Arkansas Governor Asa Hutchinson and the Arkansas Highway and Transportation Department are backing ballot Issue 1, the Transportation Sales Tax Continuation Amendment. Other proponents include agencies for municipalities, counties and the Arkansas State Chamber of Commerce.
In 2012 voters passed Issue 1, authorizing a temporary 0.5% sales tax to be levied until the general obligation bonds in the amount of $1.3 billion for the construction of a four-lane highway were repaid (estimated to be in 2023).
The current ballot Issue 1 (2020) would amend the state constitution to make permanent the 0.5% sales tax. According to the Arkansas Department of Transportation, the revenue from this tax would be dedicated to maintaining and improving Arkansas’ state highways, county roads and city streets.
On Thursday evening, September 17, the City of Mansfield unanimously approved a resolution supporting the amendment to the constitution. “If we don’t pass that, we will be in trouble,” stated Mansfield Recorder/Treasurer Becky Walker. “It will effect our revenue, and it is what helps maintain our streets…” Resolution 2020-4 states “it is beneficial for all municipalities to support HJR 1018 as a necessary funding mechanism for our travel-infrastructure and will serve as an economic boon for the State.”
By law, the revenues derived from sources dedicated to transportation (motor fuel taxes, vehicle registration fees, the natural gas severance tax, the temporary ½-cent sales tax, etc.) are divided between the state (ARDOT), all cities, and all counties. The state (ARDOT) receives 70 percent of
those funds for work on state highways; 15 percent is divided among all incorporated cities in the state for work on city transportation projects; and 15 percent is divided between all the counties for work on county roads and bridges. The 15 percent that goes to cities and counties is referred to as ‘turnback funds.’
The notion of a temporary tax being made permanent is facing criticism. “I’m not advocating for taxes,” stated Arkansas Liberty Coalition leader Gary Epperson. “But if we’re going to be taxed, I’d rather it be on a city or county level so it can be tracked.”
“There is no question it will be a tough sell, even with the prospects for job creation and economic development,” stated Randy Zook, President and CEO of the Arkansas State Chamber of Commerce-Associated Industries of Arkansas.
“The idea that we are in a crisis with roads is a false dilemma,” said State Director of Americans for Prosperity-Arkansas, Ryan Norris. Norris likened Issue 1 to the boiling frog fable, the premise that if a frog is put suddenly into boiling water, it will jump out. But if the frog is put in tepid water, which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death. “It is a scare tactic,” stated Norris. “The real problem is a failure to budget…They want us to believe that we have these problems because we aren’t paying in enough money. That is not true, this is a self-created crisis.”
Guidehouse, a Virginia-based consultant firm, found that the “agency’s maintenance budgeting process is based on historical precedent. ArDOT budgets about $190 million annually for maintenance activities. Those budgets have remained relatively flat and are largely driven by historical budgets rather than considering the features of the roadway system and addressing the greatest needs.” That, according to Norris, is only 10% of ArDot’s overall budget for maintenance. “It is a problem of prioritizing maintenance in their budget,” added Norris. “That $190 million is definitely not enough for the entire state’s maintenance.”
As the state continues to build more highways, will the budget demands to maintain these roads also continue to grow? In the end, the fate of Issue 1 will rest in the hands of Arkansas voters on election day, November 3, 2020.
