In a time when taxpayers can finally afford to fuel their cars, some state legislators are jumping on the gas tax hike bandwagon. The latest set of state legislators capitalizing on the moment are Indiana House Republicans. Despite having a $2 billion surplus, these legislators want taxpayers to foot the bill for expanding state transportation needs. Others, though, have vocally acknowledged that a state’s new and current transportation needs can be met through smarter budgeting, instead of gas tax hikes. Gov. Asa Hutchinson (R-Ark.) is the most recent governor to take this approach.
“[W]e will NOT raise taxes to fund our highways. Specifically, there will be no new taxes on gasoline, diesel fuel or sales tax. With our economy still on the mend and with families who are still struggling to make ends meet, now is not the time to raise taxes,” Hutchinson said.
Hutchinson’s governing stands in stark contrast to Hoosier legislators. Under his leadership, the Natural State ended its 2015 budget year with a $191.6 million net surplus. And as a true friend to taxpayers, the governor is asking lawmakers to address spending problems through “[government] efficiency” and “budget savings” in order to meet the funding requirements of the federal transportation bill, rather than to tax Arkansas taxpayers to high heaven. According to the governor, raising the gas tax at this time would be a shot in the foot to taxpayers and to the budget.
In comparison to neighboring states, Arkansas has the lowest annual percent of general revenue that is used for highway funding at 0.01 percent. In order to obtain $2 billion in Federal Highway Trust Fund resources over the next decade, the governor proposed a transportation budget last month that involves appropriating a mixture of its surplus funds and general revenue to the Arkansas Highway and Transportation Department. This mixture alone would produce $750 million for highway projects over the next ten years without increasing fees or taxes.
Under his proposal, funding for the first year will originate from $40 million in allocated surplus funds—a combination of funds from fiscal year 2015’s unobligated surplus fund and the governor’s rainy day fund. After funding obligations are met in the years following, 25 percent of unallocated surpluses will transfer to the Highway Department. Gov. Hutchinson is also calling for the transportation fund to draw money from sales taxes on new and used vehicles, which will cap out at $25 million, general revenue funds that are collected through diesel taxes, which totals around $4 million, and through state sales taxes garnered from the 12 cent highway sales tax that was passed by voters in 2012. The highway sales tax would also bring in $5.4 million.
In just his second year of office, Gov. Hutchinson demonstrates that you can address significant short and long-term transportation needs without raising taxes. ATR applauds the governor’s efforts to improve government efficiency through existing revenue streams and urges lawmakers to pass his budget.