Ordinarily we do not expect the trucking industry to be the kid who hollers that the emperor has no clothes. It is more apt to go along obligingly with great policy subterfuges, as it did six years ago when it strongly endorsed the Interstate highway bond program.
But to Gov. Huckabee’s evident shock and dismay, the Arkansas Trucking Association announced this week that it considered the governor’s new highway bond program a genuinely bad deal for the state. It is, and it is heartening to see the trucking lobby say so.
Gov. Huckabee had said there would be no organized opposition to his twin bond proposals, a permanent $575 million credit card for the state Highway Commission and a big bond refinancing that would produce $150 million or more for new building on university campuses. He seemed amazed that the truckers were going to fight his program. It is principally for their benefit, he said.
Lane Kidd, president of the truckers’ association, said its board had voted unanimously to oppose the program. He summed up its premise about as clearly as it can be done. Why would the state want to spend $1 billion for $575 million in highway improvements?
The same argument could have been raised in 1999 when voters, following the trucking group’s strong recommendation, approved a $575 million bond issue for Interstate improvements.
But he said that was different because so much Arkansas Interstate mileage was in desperate disrepair that a crash program with borrowed money made sense.
The point was at least arguable. Interstate repairs have been made at a slightly sharper pace since then than they would have been if the state had spent directly on Interstate repairs the money that is spent each year to pay off the debt.
Here is the simple equation that voters should consider when they vote on the highway plan Dec. 13: Whenever the new bonds are issued — maybe 2009, maybe later — the state will pledge its allotment of federal Interstate maintenance money each year (about $58 million a year) and the receipts of a 4-cent-a-gallon diesel tax (currently $16.4 million a year) to retire the debt. That is close to $75 million a year to retire the long-term debt, perhaps 15 years. For that, the state would get $575 million up front to spend on Interstate improvements over the succeeding years.
Now consider what you would get if you spent the $75 million directly on highway building each year instead of using it to pay interest, principal, underwriting and lawyer fees.
Over 10 years, that would be $750 million of new highways, but under the governor’s program you would have built only $575 million in roads and you would still be paying $75 million a year to investors.
After only five years under the pay-as-you-go plan, you would have $375 million of Interstate improvements. Surely that is sufficient when the state’s other highway and street needs go begging.
The principal beneficiaries of the governor’s plan are not motorists and shippers and certainly not taxpayers. They are the bond underwriters, brokers and attorneys.
There are two other reasons to defeat the highway bond plan, the first one raised by the truckers. It would radically change the state’s fiscal policy and might be unconstitutional.
At any rate, contrary to the accounts of bond lawyers and the state’s bond agency, it violates the spirit of Amendment 20 to the state Constitution, ratified in 1934. It would effectively repeal, at least for the Highway Commission, the requirement that voters must approve each time the state borrows money and obligates the state’s general fund.
If voters approve the governor’s plan, the Highway Commission at its leisure could borrow money until kingdom come as long as the aggregate debt did not exceed $575 million. We promise you that Gov. J. Marion Futrell, that old skinflint, and the authors of the amendment did not expect it to be construed liberally to give a state agency a permanent line of credit. They hated the very idea of debt.
If you think the state has a higher obligation to improve its schools and care for the needy, you might want to look at the fine print of the bond law. If the federal maintenance money and the little diesel tax prove to be inadequate to pay off the bond investors each year, a distinct possibility, the money will be taken automatically not from other highway funds but from the schools and the accounts for Medicaid and other human services.
The governor’s college building bonds? Let’s talk about them later.
