By Rob Moritz
Arkansas News Bureau

LITTLE ROCK — Word last week that funding recommendations may be ready by January suggested progress from the state panel charged with finding new ways to pay for improving Arkansas highways.

In reality, the work is just beginning, says the chairman of the Arkansas Blue Ribbon Committee on Highway Finance.

Once the panel agrees on possible funding sources, which likely will include a tax increase, final recommendations will be forged during a series of public hearings statewide early next year and presented to the governor and Legislature by July 1, in advance of the 2011 regular session.

The panel, headed by state Sen. John Paul Capps, D-Searcy, is working against the backdrop of declining revenues and rising unemployment within a sagging state economy that has already forced the Beebe administration to cut $100 million from this year’s budget.

“It is a daunting task,” Capps said last week. “It’s been a process that I have tried to really wrap my arms around because I’m use to a committee where you go and have an agenda, discuss that issue and then you take a vote, in most cases.”

Whatever plan is proposed, members of the committee acknowledge that selling it to the public will be difficult because the panel’s hands will be tied by the state constitution, which puts funding responsibilities in the hands of the Legislature but gives lawmakers little control over how the Arkansas Highway Commission spends road money.

“This committee unfortunately is only charged with making recommendations on one side of the coin, and that’s the revenue side, but if we go out to the public, they’re going to say, ‘what’s my dollar going to buy?’” said committee member Jim McKenzie.

“I think we’ve got to get a little bit more specific in terms of a program that these dollars are going to fund,” said McKenzie, executive director of Metroplan, an alliance of several Central Arkansas counties trying to address highway and transportation needs. “The commission recognizes that need … when we start going out to the public they’re going to ask and we really need to have something to tell them.”

State Highway Director Dan Flowers estimates maintaining state roads at their current level alone will take about $200 million a year. Up to $1.9 billion annually is needed to address highway improvement needs projected to cost $19 billion over the next decade.

A new source of funding is needed, Flowers says, because the current road funding source — motor fuel taxes — is collected on a per gallon bases and revenues do not rise with inflation. When gasoline prices go up, motorists cut back on driving and buy fuel efficient cars, he said.

Since September, two subcommittees of the highway panel have been reviewing potential funding options. The New Revenues Subcommittee has been looking at a variety of new funding streams, including a weight distance tax, tolls, an income tax hike, raising general sales taxes and a vehicle miles traveled tax.

The Revenue Transfer Committee has narrowed its choices to tapping revenue from sales of new and used vehicles. However, members have struggled with how to make up the loss in general revenues, about $145 million annually from sales taxes on new cars and $90 million from the tax on used vehicle sales.

During last week’s meeting, members also wrestled with whether to take several proposals to the public next year, or just one.

“There needs to be some choices, not a wide range, but narrow it down,” said Billy Lynch of Heber Springs.

McKenzie agreed, but said raising taxes would be a hard sell regardless of the plan.

“Half the battle will be won if we can win the public over and let it be their idea too,” he said.

Bill Fletcher of Hot Springs said selling a tax increase would be especially difficult because many people don’t know that highway funding comes from special taxes on gasoline, not from the state’s general revenue.

Randy Ort, spokesman for the state Highway and Transportation Department, said the agency will assist lawmakers anyway it can in educating the public, but in the end, it’s up to the blue ribbon panel to find the money and the department’s responsibility to develop the highway projects and spend the funding.

“We hope that everyone can have a statewide perspective. We’ve got needs all around the state,” Ort said.

“There’s been a lot of attention on bridges, capacity needs in Northwest Arkansas, basic widening of shoulder needs in more agricultural parts of the state for farm equipment,” he said. “You’ve got to take care of what you already have in place, but there’s expansion and new roads that are needed.”

Rep. John Lowery, D-El Dorado, urged the panel to have faith in Arkansans.

“I hope we don’t underestimate the public,” Lowery said. “I’m really excited about what we’re doing here. We’re going to the public and we will have some specific plans. Legislators will have input too.”