- Associated Press - Saturday, May 28, 2016

LITTLE ROCK, Ark. (AP) - The biggest criticism of Gov. Asa Hutchinson’s plan to raise nearly $50 million for highways is that it doesn’t address the long-term needs for Arkansas’ roads. But when you look at the options for closing that larger funding gap, it’s easy to see why the governor punted.

Raising taxes, tapping into general revenue and even using a funding stream that was intended for reducing the grocery tax are among the options lawmakers may consider as they try to craft a long-term solution for highways at their session next year. There’s no easy path for any of those solutions.

Hutchinson’s plan, signed into law last week, is aimed at allowing the state to receive $1 billion in federal matching funds for highways over the next five years. It relies on the state’s surplus, investment returns and other funds to raise money for roads.

Arkansas highway officials say they have $20.4 billion in needs over the next decade, but expect only $3.6 billion in state and federal funding. It’s a problem with no simple answer, at least politically.

“If this were an easy issue - we’ve been talking about this for years and years - the solution would have already been come up with,” said Scott Bennett, director of the state Highway and Transportation Department.

Those who favor raising taxes for highways say they haven’t given up hope on that option, despite opposition from Hutchinson and other top Republicans who say the anti-tax mood won’t be any different when the Legislature returns in January. Legislative leaders have said any tax increase would likely need to be offset by a tax cut elsewhere, a move that would restrict an already tight budget even further.

Republican Sen. Bill Sample, who chairs the Senate Transportation Committee, said he doesn’t know whether he’ll try again with his proposed fuel tax increase next year. Sample, however, said he’ll spend the coming months researching how other states pay for their highways.

“I think a lot more people than some of these naysayers think do actually support a tax, a user tax going to fix the highway system we have,” Sample said.

Hutchinson has said the only way to move forward with a tax increase would be a ballot measure, but says he thinks it would need to come from voters and not the Legislature.

“It ought to be initiated by the voters and it ought to go to the ballot,” Hutchinson said. “I think you’ll wind up with a good product and the voters will be able to look at it.”

The other fight that’s likely to come up next year is a renewed push to transfer vehicle-related tax revenue to highways, a plan that’s faced resistance from Democrats who say the diversion would jeopardize other state services. Hutchinson ultimately backed off his plan to tap into vehicle sales tax revenue for road needs for his plan, but lawmakers say they haven’t given up.

Republican Rep. Andy Davis said he’s looking at a proposal to shift some vehicle tax revenue to roads, though gradually and at a lower level than what’s been previously proposed. An effort to gradually shift such revenue to roads that would have eventually capped at $548 million was dropped last year after Hutchinson objected to it.

“There is some appetite for general revenue transfer, I would say, if it’s a smaller total than what’s been tried in the past,” said Davis, who said he’s looking at about a $100 million cap for a transfer proposal.

Another contentious proposal would be Republican Sen. Bryan King’s suggestion to tap the state’s Little Rock-area desegregation settlement payments as those transfers are phased out. Those funds are earmarked to eventually go toward cutting the state’s grocery tax. King said lawmakers could still move forward with the grocery tax cut or enact another tax cut.

“Leave the grocery tax on there, debate the tax situation this next session, but at least have a dedicated revenue stream that highways would get the money,” said King, who voted against Hutchinson’s plan.

None of the proposals floated lend themselves to consensus easily. But lawmakers say that doesn’t mean they should shy away from a chance to find a solution next year.

“I think we’ve got to look at a long-term fix because the problems are just going to continue to overwhelm us if we continue to ignore them,” said Senate Minority Leader Keith Ingram, a Democrat from West Memphis.


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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