- Associated Press - Sunday, May 3, 2015

LITTLE ROCK, Ark. (AP) - By creating a working group of education leaders, business owners, legislators and highway officials to come up with solutions for Arkansas’ road funding woes, Gov. Asa Hutchinson says he wants to find consensus on a long-running problem for the state. But with few options beyond raising taxes or tapping into general revenue, middle ground will be difficult to find.

The 20-member panel the Republican governor announced last week is the latest attempt to find a solution on contentious issues, joining task forces and councils he’s formed on Medicaid expansion, Common Core and criminal justice reform. It adds to a growing list of unfinished business that lawmakers face from this year’s legislative session.

“Highway funding has to be re-examined here in Arkansas,” Hutchinson told members of the Arkansas Trucking Association as he announced the group’s formation.

The group is being formed after a legislative session Hutchinson successfully staved off an attempt to tap into general revenue for highway needs. The proposal to gradually transfer tax revenue from car-related items to highways was pulled after facing opposition from Hutchinson and advocacy groups who said it would threaten other budget needs. Finance officials said the proposal would have cost the state nearly $35 million in the coming fiscal year and $548 million once fully implemented.

The move was advocated by highway officials who said the transfer was needed to address the growing gap between road needs and funding, which relies primarily on gas and diesel taxes. Arkansas highway officials say they have $20.4 billion in needs over the next decade, but only $3.6 billion in expected revenue from the state and federal government.

The ways to narrow that gap are limited.

“In looking at this issue around the country, that seems to be the recurring theme is you either allocate the existing revenue coming into the state or somehow you increase or restructure or come up with new taxes,” said Scott Bennett, director of the Arkansas Highway and Transportation Department, who will be on the working group.

Arkansas has already adopted two of the major recommendations for boosting highway funding that were issued by a blue ribbon committee five years ago, with the state’s voters approving a temporary half-cent sales tax in 2012 and reauthorizing a $575 bond program a year earlier. Tapping into general revenue was the other recommendation from that panel.

“Without getting into tax increases currently, I don’t know what other options we have,” said Republican Rep. Dan Douglas, the sponsor of the scuttled proposal to transfer car-related tax revenue to highways.

The discussion comes as state highway officials have put projects worth $162 million on hold amid uncertainty about funding at the federal level, and as several other states are grappling with new ways to pay for road funding.

Bennett says the number of states that have had to address this issue makes him optimistic that the working group may be able to find a consensus.

“There are a lot of states around the country, more so than normal, that have passed some sort of revenue bill for highways,” Bennett said. “There’s been a little bit of everything.”

Ideas that have come up before that the panel may consider include indexing the fuel tax to construction costs, changing the tax to a percentage of fuel prices and increased registration costs for electric and hybrid vehicles. But with Republicans firmly in control of both chambers of the Legislature, there’s likely little appetite for any tax or fee increases for pay for the roads and the successful push for tax cuts this year complicates any talk of dedicating general revenue to roads.

With the working group including a representative from the Department of Higher Education, local officials and the state Chamber of Commerce, Hutchinson said he’s hoping to find a solution that will unite groups that have been on opposite sides in past highway funding debates.

“We want to have it wide-ranging so those who are worried about our normal general revenue budget, that their voice is heard,” Hutchinson said. “Unless we get a consensus, we’re not going to be able to change anything.”

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Andrew DeMillo has covered Arkansas government and politics for The Associated Press since 2005. Follow him on Twitter at www.twitter.com/ademillo

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