And House Transportation Chair Robert Johnson, D-Natchez, the author of the legislation, said if that proposal dies in the tax-averse Legislature, he will propose a statewide referendum on the issue.
“It is that important,” Johnson said. “All the states around us are taking action to do something with their roads.”
He pointed out that in 2012 Arkansas voters approved a half-cent sales tax increase that is supposed to fund $1.8 billion in highway improvements over a 10-year period.
Johnson’s proposal would reduce the current 18.8-cent per gallon tax on gas and diesel fuel to 12 cents, but would add a 6 percent tax to the average wholesale price of motor fuel. Or, the tax could be tied to the inflation rate.
Johnson said the tax would generate an additional $300 million annually. If the bill becomes law, he said the tax would be about 35 cents per gallon instead of the current 18.8 cents.
The legislation has passed his Transportation Committee and is now pending before the Ways and Means Committee.
While it has become increasingly more difficult to pass tax bills in the Republican-controlled Legislature, several proposals that could raise taxes are still alive as the session enters its fifth week of a 13-week session.
Legislation has passed the Ways and Means Committee and pending before the full House to allow municipalities to ask voters to approve a 1-cent sales tax increase for capital needs.
Senate Finance Chair Joey Fillingane, R-Sumrall, said he would consider the legislation if it passes the House. He said he does not have strong feelings on the proposal. Fillingane also has filed legislation to ensure taxes are collected from people who win small amounts in the state’s casinos. Revenue from that proposal, like Johnson’s bill, would be directed to transportation needs.
Johnson said he is not opposed to Fillingane’s bill, but questioned whether the state had the technology or the manpower to enforce it.
It’s far from a slam dunk that any tax increase proposal will pass.
“I am against raising taxes 100 percent,” said Rep. Tracy Arnold, R-Booneville, when asked about the various proposals pending before the Legislature.
One of the first public officials to advocate for a tax increase to improve the state’s highways is Republican Central District Transportation Commissioner Dick Hall. He has said that the state does not have the money to build new four-lanes and keep up with maintenance needs.
The problem is that the revenue generated from the 18.8-cent tax, which provides nearly all of state funds for road construction, has not kept up with the soaring cost of that construction.
Hall maintains the tax generates 8 cents by today’s standards instead of the 18.8 cents it generated in 1987.
Construction costs have more than tripled, while at the same time the revenue generated from the tax on a gallon of motor fuel has increased much more modestly. In 1989, that tax generated $219 million annually compared with $288 million today.
The key is that the tax generates the same amount of money whether a gallon of gas costs $1 or $4. And today’s cars on average get much better gas mileage than they did in the 1980s.
Arnold said he believes that less focus should be spent on building additional four lanes after the rapid expansion that took place after the passage of the 1987 Four-Lane Program and that more emphasis should be placed on maintaining existing highways.