By NMA Member Tom Beckett
Editor’s Note: This post is the second in at least a three-part on the complicated funding for roads in a mostly rural state. Check out Part 1 of the Arkansas Report.
Back in 2012, Arkansas voters approved a half-cent sales tax increase to generate revenue dedicated to transportation. With this ballot initiative, the state portion of the sales tax became 6.5 percent. Counties and municipalities could also add levies to the state tax, which many have already done.
I live in Siloam Springs, where the combined tax is 9.5 percent; Fayetteville is similar, but it has also added a one percent bite onto restaurant sales, and a half percent for something else, bringing its sales tax to 11 percent, which is a real bounce to the check when you go to eat an even modestly priced dinner.
Due to all the sales tax stacking, Arkansas has an average rate of 9.465 percent, second highest in the nation, only slightly behind Tennessee’s at 9.469 percent.
On the 2012 ballot, Measure 1 or The Arkansas Tax Increase Question passed by 58.2 to 41.8 percent. Voters agreed that starting in 2014, residents would be levied a half-cent sales tax to pay back $1.3 general obligation bonds for the construction of four-lane highways. Revenue for the sales tax is split 70 percent state/15 percent county/15 percent local. Officials vouched that the bonds would be paid off in 2023, and the tax would then expire. It has now been enshrined as Amendment 91 of the Arkansas Constitution.
As of June 2019, 13 projects totaling $532.6 million had been completed. Nine projects totaling $525.9 million are still under construction, and 14 projects are currently scheduled.
The current estimate of the Department of Finance and Administration states that the tax will bring in $293.7 million this year, with $205.59 million going to the state, with county and local each getting $44.055 million.
Arkansas has 75 counties, and each county should average $587,400. Without looking, I’d venture that the counties in northwest Arkansas—Benton, Washington, Madison, and Carroll (with the cities of Bentonville, Rogers, Fayetteville, Springdale, Eureka Springs, and Huntsville) as well as Pulaski (Little Rock), Crittenden (West Memphis), and possibly Sebastian (Fort Smith)—get a good bit more above that average. For example, just in Benton County, there are several major projects in progress on I-49.
Issue 1 is back on the ballot for November 2020. The extension of the half-cent sales tax is now called The Arkansas Transportation Sales Tax Continuation Amendment.
Even though that election is eight months away, there is already motion to push for passage of the measure. The Arkansas Municipal League held its winter conference in Little Rock recently. Speakers urged local leaders to emphasize the need to continue the dedicated sales tax because, as the Association of Arkansas Counties Executive Director Chris Villines put it, “Infrastructure is important to all of us….there are no red or blue potholes.”
According to Villines, the tax would provide money for thousands of miles of interstate highways and farm-to-market roads, as well as money to repair and replace deteriorating bridges. If we lose funding, then cash for road repairs would have to come from another part of the budget, like rural policing. “Poorer services and poorer roads.”
Arkansas DOT executive director Scott Bennett said the measure is needed because highway money has remained relatively flat over the last 30 years:
“We have had three gas tax increases since 1983, but people are also buying more fuel-efficient vehicles. It has kept the revenue relatively flat while prices for construction and repairs have continued to increase.”
Governor Asa Hutchinson has also come out in favor of the extension.
I have a couple of thoughts on the issue of taxation.
The first is about government in general: any time a government body has a revenue stream, they are extremely reluctant to give it up—hence the proposed Amendment.
The other thought: they get you one way or another.
With that in mind, as I noted in the last post, to some extent, ‘you get what you pay for.’
When I moved to Arkansas from New York in 2006, part of the decision process was the level of taxes.
It turned out, though, Arkansas’ sales tax was more expensive than New York’s. When I left Tioga County, NY, the sales tax was 7.75 percent, and in Arkansas, it is now 9.5 percent.
Conversely, though, my property tax was significantly lower, and I qualified for a Homestead Credit, which in New York I did not.
