LITTLE ROCK — A bill to dedicate revenue from vehicle sales taxes to state highways, counties and cities failed to clear the House Transportation Committee on Thursday.
House Bill 1418 by Rep. Jonathan Barnett, R-Siloam Springs, the committee’s chairman, failed in a 10-9 vote, falling one vote short of the 11 it needed to clear the 20-member panel. The vote was nearly a straight party-line vote, with only one Democratic member, Rep. Walls McCrary of Lonoke, joining with Republicans to vote for the bill.
The committee is composed of 10 Democrats, nine Republicans and a Green Party member who usually votes with Democrats.
Under the bill, revenue from all sales taxes collected on the sale of new and used vehicles would be distributed as follows: 70 percent to the Arkansas Highway and Transportation Department, 15 percent to the County Aid Fund and 15 percent to the Municipal Aid Fund. The money received by AHTD would have to be used for highway construction and maintenance, but the money received by counties and cities would not be limited to road projects.
The transfers would not begin until after total sales tax collections for one year exceed $2.25 billion. The bill would be phased in over a 10-year period after that.
Barnett told the committee that the fuel taxes that now fund highway construction have been flat for 20 years while highway needs have increased. He noted that his proposal was one of the recommendations made by the Arkansas Blue Ribbon Committee on Highway Finance in 2010 and was the only option currently on the table to address highway needs.
“The bill would not cut any funding for any agency of government,” Barnett said. “It will, however, begin sharing the growth of general revenue — and that’s been my argument since the very beginning. The Highway Department has to get general revenue.”
Former House Speaker Robert S. Moore Jr., now a member of the state Highway Commission, testified in support of the bill.
“This is the only recommendation that’s being considered by the Legislature. There is nothing else,” Moore said. “This is the one funding mechanism for the future that’s going to allow the state of Arkansas to continue to do what’s expected in every one of your districts, and that’s maintain good highways.”
Moore, a Democrat, acknowledged that Gov. Mike Beebe and higher education officials oppose the bill and that it is being proposed at the same time that legislators are talking about passing substantial tax cuts.
“We ought to be sitting at the table together up here and we ought to be supporting a means together of sharing revenue growth so that we have institutions of higher learning, so that we have good highways, and that coalition should be talking to this group about how we don’t have the ability to cut taxes right now because we have obligations of government that the people expect and we need to pay for,” he said. ‘That’s what I’d be doing; that’s not what we’re doing. I didn’t convince anybody.”
Testifying against the bill, Rich Huddleston, executive director of Arkansas Advocates for Children and Families, said that passing the measure while simultaneously passing an expected $100 million to $15o million in tax cuts would “represent a perfect storm that could really hurt the future funding base for things like education, health care, public safety and services for vulnerable children and families.”
Barnett said after the hearing that he was disappointed to see his bill treated as a “partisan” issue by the committee, noting that a majority of members of both the House and Senate have signed on as co-sponsors. He said he did not immediately know whether he would try again with the bill this session.