Leader Blues

Wednesday, April 02, 2008

TOP STORY > > Lawmakers decide to hike tax on natural gas

By JOHN HOFHEIMER
Leader staff writer

If, as anticipated, the House and Senate approve each otherís versions of the $100-million-a-year gas severance tax increase today that will benefit local road projects, Gov. Mike Beebe is likely to sign the tax into law sometime this afternoon, according to Matt DeCample, the governorís spokesman.

The old rate was less than three-20ths of a percent, while the new rate will be 5 percent.

The House approved its version 81 to 16 Tuesday and the Senate approved a similar version 32 to 3.

While thatís a drop in the bucket compared to the $19 billion worth of maintenance and new construction the state Highway
Department has identified over the next 10 years, itís far better than nothing. Thatís according to Metroplan executivedirector Jim McKenzie.

Of that $19 billion, $8.8 billion will be needed just to maintain the existing highways, and the state Highway and Transportation Department has identified only about $4.1 billion in revenues, plus another billion dollars over 10 years from the new tax.

McKenzie, a longtime advocate of increasing the stateís severance tax, said, ď$100 million doesnít buy what it used to.Ē

Cabot will eventually average maybe $170,000 a year in increased road funds, Lonoke $30,000, Jacksonville $125,000 and Sherwood $167,000, according to figures from the Department of Finance and Administration.

The governor worked out his proposal with the companies extracting the gas from the Fayetteville Shale, then gathered legislative support before calling his special session.

Of the new revenues, which are phased in, although not gradually, the state Highway Department will get 70 percent of the road and highway money, the counties will get 15 percent and the cities will get 15 percent. Five percent of the total will go the stateís general fund.

ďIt will take a while before (the state sees) the $100 million and the resource will deplete as it is extracted,Ē McKenzie said.

In its first year, Pulaski County would receive $631,591, with a high of $871,870.

Jacksonville would receive an estimated $134,937 in 2009, with a high of $240,099 in 2015.

Sherwood would receive $97,026 the first year, topping out at $172,642 a year.

Little Rock would receive $826,029 the first year and a high of $1,469,782 a year, and North Little Rock would receive $272,585 the first year and a high of $485,021.

Lonoke County would receive $140,136 the first year and amounts ranging from $180,631 the first year and nearly $250,000 in 2015.

In the highest year, before the revenue starts falling off, Austin would receive $4,856, Cabot $176,084; Carlisle $18,491; England $24,206; Lonoke $34,406 and Ward $20,706.

Scott Bennett of the Highway Department says the state needs an additional $150 million a year in funds just to meet the maintenance needs. At best, the severance tax will get them half of that, McKenzie said. Thatís still not money to complete the North Belt Freeway, work on Hwy. 67/167 or build the new I-430/630 interchange in west Little Rock, he added.