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Research Corner
Arkansas Gov. Asa Hutchinson issued a proclamation in April declaring the necessity of a well-maintained road system. He referenced the various independent studies that have determined that the “state highways, roads, streets and bridges” in Arkansas are in dire need of construction, reconstruction and maintenance. The proclamation also determined that: (a) the revenues currently available are inadequate for the preservation and maintenance of the existing state highways and local roads infrastructure; and (b) the current structure of the motor fuel tax is inadequate due to reductions in revenues due to fuel efficiency and use of alternative fuels.
The Governor appointed the 20-member Working Group on Highway Funding (“Working Group”) to actively involve the public to determine adequate funding for the “present and future needs of the state highways, county roads and city streets” and to provide the Governor with recommendations to create a more reliable, modern and effective system of funding by Dec. 15, 2015. The immediate needs determined by the Governor’s Working Group are approximately $160 million (allocated among the state, cities and counties as per the traditional 70-15-15 revenue sharing formula).
On Dec. 3, 2015, the U.S. Congress adopted a five-year highway funding authorization that will increase highway funding nationwide. As a result, the Arkansas State Highway Commission (ASHC) will need approximately $50 million in additional state revenue for each of the next five years in order to match the additional federal funding.
State, City and County Maintenance Road and Bridge Needs
The chronic problem the ASHC has faced in the last 30 years has been to maintain the existing state system — interstates, U.S. Highways and state highways. These maintenance needs of the ASHC for road and bridge maintenance are well documented.
During the 2012 general election, Arkansas voters adopted Amendment 91 of the Arkansas Constitution. This provided the ASHC 70 percent of a half-cent statewide sales tax for construction and improvements of four-lane highways and bridges. Meanwhile, the major ongoing needs of the ASHC for the maintenance of the thousands of miles of two-lane states highways (more than half of the entire state system) continues to experience funding shortfalls. Our two-lane state highways and bridges are deteriorating in the midst of the largest state construction program in Arkansas history.
Despite the provision of 15 percent of the half-cent statewide sales tax by the people under Amendment 91 of the Arkansas Constitution, the challenges for maintaining the even larger existing system of local roads and bridges in Arkansas continues. During the County Judges Association of Arkansas (CJAA) meeting on Oct. 2, 2015, the CJAA invited the Governor’s Working Group to attend a presentation and participate in a dialogue on the current and future maintenance funding needs of county roads and bridges in Arkansas. Sebastian County Judge David Hudson, president of the CJAA, moderated and, along with other participating county judges, presented the Working Group an explanation on the funding limitations for present and future needs of the county roads in Arkansas.
The CJAA stressed that our road and bridge system in the state of Arkansas is interconnected among the state, county and city governments. There are reported approximately 102,594 miles of roads and streets in Arkansas — the state has 16,418 miles (16 percent); counties have 68,658 miles (67 percent); and cities have 15,518 miles (17 percent). There are 12,669 bridges 20 feet long or longer in Arkansas, and 2,591 are structurally deficient or functionally obsolete. The state has 7,346 bridges — 58 percent of the total — and 16 percent or 1,196 are structurally deficient or functionally obsolete. Counties have 4,297 bridges — 34 percent of the total — and 27 percent or 1,174 are structurally deficient or functionally obsolete. Cities have 1,026 bridges — 8 percent of the total — and 22 percent or 221 are structurally deficient or functionally obsolete. This means that counties are (a) maintaining approximately 67 percent of our system of state and local roads in Arkansas; and (b) maintaining, repairing or replacing 4,297 county bridges (34 percent of the total), of which 27 percent or 1,174 are structurally deficient or functionally obsolete. The need for more funding for both state highways and county roads is plain. Failure to address the situation will only result in further deterioration of the infrastructure and the public safety of the traveling public. During the CJAA meeting, several county judges, including Independence County Judge Robert Griffin, Garland County Judge Rick Davis, Dallas County Judge Jimmy Jones, Benton County Judge Bob Clinard and Polk County Judge Brandon Ellison, explained the infrastructure needs in their counties.
We also explained revenue sharing issues between cities and counties. While it is common knowledge for county officials, many state officials were surprised to learn much of the following: the “county road tax” under Amendment 61 of the Arkansas Constitution adopted by the people in 1982 authorizes the quorum court to annually levy a county road tax not to exceed 3 mills for the construction and repairing of public roads and bridges in the county where levied. However, ACA 26-79-104, a prior legislative act, purports to direct sharing of that revenue with cities (that of the amount of the county road tax collected from the annual property tax, not to exceed 3 mills, that the county courts (county judges) shall apportion
Mark Whitmore AAC Chief Counsel
one-half, except where a greater amount is allowed by law, of the amount collected upon the property within the corporate limits of any city or town for use in making and repairing city streets and bridges in the respective cities or towns). Plainly, the sums available for county roads and bridges less the sums apportioned to the cities are not adequate. Further, several counties have special acts whereby the cities’ share is in excess of the 50-50 split. A cursory examination will reveal to the Governor or legislators that in many rural counties, one mill in property tax annually is not enough to buy or lease a couple of road graders each year. Many counties find it necessary to appropriate general county sales taxes or dedicated county sales taxes just to maintain their existing roads and bridges.
