The Highway Department raid on general revenue | Arkansas Blog

Tuesday, March 5, 2013

The Highway Department raid on general revenue

Posted By on Tue, Mar 5, 2013 at 9:26 AM

Arkansas Representative Jonathan Barnett image
  • BARNETT
The House Public Transportation committee will take up a bill today that hasn't gotten much attention, but paired with the proposed tax cuts and the spending cap, it could spell disaster for essential state programs. It's a proposal Max got wind of before he set sail for New Zealand that diverts general revenue money into highway construction.

UPDATE: The bill isn't running in committee today after all.

The bill, proposed by Rep. Jonathan Barnett (R-Siloam Springs), taps into sales and use tax revenue on new and used cars and the estimated sales tax on auto parts and services. It's a gradual shift of revenue that begins once sales and use tax reaches $2.2 billion, a trigger that should happen next year, according to the Arkansas Department of Finance and Administration, which forecasts collections will be $2.2239 billion in FY2014.

The phased transfer starts at 10 percent on the vehicle taxes in the first year and grows to 100 percent in FY2024, the 10th year, while the percentage shift from general revenue to highway funding for the sales tax on car parts and services starts really small — .6 percent — and grows to 6 percent in the tenth year.

So initially, general revenue doesn't take much of a hit, according to DFA projections, but by the 10th year, we're talking about nearly half a billion dollars diverted from general revenue. Everyone agrees that we need better roads, but at what cost?

This move, backed by the state Chamber of Commerce and, naturally, the Highway Department, comes just months after voters approved a half-cent increase in states sales tax.

Currently, Barnett is joined by dozens of co-sponsors, including a number of Democrats, though I'm told that some sponsors may peel off as the bill gets more attention.

Gov. Mike Beebe's spokesman Matt DeCample said the governor is opposed to diverting general revenue into road construction.

"The governor has met with Rep. Barnett and makes no secret of the fact that his base tenet is that he doesn't feel that general revenue should be used for highways. At the same time, he has said he's willing to listen to ideas, but he feels that we can't afford to have general revenue money going to highways with all the needs that we have for that pot of money."

Yesterday, House Speaker Davy Carter said he applauded Barnett for slowing the process down and having a lot of conversations with members.

"I think most people realize that the way we're funding highways could be better but it's awfully hard to get from there to where he wants to go by taking general revenue out like it does."

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