Officials: Even With Severance Tax Cash, Arkansas Highways Would Need More

Mon March 24, 2008 - Southeast Edition
CEG




LITTLE ROCK (AP) If Gov. Mike Beebe’s proposal for an increase in the state severance tax is approved, most of the money will go toward improvement of state and local roads.

The proposal has drawn criticism from some Republican legislators. Rep. Mark Martin, R-Prairie Grove, said the money is being spread too thin for it to make a difference in local projects.

“It could sure do a lot more good if we actually shipped all that to cities and counties,” he said. Localities are to get 14.25 percent of the new dollars that would flow from the severance tax hike.

On March 11, Gov. Mike Beebe announced an agreement that would raise the severance tax 5 percent, with exemptions built in to keep companies from having to pay the full rate on certain new wells or those expensive to run. If approved, the tax would bring in an estimated $57 million next year and about $100 million annually by 2012.

Arkansas Highway Commission chairman Jonathan Barnett of Siloam Springs said that any money from the tax the agency gets would help keep up the highways.

“Is it enough money? No, we need more money, but does this help? Sure, absolutely,” Barnett said. “The transportation infrastructure in this state needs help, any help.”

State highways are projected to need $16 billion more than will be available in the coming 10 years.

Martin said the severance tax won’t raise enough money to make a difference locally.

“It could sure do a lot more good if we actually shipped all that to cities and counties,” Martin said.

But Beebe has noted that the State Chamber of Commerce-Associated Industries of Arkansas had endorsed his plan to raise the tax.

“[Martin] might say it’s not enough money,” Beebe said. “If he wants more tax, I disagree with him. I think this is a fair tax. The cities and counties appear to be satisfied.”

Highway and Transportation Department spokesman Randy Ort said the state has 16,400 mi. (26,400 km) of roads, and maintenance of those roads is the top priority for the department.

Costs are rising for road repairs.

“With current costs and our current funding level, we’re just falling farther behind,” Ort said. The department would need another $300 million per year, he said.

Barnett said other projects that need funding include the Bella Vista bypass in Northwest Arkansas or creating additional capacity for the Interstate 430-630 interchange in west Little Rock.

“We really almost need $100 million plus a year to fund those types of programs, but $50 million, $60 million, $70 million, that’s a good start,” Barnett said.

Ort said the $300 million estimate for the Bella Vista Bypass could lower to $139 million if the road is made a toll highway and tolls are devoted to paying off bonds.