Arkansas Senate Panel Oks Funding Plan for State Roads

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An Arkansas Senate panel on Wednesday, February 20, advanced a key part of the governor’s $300 million highway funding plan, approving a proposal to raise fuel taxes and tap into expected casino revenue for the state’s road needs.

The Senate Revenue and Tax Committee approved the proposal, which is expected to go before the full Senate on Thursday. Republican Gov. Asa Hutchinson and legislative leaders last week unveiled the highway funding plan, which includes a separate proposal to ask voters next year to permanently extend a half-cent sales tax for state roads.

“It’s substantial, it’s prudent and it’s long term,” Republican Sen. Terry Rice, the bill’s sponsor, told the committee before the vote. “I think those three things are needed.”

The proposal approved Wednesday creates a new wholesale tax on fuel that would raise gasoline prices by 3 cents a gallon and diesel by 6 cents a gallon. It also proposes tapping into at least $35 million a year in expected tax revenue from four new casinos that will be created under a constitutional amendment voters approved last year.

Under the proposal, the first $31.2 million in casino tax revenue would go toward the state’s general fund and at least $35 million in additional casino revenue would go toward roads. The state would use other general revenue funds to make up the difference if casino revenue doesn’t hit $35 million. Finance officials say they don’t expect the casino revenue for highways to hit $35 million until the fiscal year that begins July 2024.

The chairman of the tax committee voted against the proposal, saying he was concerned about how much state general revenue would be used to make up the difference.

“I believe the highway department is independent and providing them general revenues, especially off the top, is something I’m not in favor of,” Republican Sen. Jonathan Dismang told reporters.

The proposal also calls for imposing a $100 registration fee annually for hybrid vehicles and $200 annually for electric vehicles. The increased fines drew objections from several hybrid vehicle owners, as well as the Sierra Club of Arkansas.

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