Friday, September 12, 2014

TOP STORY >> State highway funds depleted

Leader senior staff writer

Unless sales tax on road-user items — such as new and used vehicles, tires and batteries — is redirected from general revenues to the state Highway Department’s construction and maintenance funds, construction of new highways will continue to slow and existing roads and bridges won’t get all the maintenance they need.

That’s according to a presentation state Highway Department Director Scott Bennett gave to the Little Rock Air Force Base Community Council on Wednesday.

Most of the Highway Trust Fund money that comes to Arkansas from the federal government is generated from federal fuel tax per gallon, and that amount has been declining steadily.

Currently, gasoline fuel tax accounts for two thirds of the revenues in the federal highway trust fund, with diesel fuel taxes accounting for another 25 percent.

Between more expensive fuel and more efficient vehicles – attributable in part to federal mileage standards – Arkansans are burning and buying less fuel.

Add in the increase in vehicles running on natural gas or electricity, which currently have no effective revenue-generating tax, and compound that by the ever-rising cost of building and maintaining roads, highways and bridges, and state highway revenues are increasingly inadequate.

For those alternative-fuel vehicles to pay their fair share for roads, a new method must be found, perhaps an annual assessment at tag-renewal time, Bennett said.

The state has already implemented two of the top three recommendations of the General Assembly’s Blue Ribbon Highway Revenue Committee, co-chaired by former state Sen. John Paul Capps of Searcy, Bennett said.

Among the recommendations were reissuance of Garvey bonds, approved in 2011, and a temporary half-cent sales tax set to expire in 2022 in anticipation of completion of the phased transfer of road-user tax money to highway funds.

But that third and most important piece, switching road-user sales tax from general revenue to the Highway Department has yet to get traction. Currently, that puts about $400 million a year into the general fund.

“In 2013, a bill had a lot of cosponsors,” Bennett said. But it didn’t get out of the House committee.

Gov. Mike Beebe, under whose leadership the General Assembly cut hundreds of millions of dollars worth of taxes a year by removing the tax on groceries, rigorously opposed diverting the road-user sales tax from the state’s general fund. Both gubernatorial candidates, Democrat Mike Ross and Republican Asa Hutchinson, haven’t written it off, said Bennett, who talked with them.

In addition to combined state and federal fuel taxes — roughly 40 cents a gallon — Arkansas would have to increase it by 15 cents a gallon to offset the income they hope to derive from a switch in the user-tax.

Locally, the state has undertaken the $41 million widening of Hwy. 67/167 from Redmond Road to Main Street, including new overpasses at each road, with completion set for early 2016.

Then, assuming it can pay for it, the $60 million widening of Hwy. 67/167 from Vandenberg Boulevard is slated to start in 2016.

That project should be complete in 2019, in time to begin widening Hwy. 67 from Vandenberg to Hwy. 5 at Cabot for an estimated $70 million.

Dates have not been scheduled yet for an interchange at Hwy. 67/167 and Hwy. 5 for an estimated $14 million, a new Hwy. 67/167-Hwy. 89 interchange, also estimated at $14 million, and another Cabot-area interchange at Hwy. 67/167-Hwy. 38 for an estimated $15 million.

“We are asked to do more with less, but we can only do less with less,” according to a department Powerpoint slide.

It is already one of the most under-funded highway departments in the nation and seems to have squeezed all the fat out of its budget.

With 16,416 miles of highway, only 11 states have a larger highway system. But Arkansas is 43rd in highway revenue per mile.

Among roughly similar sized road systems in Illinois, California, New York, Tennessee and Florida, Arkansas has only a quarter to one-tenth the amount of revenue per mile for construction and maintenance.

While the administrative cost per mile in Arkansas is $1,821, the cost in Illinois is $8,830 and $108, 417 per miles.

Meanwhile, the department had 3,801 employees in 1973, 4,052 in 1993 and only 3,607 in 2013.

Between 1977 and 2012, Arkansas’ general revenues increased from about $800 million to about $6 billion, while state highway revenues remained flat, topping out in 2012 at about $450 million.

If the road-user taxes were transferred for Highway Department use, that would increase by about $340 million a year, with another $120 million a year to be shared by the city road funds and an equal amount shared by county road funds.

Gas and diesel consumption fell about 86 million gallons between 2007 and 2013, resulting in a net loss of $54 million in revenues during that time — even as miles traveled increased by 1.1 billion miles.

In the 20 years between 1993 and 2012, the purchasing power of the fuel tax in Arkansas declined by 37 percent. And, by 2023, it is estimated that the purchasing power will be only about half of what it was in 1993.

Put another way, in 1997, $100 million would have paid for widening 143 miles of highway. Today, that would widen only 15 miles.

It would overlay 400 miles of highway then, but now overlays only 54 miles.

While the quality of infrastructure in the U.S. was rated ninth in the world in 2008-2009, it fell to 25th by 2012-2013, behind the likes of Saudi Arabia, Oman and Bahrain.

 The Hwy. 367 bridge over Cypress Bayou, just north of Ward, will be closed from 9 a.m. to 3 p.m. Tuesday while it undergoes a routine inspection, reducing northbound and southbound traffic to only one lane.

 I-40 between Kerr Road and Hwy. 13, north of Carlisle, will have east and westbound traffic reduced to one lane for resurfacing work between 9 a.m. and 3 p.m. Tuesday through Thursday.