By Rob Moritz
Arkansas News Bureau
LITTLE ROCK — Arkansas’ current method of funding highway improvements with fuel taxes is a “structural problem” that needs to be remedied, a state panel looking for new ways to finance road building said today in an interim report to legislators and the governor.
The Blue Ribbon Committee on Highway Finance missed today’s deadline to make final recommendations after more than a year of study. The panel said it would continue to meet and make final recommendations by Dec. 1.
“This is not the end,” said Sen. John Paul Capps, D-Searcy, chairman of the 10-member committee. “We just didn’t have time to complete everything that we wanted to do. It was the feeling of the committee that we need to be as thorough as possible.”
The 12-page report includes the panel’s “interim position statement” and details what it believes to be a “structural problem” with depending on user fees to pay for highway construction.
The 19-member committee, created by the Legislature in 2009, has been meeting to develop a new funding source to help bridge the gap between highway needs projected to be more than $19 billion over the next decade and anticipated revenue of about $4 billion.
Highway officials say rising fuel costs and more fuel-efficient vehicles have resulted in flat revenues from fuel taxes in recent years.
“The systemic failure of current financing has made clear to the committee that the traditional approach to highway, road, street and bridge maintenance and construction is, in its present form, no longer sustainable when measured against a changing economic and technological environment, erosion of purchasing power and continuing escalation of costs,” the report states.
The report cites four examples of the current funding structure’s “failings,” including:
—A gap between growing general revenue and stagnant highway revenue.
—Increase in highway construction costs and the erosion of the highway department’s purchasing power.
—Decreasing motor-fuel consumption because of increased miles-per-gallon standards and new technology, such as hybrids.
—The inconsistency between the state’s small population and the large size of state and county road system that must be maintained.
The report said the committee would continue to study a variety of possible funding options, including bonds to be paid off with a temporary half-cent sales tax that would sunset in 10 years or sooner; indexing motor fuel taxes to the state Highway Construction Cost Index; a phased-in excise tax on motor fuels at the wholesale level; and a 10-year phase-in of existing vehicle-related sales tax from general revenue to the highway fund.
The report said some of those proposals could be referred to voters for consideration.