My property tax here is a lot like my Town and County tax was in New York, as it covers a variety of non-school government services—things like sheriff patrols, roadway maintenance, fire department, courts, etc.
Arkansas schools are funded by a personal property tax or a “car tax,” since it is assessed on motor vehicles and boats. We did not have this in New York, but we did have a separate levy for schools there.
Even with a 2001 Stratus R/T, a 2013 Toyota RAV4, and a 2017 Winnebago, my car tax was around $1700 last year—less than the $2000 I paid to the Union-Endicott district in New York in 2006. The NY tax had gone up $800 over 14 years, and is probably higher still, a dozen years later. The plus side of the Arkansas car tax is that it’s based on the value of the vehicle. For each passing year, my vehicles grow older and my tax declines, so I’m gaining ground there.
As much as I hate to pay more in taxes, making the half-cent sales tax permanent, in the long run, is a good idea.
I don’t want to start another civil war, but one thing I’ve noticed over the years while driving for a living is that the south tends not to spend a lot of money on roads. Up north, where taxes are higher (with some exceptions), the state highway networks appeared to be better built, and though recent ASCE ratings would belie this, better maintained.
In New York, it’s pretty common to find most two-lane state highways with wide lanes and broad shoulders, even the bridges. Down south, it’s more of a mix. More recently, built roads have those characteristics, but older roads often have narrower lanes, and once you’re over the white line, you’re in the ditch.
I remember once driving on US-84 in Mississippi, and noting that there was no shoulder whatsoever—so almost immediately if you left the roadway, you were going down a 20-foot embankment into a swamp. Pray you don’t get a flat!!
The assessments of the DOT and county association officials have some merit. As cars have gotten more fuel-efficient, they use less gas, thus bringing in less tax revenue.
The money to fund not only new construction but to maintain what’s already in place is not keeping up with the demand. Maintenance requirements grow every year as more and more vehicles are on the roads.
At least a half-cent sales tax is a permanent solution to an issue that will be with us as long as there are cars and trucks on the road, something I don’t see changing in my lifetime (while I’m already 60, that should be quite some time to come). A permanent sales tax will eliminate the periodic shortfalls that must be addressed every few years. As long as the tax money is used for its intended purpose, this will be a winner in the long run.
Now, if only the Arkansas DOT would address a couple of wish list projects for me:
- Complete I-49 over the Ouachitas, from Fort Smith to Texarkana, and
- Widen I-40 from West Memphis to Little Rock, one of the most congested stretches of highway away from the east coast.
Maybe in my lifetime!!
Author’s Note: I had planned on addressing Amendment 100, which allowed for casinos to operate in Arkansas, with some of the tax revenue going to highways-it’s the third leg of the funding stool-but it’s proving to be a bit more complicated than I initially thought. There’s litigation in Pope County. I’ll take that up in a future post.
Tom Beckett is a retired driver and fleet manager for JB Hunt, where, in his driving career he ran 770,000 accident free miles, and has driven over two million miles since 1975 in all kinds of vehicles. A New York native, he is a resident of northwest Arkansas since 2006. He lives in Siloam Springs with his wife Diane and four sleepy cats.
Editor’s Note: The opinions expressed in this article are those of the author.
