diesel tax to existing GARVEE bond issue already authorized, leveraging bond program from $575 million to $1 billion.

· Temporary half-cent sales tax through proposed constitutional amendment, which would include a city aid program, to be paid for from one cent of existing motor fuel tax. (Similar to the existing county aid program.)

· The constitutional amendment will be dedicated to a four-lane highway construction program connecting all parts of the state.

· All programs will continue the 70-15-15 split among the state, cities and counties.

· GARVEE and the half-cent proposal would create roughly $3 billion for construction and improvements for Interstates, the national system and a four-lane program connecting all parts of the state.

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