Arkansas House Committee Approves Part Of Governor's Highway Plan

Feb 26, 2019

The House Revenue and Taxation Committee discusses the highway plan.
Credit Sarah Kellogg / KUAR

Part of Arkansas Gov. Asa Hutchinson’s highway plan needs one final vote to fully pass in the legislature. The House Committee on Revenue and Taxation approved the bill on Tuesday.

The proposed highway plan is split into two parts. The first part, a permanent extension of the half-cent sales tax on fuel, requires approval by constituents on the 2020 general election ballot. An extension of the tax is predicted to raise $205 million annually for the Arkansas Department of Transportation.

The second part, which consists of an increase on a new tax index for diesel and gasoline, additional registration fees for hybrid and electric vehicles, and the collection of tax revenues from casinos, restricted reserve funds and the use of other funding, make up the remaining $95 million of the plan. This part of the plan just needs to be passed by the legislature.

Rep. Mike Holcomb, R-Pine Bluff, who brought the bill to the committee, said never before has he seen such cooperation on coming up with a highway plan. While he acknowledged that the bill is "not perfect," he also said Arkansas cannot wait any longer to work on its roads. 

"If we continue to delay the necessary repairs that we need on our state highways, our bridges, our streets...If we don’t do that right away, rather than spending hundreds of thousands, we’re going to be spending millions to recover," Holcomb said.

The bill mandates $35 million be annually collected from the state. The state expects casinos provide this revenue, due to the expansion that voters approved in November. However, if revenue from gaming falls short of the required $35 million, which is predicted for the next few years, the remaining funds must come from other areas of the state.

Rep. Les Eaves, R-Searcy, questioned that aspect of the bill in committee.

"If there’s not enough money at the end of the day to fund RSA the way we think it’s going to be funded. Would this mean that the $35 million minimum, no matter what?" Eaves asked.

Paul Gehring with the Arkansas Department of Finance and Administration, said the $35 million minimum was required each year as a part of this bill, and the governor and the legislature would have to work on the budget to allocate the required funding for the plan.

One criticism the bill received from the public concerned the additional registration fees for hybrid and electric cars. Annually, electric car owners would have to pay an additional $200 to register their vehicle, while hybrid vehicle owners would pay $100 annually.

Glen Hooks with the Arkansas Sierra Club, said there is a concern these extra registration fees are more than what drivers of such cars would avoid by not paying for fuel. He said these fees could discourage people from purchasing electric or hybrid cars in the state.

"I think it’s worth noting that putting the electric vehicle fee at $200 a year will put Arkansas at the top of the list nationally, tied with two other states, when it comes to the highest fees in the entire country for electric vehicles," Hooks said.  

Hooks mentioned other states like Iowa and Illinois that waive or reduce fees to those who purchase electric or hybrid vehicles.

"They recognize that these EVs and these hybrids result in cleaner air, and better public health, and less road damage," Hooks said. 

The committee passed the bill by a voice vote. It now heads to the House for a full vote. If passed, it then goes to the governor.