LITTLE ROCK—The increase in the severance tax on natural gas will likely generate more than the $57 million expected in its first year, Gov. Mike Beebe said Tuesday.

The severance tax increase was approved in a special legislative session and Beebe signed it into law on April 2. Beebe said the estimated revenue for the first year of the tax was based on a natural gas price of $8 per million British thermal units. The natural gas price was $13 per million Btus on Tuesday.

Beebe said the price will probably fluctuate but he expects the estimates to be reworked when the tax hike goes into effect Jan. 1.

“It’s going to be a lot more than $8,” Beebe said.

The tax increase was projected to raise $100 million per year for state highways once new gas wells being drilled are producing. The increase replaces a rate that brings in about $660,000 a year.

“That won’t solve all the problems. It’s a beginning,” Beebe said.

Beebe addressed a gathering of the Arkansas Good Roads Transportation Council, a group that advocates improvement of roads and highways in the state.

Beebe assured the group that he believes good roads are necessary for economic development but that the first priority in the state budget has to be education. He restated his opposition to using general revenue for highways but said he understands the significance of the highway funding problem.

The state Highway and Transportation Department says it has $19 billion in needs for the coming 10 years but only anticipates about $4 billion in revenue.

The state was fortunate to have a budget surplus during the last legislative session, enabling the Legislature to spend enough on public schools to get the system out of court and still have $80 million additional to devote to the highways, Beebe said.

For new highway construction, Beebe said he would be open to using tolls for funding. He said he is against adding tolls to pay for improvements to existing roads but said one funding possibility is adding lanes to be used only by motorists who choose to pay tolls.

“We all have to look at innovative ways,” Beebe said.