Half-cent sales tax to fund highways, roads is hardly a long-term plan

By Josh Curtis, AAC Governmental Affairs Director

Forty million dollars is a good chunk of change. You may be wondering why I’m throwing out that number. I’m throwing it out because that is the amount of money counties received from the half-cent sales tax dedicated for road funding last year. Our counties have utilized this money to improve roads all across the state. County roads are vital for Arkansas’ diverse economy, particularly for farmers transporting product to market. Additionally, businesses and large industries that employ the great citizens of this state depend on safe and reliable county roads to earn a good living.

At the beginning of the year, I was asked to speak before the Mississippi Association of Supervisors (MAS), which is the equivalent to the Association of Arkansas Counties. Prior to the state legislative session, MAS hosts a mid-winter conference focusing on legislative matters. Infrastructure funding seems to be priority for every state. MAS wanted to hear what Arkansas has done to fund the highway system, county roads and city streets.

In 2009, the Arkansas Legislature created the Blue Ribbon Committee on Highway Finance. This 19-member, independent panel was comprised of elected officials, business leaders, and civic leaders from around the state. The committee’s goal was to develop recommendations that could be considered by the General Assembly to help address Arkansas’ highway funding shortfall.

During the 2011 legislative session, the Arkansas General Assembly referred to voters a proposed Constitutional Amendment to levy a temporary, 10-year, half-cent sales tax increase to fund highway improvements. What became Issue No. 1 on the November 2012 ballot was one of the Blue Ribbon Committee recommendations. Because an independent panel came up with the idea, and the voters would ultimately decide the outcome, the strongly anti-tax legislature was not much more than a pass-through entity in this process. The legislature did not actually propose the tax increase, nor did it have to vote on the proposal’s merits. The body let the people decide, and the measure passed with 58 percent voting in favor and 42 percent opposed.

While driving to Jackson, Miss., I did not notice any orange barrels — except for those surrounding the burst water lines in downtown. I quickly realized Mississippi needs a lot more than a half-cent to fix its deteriorating roads. Mississippi has dug itself in a hole by not allocating adequate funding for its road system. I would argue that if you ask Joe the Plumber to list the top three things the government is responsible for, roads would be in that top three. Most lawmakers I talk to agree we need more money for roads in Arkansas. The debate is how that can be accomplished. The legislature always has ideas on how it can appropriate more cash to infrastructure. However, legislators have not been able to reach an agreement over the last couple of sessions on how to increase funding for roads.

This column is not meant to lobby for additional funding for roads in Arkansas, though I might get in trouble by a few county judges for saying that. I simply want to make readers aware the money generated by the sales tax sunsets in 2022. That means counties will no longer receive that $40 million a year it currently receives. On its agenda, MAS called my presentation, “Long-Term Infrastructure Plan: Arkansas Success Story.” I would argue they got the success story part right in this title because the maintenance program for county roads have been improved. But the more I think about this program, it’s not a long-term plan. Generally you can call a 10-year plan a long-term plan. However, when you are halfway through the program, you start to realize what happens when the money goes away.

One thing Arkansas has going for it is the partnership between the Arkansas Department of Transportation (ArDOT), cities and counties. All dedicated road money is split 70/15/15 — 70 percent going to ArDOT, 15 percent to the counties, and 15 percent to the cities. This formula works, and we are fortunate that each entity agrees with this formula. So when the half-cent sales tax expires, the cities also stand to lose $40 million a year. ArDOT will lose close to $200 million a year.

Maintaining the highway and road system is expensive, but going without this revenue for a few years would make the next “long-term plan” even more expensive. Everyone has to put oil in his or her car; it’s a maintenance expense. If you go without oil and stop doing the required maintenance, that small expense will turn into a catastrophic expense. It’s the same for our highway and road system.