Arkansas lawmaker drops proposal to transfer tax money to highways so panel can study funding

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LITTLE ROCK, Arkansas — An Arkansas lawmaker dropped his proposal Thursday to transfer tax revenue from car-related items to highways, after Gov. Asa Hutchinson said he'd form a committee to study options for funding the state's road needs.

Republican Rep. Dan Douglas of Bentonville withdrew his legislation to gradually phase in the transfer from the state's general fund over a 10-year period. Finance officials said the proposal would have cost the state nearly $35 million in the coming fiscal year and $548 million once fully implemented.

The proposal faced objections from Hutchinson, who said diverting the money would threaten his proposed budget. Advocacy groups had also said the proposal would threaten other budget needs, such as public schools and higher education. A House committee had endorsed Douglas' proposal last month, but he had put the measure on hold to address the governor's concerns.

"The governor had some budgetary concerns and wanted to look at some other options. I feel like that's fair to give a little bit more time," Douglas said. "We want to make sure whatever funding source we get out here it meets the needs and is as painless as can be to everyone concerned."

Hutchinson, a Republican, said in a statement he had met with Douglas to discuss the proposal.

"I made the case that now is not the right time for making significant adjustments in our balanced budget," Hutchinson said in a statement released by his office. "But I do understand the importance of this issue, and I have committed to forming and leading a governor's working group that will include all the key parties in an effort to build a consensus on highway funding for our future."

Douglas and highway officials had said the transfer proposal was needed to close the growing gap between Arkansas' road needs and funding. The state's highways are primarily funded by gas and diesel taxes, which have been in decline in recent years. Arkansas highway officials say they have $20.4 billion in needs over the next decade, but only $3.6 billion in expected revenue from the state and federal government.

This is the second time in recent years an effort to tap general revenue for highways has stalled in the Legislature. A similar proposal failed before a state House panel two years ago after facing similar opposition from advocacy groups and then-Gov. Mike Beebe, a Democrat.


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