Leader Blues

Friday, July 03, 2009

TOP STORY >> Prospects seem grim for better highways

By JOHN HOFHEIMER
Leader senior staff writer

There’s no such thing as a free lunch, and there is no such thing as a free road and highway program either.

That’s why state Sen. John Paul Capps, D-Searcy, Metroplan executive director Jim McKenzie, Jacksonville attorney Mike Wilson and 16 others are serving on the Arkansas Blue Ribbon Committee on Highway Finance to find permanent funding to at least keep the state’s streets, roads and highways repaired and maintained, and if there’s money enough, to build new ones—finish the North Belt Loop, for instance.

Capps, who has a long-standing interest in highway issues, is the chairman.

The state Highway and Transportation Department projects its needs over the next decade at $23 billion, with anticipated revenues of only $4.1 billion. That means they expect to have about one of every six dollars they need.

Highway Department Director Dan Flowers told the group the state needs an additional $200 million a year just to maintain current conditions.

The only news here is that the needs category has increased by $4 billion, while the projected revenues haven’t budged an inch.

And that’s just state highways and interstates. There’s no complete data yet about the costs of maintaining or building city streets and county roads.

All agree more money is needed and while there are variations on a theme, basically that comes down to increasing taxes or fees or taking money from other state programs, such as prisons and education—each of which is generally conceded to need more, not less, funding.

Capps said he expects to have figures on the amount of money that could be raised through various methods when the commission reconvenes July 15 for its third meeting.

Among the tax-or-fee proposals are including a severance tax on lignite, using taxes collected on Internet sales, toll roads, raising property taxes and a hike in the state fuel tax.

Raising additional revenues is difficult in Arkansas, where the state Constitution puts “structural handcuffs” on the state’s ability to raise excise taxes. It requires a three-quarters majority of both houses to raise taxes, according to McKenzie.

McKenzie in the past has promoted regional mobility authorities with the power to levy taxes on fuel or elsewhere upon a vote of the people, the money then being available for roads and highways in the areas that voted for them. For instance, central Arkansas could pass such a tax, and then apply the revenues to roads and highways within its area.

“If folks want good roads, they are going to have to pay more,” McKenzie said. “It an immutable law of economics.”

Wilson said one reason for the financial difficulty was that revenues were flat, but “the costs are almost exponentially rising. Up and up and up. In 20 years they’ve increased 10 times. Cost of asphalt is many times greater than 10 years ago.

“It’s going to have to be some sort of tax,” Wilson said. “There’s no way around it. A motor fuel tax, property tax, they’re all distasteful and unpopular. We could (divert to highways) all sales taxes on tires and tire parts and cars, but that would be way short of what they need and it makes a hole in general revenues.”

“Virtually all the money locally comes from the tax on the number of gallons, not the price” at the pump, Capps said. Thus, when gas prices go up and people drive less and buy less fuel, less money is available for highways.

“Every state is going through this very same thing,” Capps said. “It’s a national issue but we have to address ours at the state level.”

He said the commission also must look into the future. Raising gas and diesel taxes would be a temporary fix if in the future vehicles run on electricity or are hybrids, for instance.

“We have been underfunding for decades,” McKenzie said. “Highways are being funded by an inelastic tax. The thing that goes up with inflation is cost of building and maintaining roadways, particularly last four of five years, cost has spiked with the run up (in price) of oil, steel, asphalt and concrete.”

There is worldwide competition for those resources, he said.

“Purchasing power’s going down. There’s been no federal increase since 1993. The state had a modest one.”

“Build roads and you have to maintain them forever,” McKenzie said. “It’s the same for cities and counties. We need to equitably fund city, county and state roads, now and in the future.”

“The stimulus (highway money) is like taking an aspirin,” said Wilson. “When it wears off, the headache comes back. We have to be innovative and creative. We can’t print money or raise gas-taxes 40 cents a gallon.”