Pick almost any issue between Mike Beebe and the good Republican Sheffield Nelson and the governor in our sights would own the higher ground. But on how to use a severance tax on natural gas Nelson is right and Beebe the shortsighted one.
Both view the state’s historical refusal to tax the production of Arkansas’ rich veins of natural gas as a shame, and the governor seems willing to ask the voters to do what the legislature finds it impossible to do, levy a tax on the big exploration companies comparable to what other states collect.
Beebe wants to first see if the companies will negotiate and agree on a reasonable tax and help push it through the legislature. That will not happen, although Sheffield Nelson’s initiative proposal will give them a compelling incentive to come to the table. Nelson is going to circulate petitions to put a 7 percent tax on the wellhead price of gas, the rate in neighboring Oklahoma, on the general-election ballot next year.
Arkansas now collects three-tenths of a penny for each thousand cubic feet, which is hardly even a nuisance. Texas imposes 7.5 percent.
Nelson, however, wants to dedicate the revenue — upwards of $100 million a year and climbing at the 7 percent rate — to higher education and Beebe wants to spend it on highways. He won’t support Nelson’s initiative next year unless he changes it to divert the money to the Highway Department. Beebe said he believed that Nelson, being a good man, would come around to his side.
Let us hope instead that it is the governor who sees the light. Arkansas, the nation and most of the individual states have always paid for highways with user taxes, that is, fees collected from those who use them and roughly in proportion to the extent that they use them and damage them.
Thus, we build and maintain our roads and bridges with state motor-fuel taxes, vehicle-registration fees and a variety of smaller levies connected with transportation — some $600 million a year in all — and a portion of the fuel taxes collected by Uncle Sam that match the money that we collect. We have resisted efforts by the transportation interests from time to time to take sources of revenue for the schools and other services and divert them to the highway program.
That policy has worked well, especially for highways, even in a state that has a higher per-capita highway burden than most states because of the state’s rural and widely dispersed system of roads. Fewer motorists are paying for more highway miles than in, say, New Jersey.
Nevertheless, Arkansas’ highway system, though not the best, ranks far better in comparison with other states than does its public schools, or for that matter its colleges, its health care or its services to the elderly and needy. We have fewer college graduates in our workforce than any other state. If we are truly interested in economic development, as Nelson points out, that has to be a larger factor than the condition of our highways.
It is true, as Beebe says, that motor-fuel tax receipts are not climbing as fast as road construction costs in spite of the fast-rising number of vehicles on the roads. Increasing fuel efficiency in new vehicles means that people are buying less fuel per mile traveled, which means that they are paying fewer taxes per trip. Our motor-fuel taxes are tied to volume, not to price. We do not have a sales tax on gasoline or diesel. So people are paying less in taxes per trip, and a steadily declining share of what we spend on traveling are going to maintain and improve the roads.
When the state needs to undertake a major highway-building program, road-user taxes are still the most prudent way to do it. The lack of a fair impost on the giant rigs that cause most of the damage to the Interstate and primary roads and bridges remains the state’s biggest failing. The late Henry Gray, highway director deluxe, tried vainly for many years to get a reasonable tax on those 80,000-pound behemoths to cover a fraction of their road damage. Now that would be a worthy fight for Gov. Beebe.
Meantime, let us hope that he enlists in the fight to raise the opportunities for children by dedicating a severance tax to a college education for everyone who wants it.
