The governor's highway plan: sales tax, fuel tax, gambling tax, electric car fees | Arkansas Blog

Monday, February 11, 2019

The governor's highway plan: sales tax, fuel tax, gambling tax, electric car fees

Posted By on Mon, Feb 11, 2019 at 11:19 AM

click to enlarge plan2.jpg

Gov. Asa Hutchinson
this morning proposed a $300 million plan, the biggest ever, to increase spending on highways.

The elements:

* $205 million by making permanent a half-cent sales tax currently dedicated to highway bonds. This would require voter approval in 2020. The tax would otherwise expire June 20, 2023.

* $58 million from a fuel tax at the wholesale level that would work out to about 3 cents a gallon on gas and 6 cents on diesel. This will require legislative approval and a simple majority vote because it's a new tax, not a change in an existing tax rate. (UPDATE: This figure derives from a wholesale tax on the price of gas of 1.6 percent of the average regional price of fuel as determined by the Department of Energy. If prices rise, the final cost would be capped at .1-cent-per-gallon increase a year. That means, for example, a rise every year for 10 years would move the tax from 3 to 4 cents on gas and 6 to 7 cents on diesel.)

* $1.9 million from a new registration fee for electric and hybrid vehicles.

* $35 million by dedicating that much from casino revenue (now general revenue) to highways. Lots of questions here. Casino revenue is currently about $64 million a year in general revenue, the state has said, and that take is expected to dip to $31 million a year under the lower tax rate imposed by the casino expansion amendment.  Hutchinson said the state expected an increase in revenue from expanding casinos, but said reserve funds would be used if necessary to guarantee the $35 million flow.  The general revenue pot will be protected to $31 million, the amount currently budgeted from casino taxes. But it will be capped there forever. That is, all future casino tax revenue beyond that will go to highways, not general state use. This means another potentially expanding source of money. The governor said he felt comfortable that casino revenue would grow to meet the $35 million commitment.

Hutchinson was joined by legislative leaders, the head of the road builders lobby, the leader of the trucking lobby and legislators from both parties.

He said the proposal was the largest in history. He said it would maintain interstates, improve primary highways, improve secondary roads, replace every deficient bridge in the state, make safety improvements and add lane capacity.

Hutchinson said he was guided by the needs of farmers and rural workers who commuted long distances to jobs. He said there was a limit to what people could afford.

He called this plan "affordable, prudent and reasonable."

Others praised the governor and said how important good roads were to the economy and daily life.

Hutchinson said he expected the Department of Transportation and Highway Commission would provide more information about where the money will be spent.

He and others said the highway plan was important to get legislative support for the governor's income tax cut for the rich. Here's the news conference.

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