Many legislators and even state officials on the Working Group were surprised to learn that countywide general sales taxes are apportioned on a pro rata basis between the county and the cities; and the city council allocation or portion is subject to appropriation by the city council each year in the annual city budget. See Attorney General Opinion No. 2014-077.
The bottom line is that only the largest counties in Arkansas have revenues available to build new bridges or new roads on new location. The projections for the counties’ share of 15 percent for 2016 are approximately $85 million for county roads and bridges statewide. Except for their county state aid, most counties use their dedicated road revenues to maintain, rebuild or resurface existing roads and bridges. The myths, misinformation and knowledge gap on these matters outside of rural Arkansas was and remains wide.
Those that may advocate a different split may not be familiar with the facts above and below. Commencing in 1965 the people of Arkansas and their representatives established a revenue share in the passage of dedicated road funding for state highways, county roads and city streets based upon a traditional 70-15-15 split. From that point forward each gasoline, diesel or alternative motor fuels tax adopted by the General Assembly or the people, including the recently adopted half-cent sales tax under Amendment 91 of the Arkansas Constitution, contained an allocation to the state, city and county under a 70-15-15 split. This revenue sharing is based upon the commonly understood principle that: all Arkansans — urban and rural — pay motor fuel taxes; that our transportation system is exactly that — a system of state and local roads and bridges; and that the sums derived between cities and counties from a pro rata portion of a 3-mill property tax are grossly insufficient to maintain our local county roads, city streets and local bridges.
The traditional split under ACA 20-70-207 further sets forth a traditional formula for division of the county portion, the county share of 15 percent as follows: 31 percent according to area, with each county to receive the proportion that its
area bears to the area of the state; 17 ½ percent according to the amount of state motor vehicle license fees collected in the calendar year preceding the distribution with each county to receive the proportion that the total of fees collected from the county bears to the total of fees collected in the state; 17 ½ percent according to population with each county to receive the proportion that its population bears to the population of the state; 13 ½ percent according to rural population with each county to receive the proportion that its rural population bears to the rural population of the state; and 20 ½ percent divided equally among the 75 counties. Much of the economy in Arkansas is based upon agriculture, cattle, poultry, timber, oil and gas production, hunting, fishing and tourism. Arkansas Farm Bureau recently reported that agriculture in Arkansas is a $20 billion industry. Those advocates seeking a different split may not have participated in the various coalitions supporting past road funding. Amendment “The bottom line is that only the largest counties in Arkansas have revenues available to 91 of the Arkansas Constitution adopted by the people in the General Election of 2012 included the traditional 70-15-15 build new bridges or new roads on new locations ... The split or revenue sharing. Those pondering revenues for roads should be myths, misinformation and knowledge gap on these mat- mindful of the traditional ters outside of rural Arkansas was and remains wide. ” and recent support of the people for the traditional 70-15-15 split. Not all that long ago, during the First Extraordinary Session of 2008, the General Assembly enacted an increase in the severance tax on natural gas from the meager $640,000 annually to the modest rate in order to partially offset the increased road and bridge damage caused by the gas production industry. These dedicated road taxes were supported by the industry. Absent support from rural Arkansans and allocation to local roads, the measure would have never received support of a super-majority of the Legislature. As stated recently by Rep. David Hillman, a member of the House Public Transportation Committee, the traditional split “is fair to everyone. ... Whatever we do to find more money for Arkansas’ transportation system needs to be shared on the same basis as in the past.” Rep. Hillman underscored the substance of the Governor’s proclamation and observed, “The transportation needs in Arkansas are more than just those of the state highway system. They are those of our counties and cities — all of which are necessary for adequate and safe roadways that our citizens deserve.” Rep. Lanny Fite, former Saline County judge, also observes that additional funding is needed for both our state and local roads and bridges. But even with the recent increases in dedicated road funding from the severance tax and the dedicated sales tax, as declared in the Governor’s proclamation, “the tax structure on motor fuels in this state is currently inadequate.” Because the tax on motor fuels is a per-gallon basis rather than a sales tax for See “ROADS” on Page 26 >>>
