LITTLE ROCK — State Highway Director Scott Bennett says almost every time he attends a regional or national highway and transportation conference he is approached by colleagues from other states wanting to know how Arkansas has manage to raise revenue for highway improvements.
Bennett says he’s even met with his counterparts in Alabama and Mississippi to discuss his states success. Missouri transportation officials came to Bennett’s office.
“Everyone wants to talk about it,” Bennett said — how did the state highway department and the Arkansas Highway Commission persuade voters to renew a $575 million bond program for interstate improvements in 2011 and approve a temporary half-cent sales tax increase in 2012 to fund a $1.8 billion bond issue for state highway improvements.
This week, Bennett will field similar questions from members of Congress.
He is scheduled to appear Wednesday before the Subcommittee on Highways and Transit of the House Committee on Transportation and Infrastructure.
The panel is interested in hearing from Arkansas highway director at a time when the federal Highway Trust Fund, the source of funding for most surface interstate transportation programs from roads to bridges, is almost depleted. Also scheduled to appear before the subcommittee are highway officials from Oregon and Virginia, state that have had similar success in raising highway revenue.
Bennett told the Highway Commission about his trip last week painting a somewhat gloomy picture of the future of federally funded highway construction in Arkansas if Congress fails to figure out a way to replenish the trust fund, which he said is nearly dry because of overspending and dwindling collections of federal gas taxes, its revenue source.
The Congressional Budget Office has said Congress’ options in addressing the shortfall include raising the gas tax by 10 cents per gallon; reducing the amount of money the government will spend on new highway projects next year; or transferring $14 billion in general funds into the fund for another one-year extension.
Bennett said federal funds — AHTD receives about $500 million annually — make up 50 percent of the department’s total revenue and pay for about 70 percent of highway construction programs in the state.
“If we continue on the trend we are are on we do have a fiscal cliff of our own that we have to be concerned about,” he said, adding that his department will soon begin developing a set of plans in preparation for the possibility that the federal funds will be depleted next September.
Bennett said Mississippi has already announced plans to reduce highway projects next year.
Bennett said after last week’s commission meeting that the congressional subcommittee is searching for innovative ways to fund highway needs and asked the American Association of State Highway and Transportation for suggestions on which states have had recent success in finding funding.
“And they called me and asked if I was available,” Bennett said.
He said state highway officials and road improvement advocates emphasized job creation in a campaign for public approval of Arkansas’ road programs.
“We’re going to create a lot of jobs from the construction side, but also access to other jobs and the economic development issue,” Bennett said. “That really was the biggest selling point in all (the) programs.”
Former Highway Commissioner Madison Murphy, who served on the panel when both highway programs were approved by voters, agreed that jobs were a major selling point, but that there were others.
“Clearly the job aspect is what we hammered, but I think it was also critical that the people of Arkansas understood that the half-cent sales tax was both temporary and specifically dedicated to identifiable projects they could look at and see on a map.”
Murphy, who did not know last week that Bennett had been invited to address the congressional subcommittee, also said Arkansans understood that under the four-lane program, cities and counties would be splitting 30 percent of all revenue generated by the half-cent sales tax.
He said voters learned during the campaign that the state’s current highway funding system, which depends on increasingly flat fuel taxes revenues, “is systemically flawed.”
Voters in November 2012 approved with nearly 60 percent of the vote the $1.8 billion bond program, funded by 10-year one-half cent sales tax increase. The program will finance a four-lane highway system connecting all corners of the state.
The tax increase began in July and the first project bids are expected early next year.
Bennett said that four-lane highway system program is expected to generate more than 40,000 jobs over the next decade.
In 2011, voters in a special election overwhelmingly approved renewal of $575 million in bonds to pay for a second round of interstate improvements.
The bond program, which was first approved by voters in 1999, at a time when Arkansas interstates were among the worst in the country, is partially paid for with a 5-cent increase in the diesel tax that Legislature adopted in 1999 in conjunction with the bond program.
Bennett cautioned that the bond programs are not enough to cover the entire state. In fact, the two will only cover about 4 percent of the state’s highway system. The interstate program is about 450 miles and the $1.8 billion program is about 200 miles.
“So we’ve still got another 96 percent of the highway program that we’ve still got to be concerned with, and that’s what we’re using these federal aid funds for,” he said.
Bennett said he also plans to tell the congressional subcommittee about the Legislature’s approval of a natural gas severance tax increase in 2008, how the bulk of that new revenue was earmarked for state and local roads.
After the tax took effect in 2009, the Highway Commission voted to use all of revenue it generates on road projects in the Fayetteville Shale play area in north-central Arkansas where many of the roads had been damaged by heavy trucks involved in drilling in the area.
“We use to say that we don’t build highways for economic development … but you really do,” Bennett said.