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Voters in Arkansas to Decide Future of Highway Taxes

Fri July 22, 2011 - Southeast Edition

LITTLE ROCK, Ark. (AP) Arkansas’ voters have always had a love-hate relationship with the state’s roads, with a series of mixed results on efforts to pay for highway construction. A shift in strategy on a highway plan headed to the ballot will test that relationship once more.

Gov. Mike Beebe’s decision to forgo a proposal for a 5-cent diesel tax hike in favor of instead asking voters to renew an existing bond program without any new taxes clouds the future of a highway program that already faced its fair share of obstacles. Once the chief proponent of the diesel tax hike, the lobbying arm of the state’s truckers shied away from an anti-tax environment that’s hit Arkansas and other states.

“Based on these results, this ballot question would likely fail at the ballot box,” Arkansas Trucking Association President Lane Kidd wrote to Beebe two weeks before the governor agreed to go instead with a bond reauthorization. “Our organization has concluded that while this is the right tax, it is the wrong time to ask voters to approve this measure.”

Now, highway proponents hope that Beebe will put the bond reauthorization on the ballot this fall rather than place it alongside a half-cent sales tax increase for a four-lane highway system in the 2012 election. They argue that the bond reauthorization should stand on its own, with its chief selling point that it won’t require any new taxes.

“Although they are part of the same overall plan, they are obviously two separate issues and will require separate campaigns,” said Craig Douglass, a spokesman of the Move Arkansas Forward committee that was formed to back the highway program.

Douglass said the chief selling point of the bond reauthorization is that it continues the work of a 1999 road plan backed by voters by a 4-1 margin. With the proceeds from that bond issue, road crews rebuilt or repaved more than half of Arkansas’ 650-mi. interstate highway system.

Despite the success of that program, state officials say their needs far outweigh their revenues. Arkansas has about $23 billion in highway needs over the next decade but only $4 billion in expected revenue. The state needs an additional $200 million a year just to maintain roads at current standards, highway officials say.

It’s a shortfall that has come after a checkered history in convincing the state’s voters to help pay for roads. A $28 million bond program in 1949 triggered an investigation and ultimately led to the creation of the state Highway Commission after auditors found inefficient and wasteful practices.

Voters also rejected taking on state debt for road repairs in 1965 and 1996. Most recently, a 2005 bond proposal that would have allowed the state to take on near-perpetual debt for road repairs failed after facing opposition from the trucking industry.

The scaled-down approach on the highway bonds means that, if approved by voters, it will bring in much less money than the $1.2 billion bond program the diesel tax hike was expected to fund. It also throws into question the campaign on behalf of the half-cent sales tax measure next year.

“I certainly don’t think it helps any,” said House Speaker Robert Moore, who had made highway funding his signature issue during the legislative session.

Moore has said he was disappointed with the trucking association’s decision to back off the diesel tax increase, but said he’s not fazed by its polling showing opposition to that tax along with opposition to the sales tax increase. The attitudes followed a 2010 election where Republicans won a historic number of seats in the majority-Democrat Legislature by pledging to oppose any tax increases.

Like the Move Arkansas Forward group, Moore said he’d rather see the bond reauthorization on the ballot before the sales tax hike. That way, opponents wouldn’t be able to lump both together under an anti-tax atmosphere.

“If somebody is really anti-tax, it would be easy enough to vote against both of them. We’ve certainly seen that happen,” Moore said.

Possibly adding to that sentiment would be a push by Sheffield Nelson, the former natural gas executive and two-time gubernatorial candidate, to increase the severance tax on natural gas to pay for road improvements. If Nelson gathers the signatures needed, his proposal would appear alongside the sales tax measure in the 2012 election.

Despite the challenges, Moore said he’s not giving up on the odds of passing both measures.

“I think we still have got a campaign to run,” Moore said. “We’ve still got to educate the people as to what it means for the future of this state and its economy.”

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