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Arkansas governor announces $300M highway funding plan; proposal includes increase in fuel tax

Arkansas governor announces $300M highway funding plan; proposal includes increase in fuel tax

February 11th, 2019 by Arkansas Democrat-Gazette in Arkansas News

Gov. Asa Hutchinson and legislative leaders on Monday unveiled a $300 million highway plan that would permanently extend the state's half-cent sales tax, increase fuel taxes and tap expanded casino revenue.

Hutchinson said the proposal was the largest highway funding plan in Arkansas history. To be implemented, the plan will require legislative action and a ballot referral in 2020.

"This plan achieves the right balance," Hutchinson said. "It is affordable. It is prudent for our budget, and it is reasonable."

The proposal would raise more than $205 million annually by making permanent the half-cent sales tax that voters approved with a 10-year sunset in 2012. This would require voter approval in 2020.

It would raise another $58 million by creating a new index for motor fuel taxes, raising the sales tax by 3 cents on gas and 6 cents on diesel.

The remaining $36.9 million would come from increased registration fees on hybrid and electric vehicles and by dedicating future casino tax revenues to highways. The plan guarantees $35 million a year from the increased casino funds, state reserves or other general revenue.

Arkansans in 2018 approved a constitutional amendment that expanded casino gaming in Arkansas.

Hutchinson's plan comes at the start of the week when the state House of Representatives will take up his income tax cut plan. Some House members have expressed reluctance to vote for the cuts without a highway funding proposal.

Democrats on Monday said their initial thoughts on the plan were positive, but they wanted to study the proposal to ensure that general revenue remains protected. General revenue comes from the state's income and sales tax collections and funds the state's basic services like public education.

The governor assured those at a Monday news conference that the plan wouldn't jeopardize the state's general revenue funding stream.

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Information from Hunter Field at the Arkansas Democrat-Gazette, Arkansas Online.

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