As a resident in Arkansas, I’m highly opposed to this. We’re heavily taxed enough as it is and I don’t know if you were living under a rock last year, but our gas taxes was just increased just for roads. What’s worse than high taxes is wasteful spending of our tax dollars allocate to. The last time the people voted for an Arkansas highway tax it was supposed to go towards FOUR lane highways when a few years later I found out it was not going towards four lane highways around the state. Instead majority of that 1/2 cent sales tax is going toward that 10 lane boondoggle in Little Rock and FIVE lane highways around the state. Not only that even the maintenance is not going where it’s really needed, I noticed that roads that are in great condition are getting repaved for no reason meanwhile while roads and bridges that are crumbling, it takes a backseat. For example US Highway 82 in south Arkansas between El Dorado and Strong majority of the road was in perfectly smooth with an exception of a few spots, but a section that was repaved a few years ago was repaved YET AGAIN which made no sense. It’s just like the movie “Falling Down” with Michael Douglas when he confronts the construction worker on his way home about how they are tearing up a perfectly fine street to justify their inflated budgets aka need for more money. Well ARDOT is that construction worker from “falling down” should not be trusted. I don’t know if you saw their plan for this but majority of the money going to widening freeways around little rock and widening I-40 from little rock to Memphis, while I-49 & 69 should be a top priority. After last year I found out 30 crossing was around billion dollars then later they wanted to make this tax permanent, is that a coincidence or was the whole purpose for this half cent sales tax was to fund 30 crossing ( the 10 lane boondoggle). ARDOT has spent money on I-40 for the last 20 years just by repaving as well as replacing bridges and it’s far from over. Widening I-40 is a waste of money because widening freeways won’t relieve traffic and Interstates 57 and 69 would relieve the need for widening I-40 from Little Rock to Memphis. Completing our Interstates as well as our remaining four lane grid system should be our top priority, not widening more freeways because we’ve spent enough money on that for 20 plus years now. I-49 is about to be completed from Fort Smith to Kansas City in the next year or two and it’s already completed from Texarkana to Louisiana, so the Fort Smith to Texarkana section should be a higher priority over 30 crossing and Widening I-40.
With the COVID19 pandemic that’s taking a hard hit on the economy resulting in people losing their lives, homes and jobs the last thing on peoples minds is more taxes on top of already high taxes. There are other ways to fund the roads like diverting road user revenue to roads or using taxes on billboards to fund highways but instead arrogant Asa wants more taxes despite Arkansas being the 2nd in high taxes. I’m all for better highways and completing our highways, but no for more taxes. Until ARDOT can get their ducks in a row and stop kissing Asa’s ass who doesn’t care about the people of Arkansas, I’ll vote NO!!!!!
Alex,
Thanks for your comment. It’s nice to know someone is actually reading these pieces!!
I am well aware that the gas tax was raised last year. It was actually a modest increase, three cents on gasoline, and six on diesel. The tax had not been raised in twenty years, during which time, although vehicle miles increased, so did fuel economy, so revenues were flat or declining. That shortfall had to be made up somehow. As much as I don’t like paying more in taxes either, this was probably the least painful way of accomplishing that. What I found more troubling was the fees assessed on electric vehicles and hybrids. Those are enough to act as a disincentive to owning one in Arkansas, since the registration surcharges will make owning one a money losing proposition for most.
As you note, there are times when taxes don’t wind up used as advertised. I agree, there should be more control over how the money is spent, and earmarked money, generally, should be used for its intended purpose, restricted by law if possible, though I don’t have that much faith in the legislature to enact such a provision. I recall when the Obama administration set up the ARRA, that projects eligible had to be “shovel ready.” The problem became, anyone with a shovel though they should get money out of that program. Some things, like your US 82 repaving, were head scratchers. They did the same thing up here on US 412 between Siloam and Tontitown, repaving parts of the road that were in fairly good shape-twice-but ignoring other parts that really needed the attention. Another project was the widening of Ark 59 between Siloam and Gentry. The road did need work-the pavement was in bad shape, and they needed to straighten out a couple of tight curves-but making it five lanes was perhaps not the best use of the funds, since most of that distance, about five miles, is rural. I don’t really see the need for a center turning lane on a route that is mostly cow pastures. The growth potential really isn’t there.
Again, as you note, there are worthy projects that should be funded. I 49 from Fort Smith to Texarkana is surely a major segment. I don’t expect to see it in my lifetime; I’m 61 now, and I just doubt they’ll get there, unless I live to be very old. It’s a major engineering effort through difficult territory, a lot like the I 540 project going north. I remember driving US 71 before the interstate was built, some turns so tight I could reach out my window and touch my trailer. My first trip over the mountain was pulling a 53 foot trailer, at night, in the rain. US 71 south of Greenwood isn’t quite as bad, and I don’t do the trip with a 53 footer any more, but I won’t miss downtown Mena.
