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Half-Cent Tax for Highways in Arkansas

Fri October 26, 2012 - Southeast Edition
Jill Bleed - ASSOCIATED PRESS


Arkansas voters will be asked to raise the state’s sales tax by one-half cent in exchange for a $1.8 billion highway improvement program that backers say will create 40,000 jobs and build four-lane highways to link much of the state.
Arkansas voters will be asked to raise the state’s sales tax by one-half cent in exchange for a $1.8 billion highway improvement program that backers say will create 40,000 jobs and build four-lane highways to link much of the state.

LITTLE ROCK, Ark. (AP) Arkansas voters will be asked to raise the state’s sales tax by one-half cent in exchange for a $1.8 billion highway improvement program that backers say will create 40,000 jobs and build four-lane highways to link much of the state.

Commercials in favor of Issue 1 began airing in Little Rock, Fort Smith, Fayetteville and Jonesboro, even though the ballot measure has drawn no organized opposition. Move Arkansas Forward, the group formed to campaign in favor of the measure, has budgeted $600,000 to air the 30-second ads in the state’s major markets.

“The upcoming election gives Arkansas voters one vote for more jobs,” the ad’s narrator said. “One vote for safer roads. One vote for four-lane highways connecting all parts of the state. And one vote for a better Arkansas economy without raising taxes on groceries, medicine or gasoline.”

The campaign has raised more than $700,000 and hopes to reach more than $1 million, Move Arkansas Forward spokesman Craig Douglass said.

The amendment calls for the authorization of $1.3 billion in bonds to fund highway projects. Those bonds would be paid for by a half-cent sales-tax increase that, if approved, would increase Arkansas’ state sales tax to 6.5 percent from 6 percent.

The tax would end when the bonds are paid off, which is expected to take no more than 10 years. The measure also calls for the dedication of an existing 1-cent-per-gallon fuel tax to fund road projects, which brings the total program to $1.8 billion.

“Several things are of benefit to voters and it’s our job to inform them of the benefits, obviously,” Douglass said. “This will continue the construction of four-lane highway projects that connect all parts of the state. We have learned in talking with voters that they want Arkansas to be better connected.”

Last year, voters approved the reissuance of $575 million in bonds to fund more than 400 mi. of interstate repairs. If approved, the new tax would fund improvements to highways throughout the state, along with a handful of interstate projects.

The Arkansas Highway Commission selected the projects by “following the cars,” Douglass said. Among the projects that would be funded by the tax include making Interstate 540 six lanes between Fayetteville and Bentonville while doing the same on Interstate 40 between Conway and Little Rock. The plan also calls for additional four-lane work in northeast Arkansas to connect Jonesboro and Paragould to U.S. 67/167 and Interstate 55.

Gov. Mike Beebe is backing the proposal, spokesman Matt DeCample said. The fact that the measure has a sunset of 10 years and that it doesn’t raise taxes on groceries led the governor to support the increase, DeCample said.

“We need opportunities for future highway funding and this is one that puts that choice directly to the people,” he said.

Many groups, including the Arkansas State Chamber of Commerce and the Arkansas Farm Bureau also are supporting the plan.

“From agriculture’s standpoint, our products can’t get to market without good roads. It’s as simple as that,” said Farm Bureau President Randy Veach in announcing the group’s support. “Like everyone, we are cautious of using sales tax revenue to fund a building program. But as Arkansas’ largest industry, agriculture will benefit from any infrastructure improvements.”

The measure is one of two referred by the Legislature during its 2011 session. The second proposal would allow cities and counties to create Sales Tax Anticipated Revenue, or STAR, districts. They are similar to Tax Increment Financing districts but use anticipated revenue from sales taxes to pay off the debt.

If approved, the Legislature must adopt laws governing the use of STAR bonds before they can be issued and any district would have to be approved at the local level.

The proposal has the backing of the Arkansas Municipal League and the governor.