I’d like to see Arkansas do a program like West Virginia’s, where they built four lane highways along certain corridors. It’s a lot easier to get from Clarksburg to Parkersburg since US 50 was made into an expressway. For Arkansas, I could envision US 82 as a four lane all the way across, from Texarkana to the bridge near Lake Village. I’d also like to see US 412 similarly rebuilt across the northern tier of the state. This would also benefit US 62, which runs concurrent with US 412 for a good distance.
I can’t speak to the I 30 project in Little Rock. I just have not been following it that closely, so that’s something I’ll have to research and address. The one thing about some of those urban projects is, they do seem to take a long time to complete. Little Rock ain’t Dallas, I know, but I recall the Central Expressway project there took about ten years before it was all done. Hopefully I 30 won’t be a similar boondoggle. Rebuilding the bridge over the Arkansas River will take several years, I’m sure.
I have to differ with you on widening I 40 from Memphis to Little Rock. My first trip on that route was in October 1984. It was congested then. My next experience with it was in the late 90’s, when I was driving for JB Hunt. It was even more congested, and the need for additional lanes was apparent. One 50 MPH motor home-or a 59 MPH JB Hunt truck, someone at our place actually thought slowing down our fleet was a good idea, when the world was going to 70 and 75 MPH speed limits-bogged down the entire highway for miles. It’s only worse now. That was a project that needed to be done 25 years ago.
For what it’s worth, I 49 between Fayetteville and Rogers is being widened to six lanes, a project that was started about ten years ago, and is now mostly complete. Prior to the opening of the third lane on each side, the road could, and did, especially in rush periods, become quite congested. Now that there’s the additional lane, it doesn’t happen nearly as much, since the ability to pass slower vehicles is improved-though there are still way too many slow moving ones in the left lane-and there is more capacity. It’s not always a “Field of Dreams” scenario: build it and they will come. There will surely be more traffic as the area grows, but for the forseeable future, I 49 seems to be handling it well. I 40 will still be busy, but more capacity will have to help.
The down side of the I 49 widening was that just a couple years prior, they had finished installing cable dividers in the median. I don’t recall the cost of that effort, but it had to be many millions. When asked why they were now going to rip out the recently installed dividers, the AHTD person said the funding for the widening project, which had been uncertain, had come through.
I 69 is still a long way off, and the route as I know it, may not help divert a lot of traffic off I 40, since a lot of it is going straight west into Oklahoma, but it will help Texas bound traffic. Not sure where you’re coming from on I 57, since it currently ends in Sikeston MO, at I 55, though I could see continuing it on to Poplar Bluff(running with US 60), and turning it south on current US 67 toward Little Rock. I could have used that route when I was a trucker!!
I agree, that everyone, including the government at various levels, is stretched right now. On the other hand, traffic is off, too, and this would be a good time to get started on some of these projects, on whatever limited basis is possible. As I said earlier, I’m not a huge fan of increased taxes-no one is-and the sales tax is way too high here. But to some degree, you get what you pay for. We’re not keeping up on basic maintenance, never mind new(and needed) programs, and the backlog of those items is an expensive fix. Having a consistent funding stream allows ARDOT to plan for the future with some certainty of being able to pay for various projects. One would have to think that this would go a long way toward avoiding the I 49 situation I mentioned above.
I think, though, a quick comparison is in order. When I was first looking at moving here from upstate NY, I got gas in Siloam Springs. This was back in 2005. The price here was $2.39. In NY, it was $2.90, about 60 cents of which was taxes. We’re not so bad off here. The one thing about New York was, almost all the state highways had wide lanes and wide shoulders. That’s not the case here. Most of the time it doesn’t matter much, but if you have to avoid someone crossing the center line, a six foot deep ditch full of water is not a good alternative. NY wastes a lot of money, don’t get me wrong. But most of the northern states have better built roads than down south. That’s from observing over 40 years of driving nearly everywhere.